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What’s next for nuclear?

The development of Hinkley Point C has been one of the more controversial elements of the UK’s energy policy in recent years, with delays and escalating expenditure causing some to question whether the new reactors will be worth the cost to the taxpayer. But now that the cost of energy from offshore wind is set to be lower than the cost of new nuclear power, many have voiced concerns about the future of nuclear in the UK.

With the news that the Government has pledged a further £557m to green energy projects in the next Contracts for Difference (CfD) auction in Spring 2019, does nuclear energy have a place in our future energy mix? Are renewables a viable alternative? We take a look…

Price wars

Fresh doubts have arisen over the future of nuclear since the latest auction for renewable subsidies, which took place in September. Both Ørsted and EDP have agreed to build offshore windfarms for a guaranteed price of £57.50/MWh, less than half of the £119.89/MWh that was awarded to windfarms in the last auction.

There are several reasons for the fall in offshore wind costs; developers are using increasingly bigger and more efficient turbines, installation costs are falling and the sector is seen to be lower risk than it was just a few years ago, so the cost of capital is lower. And, as the majority of the equipment needed for wind farms is produced in the UK, these prices are also unlikely to be affected by Brexit.

This poses a problem for new nuclear, because these prices are significantly cheaper than the price for Hinkley Point C, which is £92.50/MWh. The UK’s first new nuclear power plant since the 1990s, the budget for the Hinkley Point project has tripled. It’s now estimated that it will cost around £24bn for 3.2GW of capacity, which makes it twice as expensive as the last nuclear power plant built in the UK, Sizewell B, which cost around £4.1bn for 1.2GW of capacity (at 2017 prices). It’s also set to go live eight years later than originally planned, which shows the challenging nature of creating new nuclear capacity. And while the cost of renewables is falling, increasingly rigorous safety regulations are raising nuclear prices.

What’s next?

With the outcome of the latest auction being lauded as a turning point for renewables, and official organisations such as the National Audit Office (NAO) describing Hinkley Point C as ‘risky and expensive’, it’s fair to say that there are challenges facing the nuclear industry in the UK. When it comes to the UK’s energy mix, however, it’s likely that nuclear will continue to have a role to play for decades to come.

It’s clear that the Government sees nuclear as an important part of our future energy strategy – Hinkley Point C is designed to provide 7% of the UK’s total energy needs for the next 60 years, and there are further plans for new nuclear build projects, such as Sizewell C and Bradwell B. Additionally, the Clean Growth Strategy, which was released last week, is continuing support for new nuclear.

With coal-fired plants set to close by 2025, and our current nuclear plants reaching the end of their operational lives, we will need to fill the generation gap that will be created in their absence. While renewables like offshore wind and solar are becoming increasingly cost-efficient, they are intermittent sources of energy. We’ll need to invest in energy storage in order to manage this intermittency, which will increase the true cost of renewables, bringing it closer to the cost of nuclear. As a more reliable energy source, nuclear will also play a key part in balancing the grid as renewables become a larger part of our energy mix.

In order to remain commercially viable, however, nuclear costs will need to be reduced. This could be achieved by the Government taking an active stake in new nuclear projects – the NAO said that it should have considered sharing the construction risks of Hinkley Point C with EDF and CDN, for example. The Department for Business, Energy & Industrial Strategy (BEIS) has announced its intentions to take ‘a special share’ in all future nuclear builds.

Looking to the future

At Inenco, we use our experience and industry knowledge to help our customers to stay one step ahead in the ever-changing world of energy. From the future of nuclear in the UK to emerging energy technologies to look out for, we’re here to advise you on how to create a future-proof energy strategy – give us a call today on 08451 46 36 26 or email We’re also keen to hear your thoughts on the challenges that are facing the energy industry and how we can solve them – head over to our Innovation Hub to have your say!