Thursday’s decision by Japanese company Toshiba to pull out of the planned Moorside nuclear power station project has thrown the future of UK energy policy into doubt, and cast an ominous shadow over the economic future of Cumbria. But beyond the immediate implications, this latest debacle has also thrown into sharp relief the intractable problem at the core of the government’s energy policy. Maintaining our energy security while hitting our climate targets is a difficult task that requires clear strategic thinking and vision from the centre. Instead, key strategic decisions about our energy policy are being taken in boardrooms in Tokyo while ministers dither, delay, and cling to an outdated dogma about private investment that is bad for consumers, workers, our country and ultimately the planet.
The simple truth is that, despite the rapid and welcome deployment of renewables, Britain still needs major investment in our energy infrastructure if we are to meet our carbon targets and protect security of energy supply. Yet the government has taken a hands-off approach to major infrastructure whether that is building new nuclear capacity or tidal power, despite the pressing need for clarity and leadership on energy policy. Put simply, we don’t have enough energy capacity being built to meet future demand. The UK’s current electricity generation capacity could be reduced by 30% by 2030 because of the planned coal phase out, decommissioning of nuclear plants and the potential closure of aging Combined Cycle Gas Turbines (CCGT) plants. This would leave the UK increasingly reliant on imported energy supplies and potentially installing more gas.
We should be investing more in renewables and advanced technology solutions such as battery storage and smart grids. But these technologies are not currently even close to being ready to balance renewables at the scale we require, and great uncertainty still surrounds the costs and timelines for their deployment. Failure to provide an adequate source of low-carbon power that can balance renewables, would leave the UK highly exposed to two key risks during winter peak periods: a combination of high demand and low wind and the unreliability of imports via interconnectors. New modelling undertaken by our research department has examined official figures, this shows the UK could be exposed to serious system stress by 2030, with potential supply shortfalls of between 9% and 21% during winter peak periods.
Britain is already dangerously underprepared for what happens when existing ageing plants are switched off, in large part due to the chaos and lack of leadership from government over new energy infrastructure. No other country has placed all of the risk for such strategic national assets onto the private sector alone. And the benefits of taking a proactive approach are clear. The planned Moorside project would not just be a major boost to the North West economy, it would also provide jobs and economic growth nationally, while supplying around seven per cent of the UK’s electricity needs.
One of the most common criticisms against new nuclear is that it is expensive compared to renewables. The strike price agreed for Hinkley Point C is often cited. Yet, as the National Audit Office’s report last year highlighted, it is the funding model that raises costs not the project itself. The cost of borrowing the capital to finance such big projects is extortionate when undertaken entirely in the private sector. That is why we are calling for government to take a direct stake in Moorside using the leverage of the state to de-risk the cost of borrowing thereby reducing costs. Many in the industry agree with us, as does the Labour Party which has pledged to use national investment to underwrite, and reduce, the costs of new nuclear.
If the government took a fifty per cent stake in the new nuclear programme it could reduce the costs of construction and result in a strike price 42% lower than that agreed for Hinkley Point C. It could also reduce strike prices lower that the average achieved by offshore wind in 2017. This is not just a case for subsidy. During the operational phase, the new build programme has the potential to support up to 34,000 high skilled jobs and up to £6 billion per year for UK plc. If government took a 50% stake in the whole programme, this would generate £1.35 in tax revenue gains for every £1 spent.
The UK urgently needs investment across our energy system whether that is in offshore wind, smart grids, energy efficiency, battery technology or new major projects such as Moorside. The time for dithering is over. Ten years on from Britain’s landmark Climate Change Act, we are still far from prepared to meet the challenges of a low-carbon economy. Government can no longer pass the buck. We need a new partnership whereby government, investors, unions, councils and communities work together to deliver the high-quality, low-carbon technology we need. First on the list of outstanding tasks is for Ministers is to provide a solution to keep the Moorside plans alive.
Sue Ferns is senior deputy general secretary of Prospect, the largest union for nuclear professionals