Tuesday, 28 October 2014

If Hinkley C is cheaper than wind power why does it need loan guarantees?

As the pro-nuclear establishment is now keen to justify EU state aid for Hinkley C it is trying to argue, against the forces of reality, that the deal makes nuclear power cheaper than onshore wind. Hinkley C is getting £92.50 for 35 years with 65 per cent (£10 billion) loan guarantees. Onshore wind, from 2017, is getting at most £90 per MWh for 15 years with no loan guarantees. How can Hinkley C possibly be cheaper?

 Look at the further details and the notion that nuclear is cheaper looks even shakier. The Department of Energy and Climate Change (DECC) is conducting 'auctions' for wind power contracts under electricity market reform (EMR) which means that in practice the windfarms getting contracts will be paid less than £90 per MWh. If these schemes got loan guarantees then they would be even cheaper since the cost of borrowing would be much less. And then there is the difference in contract lengths, (15 versus 35 years)  for which the justifications are dubious. See my earlier blog post http://realfeed-intariffs.blogspot.co.uk/2013/10/wind-power-history-blows-away-ed-daveys.html

Of course in reality the likely cost overruns for Hinkley C will make the plant in practice rather more expensive than this 'deal' implies, and clauses in the contract that allow the Government to 'vary' prices paid to the nuclear operators will most likely be invoked to give the operators more money than the current 'deal'. In addition the British taxpayer is highly likely to have to pay out on the loan guarantees. The European Commission has done absolutely nothing to protect British electricity consumers and taxpayers from these problems. Far from protecting consumers, the whole point of the deal is to protect the developers. They know that once the project is started the UK Government will feel obliged to make sure the project is completed. See my post at http://realfeed-intariffs.blogspot.co.uk/2014/10/european-commission-issues-smokescreen.html

I hope to see the day that Hinkley C is completed. Now that is not because I want to see the plant built (far from it), but simply because I hope to live for many years longer!

So.......Its not just that onshore wind is cheaper than nuclear power, there's just no comparison between them.

No comments:

Post a Comment