Monday, 31 March 2014

Friends of the Earth: DECC assumes a tailing off in growth in renewables post 2020

In a damning and succinct demolition of the UK Government's case for state-aid for Hinkley C nuclear power station UK Friends of the Earth (FOE) has pointed out how in its central projections  'DECC assumes a tailing off in growth in renewables post 2020'. Such projections are out of step with reality around the world as installation of wind power and solar power accelerates and nuclear electricity production actually falls. However, the British Government appears to want to favour nuclear over renewables as it commits the consumer to paying massive bills for Hinkley C (from 2023)  but has no plans for any premium prices for renewables after 2020. It seems that the UK Government doesn't expect renewable costs to fall, but that nuclear costs will!

How very mid-20th century! Maybe the Brits will re-invent steam engines to run the railways next! (why stop at the 20th century in our 'back to the past' drive!)

There is an apparent difference between between the Coalition parties given that Nick Clegg is said to have 'vetoed' Conservative proposals for a moratorium on future onshore windfarm consents.  See . But given that the Coalition don't propose any funding for any renewable energy after 2020, it is debateable how much real difference there is - both agree, in effect, that there should only be plans for funding of nuclear power after 2020 in pursuit of low carbon targets.  The Government seems to want to ignore what is happening in todays energy technological trends and take us back to some rosy English summer of the 1950s when Britain appeared to lead the world in jet engines and nuclear power - sounds a bit like UKIP all over!

See the 2013 version of the 'World Nuclear Status Report' for details of the global nuclear decline versus rapid expansion of onshore wind and solar pv:

In a submission to the European Commission's investigation as to whether the British Government should be given permission to offer the Hinkley C developers £92.50 over 35 years with a £10 billion loan guarantee, FOE dismisses the notion that this could be justified on environmental grounds. They say that the Hinkley C deal 'represents extremely bad value for UK citizens' and point out that the cost of various renewable energy technologies will 'be far cheaper, and (costs) falling fast'  by the time that Hinkley C is deployed.

A full version of the text of FOE's submission to the European Commission is printed below. You can see the actual text on It was sent in by Simon Bullock, from FOE's Climate and Energy Campaign:

Friends of the Earth supports interventions in the electricity market to drive decarbonisation. This is appropriate because existing policy measures, such as the EUETS, are not sufficient to deliver climatechange objectives at either global, EU or UK levels. Existing measures are not compatible with a high chance  of avoiding the EU-agreed global target of preventing 2 degrees of global warming (i). In addition, fossil fuel  production and consumption continue to receive enormous implicit subsidies through not paying the full cost of the damage they incur on people and the environment, and explicit subsidies through, for example, tax breaks to develop shale gas and North Sea Oil and Gas (ii)
In this context, measures such as the Contract for Difference (CfD), feed-in-tariff mechanisms or other policy supports are an appropriate response for Member States to help ensure decarbonisation of economies compatible with tackling climate change. We see measures such as CfD as clearly being State Aid, and that State Aid is appropriate and necessary in many circumstances.
However, although nuclear power has lower carbon emissions than coal or gas power, we contend that there are two main reasons why measures which support nuclear power should not be compatible with the EU’s rules on state aid:
Other environmental impacts.
As section 8.1.1 of C(2013) 9073 points out, “while certain generation technologies emit less carbon emissions, their impact on the environment might nonetheless be considered substantial”. Nuclear generation entails the production of radioactive waste which needs to be managed and stored for many centuries; there is still no robust plan for how that waste can be safely managed on such timescales. There are also small risks of very high impact events – such as at Fukushima and Chernobyl. We contend that these are unnecessary impacts and risks given that there are multiple other pathways to decarbonisation, at similar or lower cost, which do not involve new-build nuclear power. The environmental grounds for providing State Aid do not therefore in our view apply to nuclear power.
 Mature technology
Subsidy or State Aid should not exist indefinitely. In the UK, the subsidy given to solar power is falling rapidly – reflecting economies of scale, and general falling costs. However nuclear power is a six decade-old technology whose costs are still not falling (iii), and which is propped up by multiple existing subsidies such as limited liabilities for nuclear disasters and looking after nuclear waste, even before CfD is considered. The amount of subsidy available overall is limited – it should go to technologies which are on a down-ward cost curve, not technologies which require 35 year guaranteed prices six decades after starting commercial operation. We also dispute the UK Government’s claims that support for nuclear energy supports the EU common objectives of decarbonisation, security of supply and diversity of generation:
In the UK, the amount of new-build renewables plus nuclear is limited by the Treasury’s Levy Control Framework (LCF). If Hinkley is built, then from 2023 (or later) it will be competing directly with renewable generation for that limited pot. DECC’s analysis and that of others show multiple routes to decarbonisation – these objectives can be met with more renewables and less nuclear. We note too that DECC’s central projection for electricity generation to 2030 assumes a tailing off in growth in renewables post 2020, and a rapid growth in nuclear post 2025 (iv). The renewables projection merely reflects the lack of agreed policy on renewables post 2020 – it would be more realistic to assume continued growth in UK renewables capacity on a similar or faster growth trajectory, given the falling costs of the main renewable technologies.
Security of supply
It is suggested that new nuclear helps with falling capacity margins, and the UK being able to withstand external shocks. However, falling capacity margins will occur before 2020; new nuclear cannot address this, not being ready until 2023 at the earliest. In addition, nuclear is associated with unpredictable shocks which require large amounts of back-up (in contrast to the variability of wind which is to a large degree predictable in advance). For example, in 2012, the UK on at least three occasions saw sudden drops of 600-1000MW as nuclear reactors had to shut down quickly (v).
DECC’s 2050 pathway calculator (vi) allows scenario-planning to see whether the electricity system could cope with a 5 day winter low-pressure system (when wind and solar generation would be low). No-new-nuclear scenarios deal with such situations with a combination of demand-side response, interconnection with Europe, increased electricity storage, and reliance on back-up gas-fired power plants. In our view, the UK  Government is not putting enough effort into the first three of these options.
Diversity of generation
To 2030, there would still be some nuclear on the UK power system, while it is gradually phased out. By then, the UK could have a very diverse power system compared with the current mix which is heavily reliant on just two technologies – coal and gas. A decarbonised UK power system by 2030, without new nuclear, would rely on a very diverse mix of 7-10 renewable technologies, some gas, some CCS and a focus on demand-side response, electricity efficiency and greater interconnection with Europe(vii). New nuclear would if anything mean a less diverse power system, as it crowds out a wider range of renewable technologies.
Finally, we believe that the CfD for nuclear represents extremely bad value for money for UK citizens. By the time Hinkley is in operation, solar and on-shore wind will be far cheaper, and falling fast, and it is likely that off-shore wind will be in a similar position. The index-linked 35 year price guarantees, plus loan guarantees, will be bad value in 2023; it will become worse with every passing year.

i Requires at least 80%+ cuts in EU by 2030. Friends of the Earth, 2010. Reckless Gamblers. December
ii Friends of the Earth, 2013. Fossil fuel tax breaks in the UK. February.
iii ICEPT, 2012. Costs estimates of nuclear power in the UK. ICEPT Working paper.
iv DECC, 2013. Updated energy and emissions projections. September. Annex E
v References in Friends of the Earth, 2012. Wind power – helping keep the lights on. November.
vi DECC. 2050 calculator.

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