Blackout warnings and price spikes show future without nuclear
09 December 2020
10 Point Plan Provides Blueprint, But Needs Details
Last Thursday, National Grid issued its fourth warning in seven weeks about Britain’s electricity supplies. The warning followed a now familiar pattern: low wind and colder temperatures meant the “cushion of spare capacity” in the system had been reduced. In other words, having to call on high carbon, high cost emergency power to keep the supply running. The going rate for power last Sunday evening reached an eye-watering £350/MWh, the highest level in four years. Gas and coal, the two most polluting fuels on our grid, accounted for more than 60% of our power.
Without a balanced low carbon power mix, these are the real and predictable consequences. Building new renewable capacity is only one part of the transition to a clean, secure and reliable future – we need the balancing impact of zero emissions nuclear capacity as well. It is hardly a surprise that it is windier on some days than others; or that as winter approaches, the days get colder and darker. Demand is higher, and when supply falls it is burning fossil fuels that fill the gap, at steep prices. That is the reality of Britain in 2020 – a reality that is unstable, unsustainable, and unaffordable.
Four capacity warnings in seven weeks is not the steady, predictable power supply we expect from one of the most advanced economies in the world. We cannot build a green economy if we have to switch on coal plants just to keep the grid from falling over. We cannot roll out a fleet of electric vehicles if there isn’t enough power to charge them. This is no path to prosperity and no path to net zero. The coal-free streaks and clean power records of the summer and lockdown are gone. For the past 17 days, we have burned coal to top up our power supplies. We have burned gas for the bulk of our power each one of those 17 days. The grid should be the easiest part of our infrastructure to decarbonise, the catalyst for progress elsewhere, but instead, for far too much of the time it is far from clean and far from cheap.
The cycle of grid warnings, prices rises, and fossil fuel burning is spiralling. The fist warning pushed prices to £183.20. The next went to £192.25. Then we went up to £313.45 and most recently to £350/MWh. We burned coal eight straight days in early November: we have doubled that now and are still counting.
The solution is not to expect renewables to do it alone. At the lowest wind on 26 November, we would have needed 400 GW more of wind capacity to replace the generation of the nuclear fleet. That is impossible, but that is exactly the task we set ourselves if we do not build new nuclear capacity. The current nuclear fleet, which has been the leading zero-carbon generator these past two weeks, will be half gone in five years, and almost all gone in ten. The truth is that nuclear power can only be replaced by another power source that is reliable, always-on, and not dependent on weather conditions. In the short term, that means more gas, more carbon emissions, and more distance from net zero.
In the longer term, though, we should not resign ourselves to fossil fuels. In the Prime Minister’s 10 Point Plan, in fact, we have a blueprint out of our fossil fuel dependency. The plan backed both large-scale and small-nuclear power, alongside wind, hydrogen and other technologies as part of a robust low-carbon mix. The plan put forward money to fund the research and development of modular reactor technology and committed to “pursuing large-scale new nuclear projects.” This is absolutely the right approach.
What that approach needs now are details, starting with a practical financing model to build new nuclear stations. Now that the government has declared its support in principle for multiple large-scale nuclear projects and for small reactor projects, financing is the sole remaining obstacle. Fortunately, the Government has all the building blocks of a financing model in place. The recent National Infrastructure Strategy declared that “alongside considering the [Regulated Asset Base] model the government will also continue to consider the potential role of government finance during construction.” A Regulated Asset Base (RAB) model would guarantee investors a return while controlling costs that consumers would pay. Government finance during construction would relieve developers of the biggest risks that drive up private financing costs. Since the Government would be publicly and financially committed to seeing projects through to completion, other investors would find it easier to commit as well. Taxpayers, by ensuring that stations get built, would be guaranteed their money back and more, as the stations would produce power steadily for 60 years and more.
The government could blend a RAB model and an element of public financing, as either could cut the costs of raising the money required. Since financing accounts for the bulk of nuclear costs, that would make nuclear power much cheaper for all concerned. The UK’s 60,000 strong civil nuclear industry will work with both, and is ready to mobilise. The pieces are there: all Ministers need to do now is make their decision.
With a decision, we can get on and build, creating jobs and delivering clean power. Without a decision, investment will fade away. Without investment, there will be no new nuclear. Without new nuclear, the drumbeat of capacity warnings and the threat of blackouts will be our future. But it does not need to be our fate.