Written evidence from New Nuclear Watch Europe (NNWE)

Introduction

1. New Nuclear Watch Europe (NNWE) was established in 2014 to ensure that nuclear power is recognised as an important and desirable way for European countries to meet their long-term energy and security needs as well as their carbon emissions reduction targets. Its members include companies, individuals and organisations active in the nuclear industry including those involved in the supply chain. Its Chairman is Tim Yeo, former Chair of the House of Commons Energy and Climate Change Select Committee.

2. NNWE believes that nuclear power provides a reliable, safe and low carbon source of electricity. At a time of anxiety about security of energy supplies, the cost of energy and concern about carbon emissions from the use of fossil fuels for electricity generation, nuclear power has a vital role to play.

3. NNWE feels that the time is ripe for a revival in Europe's nuclear industry, as the interest now being shown in the European market by businesses from outside the EU underlines. In addition to the environmental and security advantages of nuclear power, considerable economic benefits will flow from Britain being in the vanguard of this revival. However, to realise these benefits we need to ensure that consumers and policymakers understand the importance of nuclear power within the overall energy mix.

Summary

4. The unexpectedly low strike price (£57.50 index linked) for offshore wind in last month’s second CfD auction round has led to claims that new nuclear plants are no longer either competitive or necessary. This conclusion is wrong.

5. The cost of the Hinkley Point C strike price (£92.50 index linked) must be viewed in the context of being the first new nuclear build in the UK in a generation. The price is over £50MW/h lower than the equivalent 2012 prices for offshore wind developments which have managed to decrease costs through extensive upscaling.

6. Until affordable flexible, large scale and long-term electricity storage is available no government can allow consumers to be dependent on intermittent sources of energy. Modern domestic and business life requires a continuous supply of electricity which solar and wind can’t guarantee.

7. Nuclear remains the only low carbon large scale source of baseload electricity.

8. Headline strike prices exclude the cost of grid connections, which for offshore wind can add as much as £10MW/h to the price, and of the back-up generation capacity which intermittent renewables need. Factoring these costs into comparisons makes nuclear and other low carbon technologies look more competitive.

9. The cost of nuclear is also falling despite the need to meet more stringent safety and environmental standards than any other energy industry. The Hinkley Point C strike price of £92.50 was agreed four years ago and is now irrelevant to negotiations for future nuclear power plants.

10. The National Audit Office report on Hinkley rightly found that different funding structures could have delivered a significantly cheaper strike price for consumers. This ranges from -£6 to £28MW/h depending on future electricity prices (pg. 68, Figure 20). It is our belief that government funding during the construction period of future nuclear build should follow this model in order to reduce the pressure on consumer bills.

Conclusion

11. Nuclear energy is a key component of future domestic energy security. Even at the base level for domestic security of supply (in accordance with the Climate Change Act objectives), it is predicted at the UK will need 3.3GW of new nuclear capacity by 2035 to replace decommissioned plants. In order for the UK to maintain energy security and meet the requirements set out in the Paris Agreement (the 2-degree scenario), 14.5GW of new nuclear plant will be required.

12. NNWE believes that the price of future nuclear new build will be significantly lower than Hinkley. This is because the nuclear technologies developed by Chinese, Russian and South Korean vendors are cheaper than the EPR reactor chosen by EDF. Future nuclear new build may also benefit from savings incurred through the UK supply chain and skills being transferred from project-to-project.

13. Government investment through either whole or partial funding of the project during the construction period can also substantially reduce the costs of future new build projects.

14. It is vital that, whether or not the criticisms of the National Audit Office of the Hinkley Point C strike price are justified, the prospect of a much cheaper nuclear new build opportunities is not overlooked.