David Foxwell reflects on the fallout from Hitachi’s decision to pull out of the Wylfa nuclear power plant and whether renewables – including offshore wind – really can fill the gap
As OWJ reported last week, Hitachi has confirmed it is pulling out of the project to build the Wylfa nuclear power plant in the UK. The decision is another body blow to the UK’s plans for nuclear energy, but also for decarbonisation efforts in the UK.
However, it has been suggested that renewable energy such as offshore wind can fill the ‘nuclear gap’ with alternative low-carbon power sources that would keep bills down, maintain secure energy supply and allow the UK to continue its progress towards legally-binding climate targets. All of that might be possible, it’s said, because the cost of renewable energy – not least offshore wind energy – has plummeted.
As Energy and Climate Intelligence Unit (ECIU) head of analysis Dr Jonathan Marshall noted, although Hitachi’s decision is certainly a setback to the government’s energy plans, it should not cause alarm bells to start ringing. In recent years, government has quietly cut back its expectations for a nuclear newbuild, and that approach makes increasing economic sense as the price of renewable generation falls and the benefits of the flexible smart grid become more apparent. Filling the nuclear gap with renewables would indeed require an increase in rollout, Dr Marshall said, but one that is well within UK capabilities.
How can such an assertion be backed up? Well, as Dr Marshall noted, the National Infrastructure Commission reported recently that building a renewables-based smart grid would trim up to £8Bn (US$10Bn) a year from the UK’s electricity bill by 2030, and after all, it is in renewables technology rather than in nuclear or gas generation that investors are looking to put their money.
“With enough focus on smart low-carbon energy, there’s no reason why Britain shouldn’t achieve all its energy objectives despite the cancellation of these nuclear stations,” Dr Marshall said.
“With enough focus on smart, low-carbon energy, there’s no reason why Britain shouldn’t achieve all its energy objectives"
As OWJ also highlighted last week, analysis from the ECIU found that deploying alternative low-carbon power sources would be up to a third cheaper than the cost of energy from nuclear power.
ECIU analysis last year also found that alternative sources of energy were “more than capable” of stepping in to cover the proposed output from EDF’s 3.2-GW, hideously expensive Hinkley Point C power station and found that the intermittency of wind and solar power could be addressed using ‘flexibility mechanisms’ including storage, demand-shifting (demand-side response, DSR), trade with neighbouring countries through interconnectors and fast-ramping gas plants.
Analysis by the Association of Decentralised Energy in 2016 found that there was a potential of 9.8 GW of DSR available in the UK but that would not be the optimum solution. A combination of energy storage – in the form of pumped hydro, both in the UK and in interconnected countries, and batteries – would also help with system stability and batteries can both provide power when weather conditions limit wind and solar output and provide auxiliary services to the grid vital for voltage and frequency control.
National Grid expects 12-29 GW of storage to be installed by 2050 and the UK is also increasing interconnector capacity. The 1-GW NEMO link to Belgium is expected to begin operations early this year, and capacity could be as high as 20 GW by 2030.
But what about the cost of the above-mentioned? Renewable costs may have fallen below new nuclear but how might flexibility mechanisms affect electricity bills?
ECIU analysis suggests that the cost of balancing renewable energy sources with flexible technologies could add £5-20/MWh to the cost of energy from wind and solar. It believes that a representative scenario, in which 80% of the energy output of the Moorside (the future of which is also now in doubt), Wylfa and Sizewell C nuclear power stations was replaced in equal measure by onshore and offshore wind, with the remaining 20% by solar PV would entail an average price of £50-65/MWh, including the cost of system balancing.
This is still 13-33% cheaper than the cost of energy from nuclear (not accounting for nuclear system costs). ECIU estimates that this would see an additional 11.3 GW of onshore wind and 5.7 GW of offshore wind capacity, as well as 20.8 GW of new solar PV capacity.
As the Committee on Climate Change noted in a June 2018 report, strong support for offshore wind and other renewables – but inexplicably not for onshore wind – has enabled the UK to close coal plants. It has led to a remarkable increase in renewable generation, accompanied by dramatic reductions in costs, far beyond the level that naysayers said was possible. In fact, offshore wind deployment exemplifies how clear goals, an ambitious strategy and well-designed mechanisms, can encourage and enable the market to reduce cost and help to build wider economic co-benefits.
As UK Business and Energy Secretary Greg Clark noted in a statement issued last week about Hitachi’s decision to suspend work on Wylfa, the economics of the energy market have changed significantly in recent years. The cost of renewable technology such as offshore wind has fallen dramatically, to the point where they now require very little public subsidy and will soon, the minister claimed, require none.
We have also seen a strengthening in the pipeline of projects coming forward, meaning that renewable energy may now not just be cheap, but also readily available. As a result of these developments over the last eight years, he said, we have a well-supplied electricity market.
What he might also have said is that cost reduction in the offshore wind industry, although already mightily impressive, is far from over, and that by the time Wylfa and other nuclear plants would have become operational, the massive disparity in costs between nuclear and renewables would have been even greater.
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