UK: Strike Price Agreed As Hinkley Challenges Loom

Last Updated: 27 October 2013
Article by Angus Walker

Today's entry reports on the agreement of a 'strike price' for nuclear energy and the latest on judicial reviews.

In order to encourage electricity generation of different types, the government is offering guaranteed prices for electricity generated by various different sources, to absorb fluctuations in market prices and price different types more attractively.

Back in June, strike prices were announced for 13 types of electricity generation, and today the government has finally announced the figure for the proposed Hinkley Point C power station, for which consent was granted under the Planning Act 2008 in March. The price is £89.50 per megawatt if EDF also bring forward Sizewell C in Suffolk, and £92.50 if it doesn't. That would seem to be a perverse incentive for EDF, but presumably their economies of scale would be greater than £3 per megawatt. The price is indexed-linked and is to last for 35 years, but will be reviewed after 7 1/2, 15 and 25 years.

The announcement is here. It is accompanied by a graphic showing that while Hinkley Point C will take up 430 acres, an equivalent solar farm would take up 130,000 acres and an onshore wind farm 250,000 acres - a bit of a non-sequitur since it is not referred to in the text and in any event the strike price for solar and offshore wind is higher.

Here is a table of the different strike prices with nuclear added, compared with the current cost of electricity - you saw it here first!

Generation type £ per megawatt
Current wholesale price of electricity 47
Landfill gas 65
Sewage gas 65
Nuclear (if Hinkley and Sizewell) 89.5
Energy from waste (with Combined Heat and Power) 90
Nuclear (if just Hinkley) 92.5
Hydro 95
Onshore wind 100
Biomass conversion 105
Dedicated biomass (with CHP) 120
Geothermal 125
Large solar photo-voltaic 125
Anaerobic digestion 145
Advanced conversion technologies 155
Offshore wind 155
Tidal stream 305
Wave 305

Legal challenges

Meanwhile, on 5 December the High Court will be hearing two judicial review challenges against the decision to grant development consent for Hinkley Point C on 19 March.

First, given that a judgment is unlikely until the new year, a 10-month delay is unhelpful if, as the Overarching Energy National Policy Statement says, all forms of electricity generation are urgently needed. Given that a claim must be made in six weeks under the Planning Act, the vast majority of this time has been spent since the claim arrived at the court. There is currently a consultation on reform of judicial review that includes proposals to establish a specialist planning tribunal, so the government is certainly alive to this point.

In terms of what the claims are about, briefly, An Taisce, the Irish counterpart to the National Trust, has challenged the decision on the ground that the UK government should have consulted the Irish government before the application was made given the potential for 'transboundary effects', and Greenpeace has challenged the decision on the basis that the government should not have given consent when there was no prospect for the long-term storage of nuclear waste in play. From what I have heard I don't expect either claim to succeed.

The Observer had an article on the An Taisce claim yesterday. The organisation said that this was a wider issue than just Hinkley, and it was even more concerned about a proposed new plant at Wylfa on Anglesey, closer to Ireland than Hinkley. There has been no consultation of foreign governments on that project so far - the only ones where consultation has occurred are 14 offshore wind farms and one harbour project. Furthermore no nuclear project other than Hinkley has even started pre-application consultation yet, but perhaps today's announcement will encourage other projects to come forward. There is also a consultation on a revised process for long-term nuclear waste disposal, so there is development on that front.

While today is significant for agreement being reached between the government and EDF Energy on financial issues, the project must wait another three months or so - or longer if there are appeals - before planning issues are fully dealt with and spades can be put in the ground.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Angus Walker
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