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How much new nuclear do we really need?

Written by Harry Spencer, Senior Account Manager in Madano’s Energy practice.

How much new nuclear do we really need?

Sometimes it’s the simplest questions which prove the hardest to answer.

While almost everyone in the energy sector agrees you need some new nuclear, in order to provide reliable, dispatchable low carbon energy, it has become clear that there is little agreement on how much.

This was brought into sharp relief by two publications last week: the National Infrastructure Commission’s (NIC) assessment of infrastructure need and National Grid’s Future Energy Scenarios report.

The NIC took the view that only one major nuclear new build project, in addition to Hinkley Point C, should get the green light in the next few years.

Sir John Armitt, the NIC’s chairman, said: “We’re suggesting it’s not necessary to rush ahead with nuclear. Because during the next 10 years we should get a lot more certainty about just how far we can rely on renewables.”

But National Grid offers a different view. They outline two alternative routes which would lead to the UK hitting its 2050 decarbonisation targets.

In one of these, there will need to be an additional 8GW of new nuclear capacity; in another, an additional 17GW. As Hinkley Point C is set to deliver 3.2GW, and is at the upper end in terms of size, these figures mean anything from at least another two new nuclear plants to another five – either way, much more than the NIC envisages.

This divergence in forecasting underlines the challenging nature of making energy policy, which requires policymakers to look as far as possible into an unpredictable future.

Unless you are in possession of a crystal ball, it is impossible to know which approach is best. But it is clear the Government’s view is closer to National Grid’s.

The Nuclear Sector Deal, released last month, saw the Government sacrifice a number of sacred policy cows in order to facilitate greater new nuclear build – most notably in its newfound willingness to “keep under consideration a range of financing options when deciding how to proceed” with future new nuclear projects, including the possibility of direct investment.

This shift in policy is directly at odds with the advice of the National Infrastructure Commission, and it will therefore be interesting to see how the Government responds to the NIC in its formal response in due course.

In so doing, the Government has calculated, either explicitly or implicitly, that the risk of ending up with excess nuclear capacity looks good in comparison to the risk of renewables not being in a position to fill the gap on their own.

They are probably right. And if they’re not, well…. no one will find out for 15 years anyway.

Madano works with clients across the energy sector, including in the nuclear sector.