New UK Nuclear Plant Nabs £2-Billion Government Loan Guarantee
The UK government is promising a £2-billion loan guarantee for the proposed Hinkley Point nuclear station in southwest England, in the same month that it disallowed 1.3 GW of new wind generation on the Isle of Wight and in Wales.
“I am delighted to announce this guarantee for Hinkley Point today and to be in China to discuss their investments in Britain’s nuclear industry,” said Chancellor of the Exchequer George Osborne. If the plant is built, the deal—valued at at least £16 billion—will be led by state-controlled Électricité de France (EDF), supported by China General Nuclear Corporation and China National Nuclear Corporation.
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Contrary to the trend across most western nations, “Britain strongly backs construction of new nuclear plants,” the New York Times reports. “It views nuclear energy as a low-carbon source of power generation useful for meeting its targets to reduce carbon dioxide emissions,” and as a fallback as its existing nuclear plants age and its coal facilities are shut down.
“With British utilities lacking the expertise and financial strength to build a nuclear plant, the government has turned to EDF, which is backed by the French state,” Reed writes.
On the Energy and Carbon Blog, Gerard Wynn notes that it has taken EDF two years to raise funds for the project, despite a price guarantee of £92.5 per megawatt-hour the government had already announced for the project. In March, RenewEconomy reported that solar and wind projects had both underbid that price in the UK government’s first official auction under its “contract for difference” pricing mechanism.
Wynn warns that a new nuclear plant “may be ill-suited to the electric grid when it comes online in about 10 years’ time,” given that Britain expects to derive 20% of its electricity from “variable” renewables by 2020. He cites a report last month from the International Energy Agency and the Nuclear Energy Agency that points to the difficulties nuclear will face in a variable grid.
“Power systems have to ensure the balance between load and generation, and therefore to handle the rapid swing of wind and solar power,” the agencies noted. “Large coal and nuclear plants have to be warmed up or ramped up a long time before they can start operations,” with nuclear requiring a start-up period of two days, compared to as little as 10 minutes for a natural gas turbine.