Following this morning’s announcement by Chancellor George Osborne that the UK will guarantee a £2bn deal under which China will invest in the Hinkley Point nuclear power station, Inenco’s Principal Risk Manager Matt Osborne said:
“New nuclear will have to play an important role in the UK’s future energy mix with an increasing amount of intermittent renewable power on the system, and the market has been increasingly anxious about the delays to the Hinkley Point project and its implications on future security of supply. The agreement to underwrite a £2 billion loan may well secure the investment decision to build a new nuclear plant at Hinkley Point, but this security of supply comes at a price. Hinkley Point has already secured a high subsidy, agreed before the price of oil dropped substantially with a corresponding reduction in power prices*. With the recent reductions in support for renewables, now is the time to review the total economic case for nuclear, to avoid locking UK taxpayers into an expensive deal that will leave them overpaying for the plant for the next three decades”.
*Power prices have fallen 21% or £11.79MWh since the strike price was announced in October 2013, based on a weighted average of the front two seasons. Brent oil prices have dropped from $110 to $48/barrel.