Boris may not need the nuclear option to reach net zero

The proposal to use the regulated asset base model to fund new nuclear projects was announced this week. SSE chief executive Alistair Phillips-Davies writes exclusively for Utility Week about why he believes the government should now be showing the same level of support for renewable electricity if it is serious about reaching net-zero emissions by 2050.

He could be forgiven for not having noticed it, but just hours before the announcement of Boris Johnson as the new Conservative leader, the UK Government published documents as part of efforts towards reaching net-zero carbon emissions by 2050. The centre piece was a new way of funding nuclear power stations which regulates developers’ costs and returns but funds the projects via customers’ bills.

Nuclear power stations have made a good contribution to meeting the country’s energy needs by providing low carbon electricity.  But they have such significant upfront costs they have become near-impossible to finance in private markets. Therefore finding a new way of funding them has some appeal, but we have to be realistic about the contribution that this technology can make at present costs, because we have far better options now available to achieve net-zero emissions without relying on nuclear at prohibitive prices.

Britain is a world leader in renewable electricity and the cost of an offshore wind farm has more than halved in the last decade. Onshore wind and solar are cheaper still. Thanks to government and industry efforts the renewables industry is vibrant in Britain.  In fact there is a queue of offshore wind projects competing in a series of government auctions this summer for energy contracts. Bizarrely the amount of projects to be allowed a contract is being constrained by a cap, despite the fact that offshore projects would be much cheaper than new nuclear power stations. Accelerating net zero efforts by allowing more cheap offshore projects under the cap should be the first act for a new Secretary of State wanting to make a real impact.

Longer term, reaching net zero will require the electrification of heat and transport and therefore significant new low carbon generating capacity. We will need an end state of zero carbon energy, and a transition that allows significant low carbon energy to be built whilst keeping the lights on. If this is to be realised at any reasonable cost it should be renewables-led, further developing the UK’s capabilities in this area to export worldwide.

Of course, we will need some system diversity and flexibility to complement renewables. The Hinkley Point saga has demonstrated that delivering new nuclear power stations is extraordinarily complex, eye-wateringly expensive, hugely time-consuming and, while it clearly provides diversity it does not provide flexibility to the system. Therefore, I would like to see nuclear make a contribution, but not at any cost. Along with other technologies such as storage (pumped hydro or batteries), or gas-fired power stations running with ccs or hydrogen, we need to develop options but should not commit if the price is too high.

So, government is right to look at funding options for nuclear, but this is no more important than funding models for ccs, low carbon gases, or even electric vehicle infrastructure, which could help drive the rollout of smart charging. Nuclear can play a role if the costs come down, but only if they do come down. Renewables make practical and economic sense and we know from polling that the low cost and environmental credentials of renewable energy means it is popular with the public in a way that nuclear has never been. Renewables are a far more attractive option for a new prime minister to get behind.