‘Cheap as chips’ flexibility poses ‘huge threat’ to nuclear

Cheap flexibility from storage, demand-side response and distributed generation poses a “huge threat” to the nuclear industry, according to former energy secretary Ed Davey.

Speaking at a conference held by Aurora Energy Research in London yesterday (11 October), Davey said the falling costs of such technologies raise “serious questions” about the government’s pursuit of new nuclear plants.

“There’s no doubt storage and flexibility pose a huge threat to nuclear industry,” he told the audience.

“Nukes are expensive; take a hell of a long time to build. In ten years, where are we going to be with storage and flexibility?

“I think it’s going to be cheap as chips and have variations we don’t even know about today, because so much is evolving. The energy revolution is going apace.”

“That has to ask serious questions of the nuclear strategy which the government is pursuing”.

Davey hailed the government and Ofgem’s smart systems and flexibility plan as the “best thing” he’d seen in terms of policy since leaving office in 2015.

However, he added: “I don’t see much movement. And I’m not saying it’s because it’s easy… But we really need to be moving forward on that to give people better markets and contracts that are more investible… I think we could do a lot better.”

He continued: “If you had better policy you might be able to answer this question of do we keep a big centralised system, investing in lots of big centralised assets, or do we have more of a hybrid system.

“And we’ve gone to a hybrid system a little bit without thinking it all through but for good reasons. Solar took off much quicker than people thought, for example, and the capacity market brought on peakers which weren’t really in the picture.

“We’ve now got that hybrid system and my worry is no one’s really thinking that through strategically.”

Davey also raised concerns over the influence of large generators on policy and regulatory decisions: “My worry is that the lobbying power of the big centralised generators… is a bit bigger than for those of us who think a lot of the future is in the decentralised sector.

“If I have political message to people, it’s to really think that through because I think we’ve seen in some of the network code debates and elsewhere a politics which is very much in favour of centralised generators.”

Speaking to Utility Week in early 2017, the chief executive of UK Power Reserve, Tim Emrich, accused the Connection and Use of System panel of being unduly influenced by incumbents after the industry body recommended drastic cuts to the triad avoidance payments available to small-scale distributed generators.

The changes were approved by Ofgem later in the year.