Hinkley Point B

Beyond Hinkley

The Hinkley Point project is understandably controversial, argues Kirsty Gogan, but nuclear innovation could yet sit at the heart of the government’s industrial strategy.

 Kirsty Gogan, Energy for Humanity
13 October 2016


President Obama’s essay for the Economist this month featured a striking chart showing the dramatic decline in labour productivity across nearly all advanced economies from 2005-15, compared with the decade before.

Of all the advanced countries, Britain has fallen furthest, and hardest. Obama writes: “A major source of the recent productivity slowdown… includes a fixation on deficits at the expense of the deferred maintenance bills we are passing to our children, particularly for infrastructure.”

Britain remained committed to deficit cuts long after the “austerian” ideology had collapsed everywhere else. The hallmark of Osborne-omics was Britain’s unparalleled decline in labour productivity, which may have contributed to the hardship and anger that fuelled Brexit.

Theresa May’s new government appears to be paying attention to the forces at work here, her tanks firmly planted on Labour’s neglected centre ground lawn, with a new focus on a more interventionist industrial strategy. May’s Conference speech last week highlighted “the need to make big decisions on – and invest in – our infrastructure. The need to rebalance the economy across sectors and areas in order to spread wealth and prosperity around the country”.

The decision on Hinkley Point was taken within this context. It is not a clean decision. Yes, for the South West region and beyond (where £2.4bn has already been invested by EDF Energy in preparation for the build) construction and operation will deliver jobs, reboot the supply chain and increase the state of readiness for further investment in infrastructure. Yes, the plant will likely operate for 100 years, saving nine million tons of CO2 every year, generating clean reliable power, with a capacity factor of more than 90 per cent.

And even though renewables may well be cheaper than Hinkley by 2025, “calculations by the Committee on Climate Change show that it is unlikely that demand for electricity in the UK could be supplied entirely by renewables by that date”. Compared to the alternatives, even Hinkley is likely to be cost-effective in the long run, whilst also reducing uncertainty about the ability of the UK to meet carbon reduction targets.

But, already, it looks like an antique. Will it be possible to standardise and duplicate such a behemoth reactor design, making it scalable to solve our national energy security needs (beyond the seven per cent it will deliver), let alone contribute towards the global challenges of clean energy access within urgent timescales? The EPR is a high cost outlier compared to new build elsewhere, and a world apart from projects in South Korea or China. Many people have a feeling of dread with the prospect of delays, cost increases and who knows what difficulties for a project of this complexity, not to mention the associated impact on communities around the Olympic scale construction site suffering years of dust and disruption. It seems like a heavy price to pay.

All the same, had the decision gone the other way, it would have been devastating for overall confidence in the nuclear new build programme and investors more generally in the UK. Hinkley now needs to move forward as fast and successfully as possible, pumping investment into regions outside the South East, rebooting the skills and supply chain. The UK then must accelerate as soon as possible into a new era of modern nuclear development.

May’s determination to reset the economy in the wake of Brexit includes “identifying industries that are of strategic value to our economy and supporting and promoting them through policies on trade, tax, infrastructure, skills, training, and research and development.”

Such facilitative action is exactly what is needed, with an eye on the future direction of travel for critical sectors like including clean electricity generation. Government’s priority should be steering a steady course towards national energy security, decarbonisation and price stability, whilst supporting small and medium sized businesses innovating to grow a rich ecosystem of engineering companies and suppliers in this sector.

As Obama points out, “Too many physicists and engineers spend their careers shifting money around in the financial sector, instead of applying their talents to innovating in the real economy”.

New nuclear developers should focus less on relatively small government grants that will not fully fund first of a kind demonstration plants for novel reactors (such as with the on-going SMR competition). Far better to focus on developing a new business model that stacks up for customers and investors, with appropriate intervention from government to create the right regulatory and market framework.

Strategic priorities for the nuclear sector, beyond Hinkley, are to tackle construction delay; cost over-runs; slow build rate; and high financing costs. The future lies in modular build and shipyard assembly of mass-produced units that can be manufactured and shipped to sites for installation rather than custom-built, thereby speeding up construction times and lowering direct and financing costs. This has less to do with science or technology and more to do new business models designed to accelerate commercialization of climate solutions, at scale, within mid-century timescales.

From the global geo-political perspective, the race is very much on to determine which country will dominate global strategic infrastructure in this century. It is this national security dimension that is largely motivating the United States to ramp up efforts to accelerate the commercialisation of advanced reactors. Right now, China and Russia are ahead of the pack, so the UK and US needs to get its act together if they want a seat at the top table.


This article was originally posted on Business Green where Kirsty Gogan is an irregular columnist.