UK: Solar will be cheaper than nuclear by time Hinkley plant is built, government admits

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In deciding to delay approval on the controversial Hinkley Point C nuclear plant last month, new British Prime Minister Theresa May surprised many of those involved in the project, serving at the same time to ‘unwisely’ put a few Chinese and French noses out of joint.

Perhaps May was just buying time, as per her decision to kick the Brexit can down the road, choosing to defer the big decisions until later in her tenure. Or perhaps she had been made aware of an unpublished government report that calculates how large-scale solar PV and wind power will be far cheaper to produce than nuclear by the time the Hinkley plant is up and running.

Figures revealed in a National Audit Office (NAO) report on nuclear power last month show that the government’s data crunchers are forecasting large-scale solar power to cost between £50 and £75/MWh ($65 and $97/MWh) by 2025.

Nuclear power, on the other hand, is expected to be somewhere around £85 and £125/MWh ($110 and $162/MWh) by the same date. The government has already agreed a guaranteed purchase price of £92.50/MWh ($120/MWh) with Hinkley developer EDF for nuclear power produced at the plant.

This shift in pricing counters two previous projections made in 2010 and 2013, both of which assumed renewable energy would be more costly to produce than nuclear by 2025. However, as the government has been reminded at every juncture in its decision-making, solar PV costs are continuing to fall, and even these latest price reduction forecasts could be considered conservative.

The NAO said in its report that "the energy department’s forecasts for the levelized cost of electricity of wind and solar in 2025 have decreased since 2010. The cost forecast for gas has not changed, while for nuclear it has increased."

Various green campaigners have rounded on the government over the Hinkley debate, with Green Party MEP Molly Scott Cato calling the project a “giant white elephant” that will struggle to compete with cheaper renewable options.

"Research has shown that solar power would be a less costly way of generating the equivalent amount of power, and now the government’s own projections show that onshore wind too will be cheaper than nuclear by the time Hinkley is built," Scott Cato said.

Last month Prime Minister May postponed a final decision on the £18 billion Hinkley plant, opting to conduct another review of the project. The move strained relations with officials from China General Nuclear (CGN), which has a one-third stake in the project, while EDF – poised to develop the plant – expressed their surprise at the delay.

If the nuclear option is chosen, projections show that the Hinkley plant is likely to cost British taxpayers close to £30 billion in subsidies over the course of its lifetime – a figure that is particularly galling for a solar sector repeatedly told by the government to "stand on its own two feet" in the face of severe cuts to support schemes.

Statistics published this week from the government’s new Business, Energy & Industrial Strategy (BEIS) department show that renewables delivered more than one quarter of the U.K.’s electricity between January and March this year, with solar generation hitting 1.3 TWh – an increase on the 1 TWh generated in Q1 2015.