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Is Britain on track for an energy crisis?

The cancelling of two nuclear power stations will force the government to invest into alternative forms of energy such as wind farms.

Photo Credit: T J Blackwell

Hitachi, the Japanese giant,  has cancelled plans for a £16bn nuclear power station in Wylfa, Wales, due to fears of rising production costs amid Brexit uncertainty. Hitachi had been in talks with the UK government since June over funding for the project. However, agreeable terms could not be reached despite the UK government offering to take a one-third equity stake in the project. The Wylfa power station on Anglesey was estimated to power around five million homes. According to independent research, the project was expected to bring in around £5.7bn to the Welsh economy and the construction stage was set to create nearly 9 000 jobs.

The decision to withdraw from the project comes just months after fellow Japanese tech giant Toshiba scrapped their plans to build a power plant in Cumbria, North West England. Toshiba pulled out of the project due to the  inability to find a buyer. It was estimated the Toshiba Cumbria plant would have provided around seven per cent of UK energy. Hitachi pulling out of the deal spells disaster for the UK government’s objective to create a self-sustaining energy supply. The dismissal of the project will also mean the UK will struggle to meet its climate change obligations. Currently the UK is relying on outdated turbines and coal energy to make up domestic energy supply. Currently, the UK has 15 reactors generating around 21 per cent of its electricity.

The cancelling of two nuclear power stations will force the  government to invest into alternative forms of energy such as wind farms. Some may view this as a positive, due to the fact that the cost of offshore wind farms has significantly reduced to around £57.5 per megawatt – compared to the price of £92.5 per megawatt at Hinkley Point C. However, as wind farms are a highly unpredictable source of energy, they require back up stores, thus increasing the cost of maintenance. It was estimated that the Wylfa power station would produce energy for only £75 per megawatt, making it one of the cheapest sources of energy in the UK. At this moment it is unclear how the UK government plans to counteract the loss of Wylfa energy; however, it is likely Britons may face a rise in gas and electric prices in the near future.

Tim Yea labels the cancelling of the project a “huge disappointment and a crushing blow to hopes of a revival of the UK nuclear energy industry”. But not all are as disappointed over the cancellation, many believe that the government’s potential £5bn-plus public stake in the project was far too high. This  was also the case with the Hinkley Point C plant - the project was under heavy scrutiny due to the vast amounts of government subsidies awarded to the project. There are also fears that the cancelling of the project could mean a brain drain out of North Wales, as young engineers seek out other opportunities. Of six nuclear power projects, three have been abandoned and two are currently struggling to get the bureaucratic green light. Only Hinkley Point C has begun construction, although eight years behind schedule. The UK will now significantly struggle to reach its objective of increasing domestic energy supplies  from 15 per cent to 30 per cent.

This objective will be made even harder with the expected shutdown of the Sizewell B plant in 2035. Hitachi have said the decision to withdraw from the project would cost around 300bn yen (£2.1bn). Since Japanese investors have backed out on two occasions, Britain will have nowhere else to turn other than China. China is already a part investor in the new Hinkley Point C project and this did not come without fears and animosity. Security experts were worried the Chinese could build weaknesses into computer systems which would give them the ability to completely shut down UK energy production, and so it was heavily argued against allowing a hostile state access to critical infrastructure. As Chinese investment may not be a viable option, the UK’s domestic nuclear energy status will remain unclear.

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