UK government mulls public subsidy for nuclear

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U.K. trade body the Solar Trade Association (STA) responded indignantly to the revelation in parliament yesterday that Theresa May’s government is considering investing taxpayers’ money into the Wylfa Newydd nuclear power plant.

Business minister Greg Clark admitted in the House of Commons: “For this project, the government will be considering direct investment alongside Hitachi and the Japanese government agencies and other partners.”

With the Guardian newspaper reporting last night that £5 billion ($6.67 billion) of public money would be invested into the north Wales project – intended to replace the two Wylfa nuclear reactors decommissioned in 2012 and 2015 – the STA was left fuming.

“[The] announcement by Secretary of State Greg Clark that the government could invest in the development of the Wylfa Newydd nuclear power station marks a significant shift in energy policy towards explicit state investment in energy projects,” said the solar trade body in a statement. “The investment will further tilt the playing field in the energy market, which is already highly distorted by government interventions.

“The announcement comes at a time when the utility solar industry has been waiting more than three years for access to competitive U.K. clean power auctions, where it can offer power at close to wholesale price. Simultaneously, rooftop solar on warehouses and factories – an application which no longer requires government subsidy – has been stalled by crippling business rate hikes.”

The STA says the cost of U.K. utility-scale PV power has fallen by around 20% per year since 2014 to around £50-55/MWh. By contrast, media reports suggest a £77.50 strike price has been agreed with Horizon Nuclear Power – which was bought by Japanese giant Hitachi from German utilities E.ON and RWE – for the 60-year lifetime of the planned nuclear facility. Reports also speculate the nuclear project, on the island of Anglesey, would not be operational until 2025 at the earliest.

STA Chief Executive Chris Hewett said: “When [nuclear power station] Hinkley Point C was given the green light three years ago, we pointed out that the UK solar industry could already supply clean power at half the price [agreed for nuclear]. Since then solar prices have fallen even further, and storage technology is commercializing rapidly. Today solar combined with energy storage can provide low-cost, flexible power whilst supporting a smart energy pathway the government’s own analysis shows can save consumers billions of pounds.

“It is essential that barriers to solar power be removed and that government [allows] the technology to compete on a level playing field. Otherwise, the UK risks working against the tide of technological change and market forces, at huge costs to consumers and our economy.

“[The government has] been warned: [its] own adviser, Professor Dieter Helm, rightly highlights that nuclear has a much higher risk of economic stranding given the rapid technology change being driven by solar, EVs [electric vehicles], digitalization and storage.”

The public funding revelation also comes at a sensitive time for a government wedded to the idea of paying down the U.K.’s national debt, with Chancellor Philip Hammond having sanctioned last night’s sale of almost 8% of the government’s holding in the Royal Bank of Scotland, at an estimated £2 billion loss for the taxpayer.

The U.K. Renewable Energy Association this afternoon joined the chorus of protest at the government announcement, with REA chief executive Dr Nina Skurupska CBE warning: “The government needs to carefully consider the value for money argument before intervening with significant taxpayer support for the multibillion-pound nuclear power plant at Wylfa Newydd.

“Hitachi’s struggles to fund the project privately represent one of the great challenges facing the nuclear industry, that it is highly complex and costly to design, build, operate and maintain a nuclear power station.

“The costs of renewables are falling all the time whilst the clean technology sector continues to set records for generation. It is much quicker and cheaper to build an energy-from-waste, solar, wind or biomass plant than continue to pursue nuclear investment. Research shows that in the future, the inflexible properties of nuclear will also become a liability to the system rather than an asset, as [nuclear facilities] cannot respond quickly enough to changes in demand and supply on the system.”

<i>This article was amended on June 5 to include the comments of Dr Nina Skorupska CBE, chief executive of the U.K. Renewable Energy Association.</i>