David Morris is Member of Parliament for Morecambe and Lunesdale (including the Heysham Nuclear Power Station) and he is Chairman of Conservative Friends of Nuclear Energy. Follow David on Twitter.
I like to think of myself as an optimist but even my faith was shaken when I first heard that RWE and E.ON had put Horizon Nuclear up for sale. So this week I heaved a sigh of relief when it was finally bought by Hitachi.
The sale comes as the United Kingdom faces a cross roads in our energy policy. We claim we want to produce green energy locally but in reality we are increasingly reliant on foreign fossil fuels, particularly gas.
An obvious example is Centrica’s closure of a gas drilling platform in the Irish Sea in favour of a import station close to Barrow-in-Furness. This is an understandable move for Centrica because supplies are starting to run out. However the side effect of a reliance on foreign gas is domestic bills become tied to global commodity prices: which can fluctuate wildly.
The advantage of nuclear power stations is whilst they are expensive to build (around £8bn each) they cost comparatively little to run. Moreover these running costs are predictable, which in turn stabilises bills for domestic customers.
In France 70% of power is generated by nuclear and families just do not see the spikes in electricity bills that we get in the UK.
The other advantage of nuclear is it’s the only technology that can really produce low carbon electricity on a vast scale. An example of this is Heysham nuclear power station which at full capacity can produce half as much electricity as every single wind farm in the country combined. And it does so with the full support of the local community, whereas every wind farm seems to be opposed by its neighbours.
Despite these advantages there are problems with nuclear, and those problems relate to financing.
It was financing that pushed RWE and E.ON away from the Horizon project, despite their strong belief in it. The problem was the Merkel government’s anti-nuclear policy left them with costs in their domestic market that made it impossible to finance a major new nuclear build in the UK.
Similarly Vincent de Rivaz from EDF made the point at the recent select committee that new Nuclear was “not a done deal”. What both he and Hitachi need is a guarantee that the price paid for electricity will be stable so they can make financial plans. They are also looking for some underwriting of their projects, not because they plan to overspend, but to enable them to borrow money in a cost effective manner.
I believe that the Government will resolve these issues, not least because of the rumours being printed in the financial pages. If we get this right we could enter an age of low, predictable energy prices supplied by an industry based in parts of the United Kingdom that need well paid jobs.
The alternative is reliance on gas and wind: leading to unstable prices, eye sores in our rural communities and unnecessary air pollution. I know which I would rather.
Things for ConHome readers to look out for:
- The ‘strike price’ the amount paid by the grid for electricity produced. If its too high it pushes up bills, if its too low it’ll be hard to borrow the capital to build Nuclear Power Stations.
- The ‘overwriting’ at Hinckley Point. What deal will DECC strike with EDF to enable them to build the first new nuclear power station?
- How big will the building project be? This will depend on how things go at Hinckley Point for EDF and Wylfa for Horizon.