A range of strike prices has been given and obviously, the greater the cost, the greater the return required. Hinkley C has been settled initially at £92.50, but for Swansea it seems that a figure of £168 is being discussed, making wave power almost double the cost of nuclear! It’s unlikely that this will be the final price, and perhaps something closer to £140 will be agreed, but a figure will need to be in place before investors sign up.
In addition to these proposed developments, two smaller gas-fired power stations are to be developed, one also in Wales at Hirwaun and the other across the country in Suffolk at Eye. Each will have a capacity of 300MW and so will not be anywhere near the scale of Hinkley. What is interesting about them is that they are geared up as “peaking” stations, which basically means they will only be used when needed, such as when the wind drops.
Traditionally, the UK, like many countries, has based its requirement on a few very large power stations. Although these will still be developed, it is likely that greater emphasis will be placed on smaller, more localised generation.
Each one of these gas projects will cost around £200m. During the build time of three to four years, they will provide jobs for 150 or so but once development has been completed, the numbers required to run the stations will be greatly reduced. Locally, there may be concern at the environmental impact of a gas-fired power station near residential areas.
Gas is the way ahead for many industries. Oil has been phased out, and coal is following unless Carbon Capture and Storage (CCS) installations can be developed to save it. Gas is 35-50% as “dirty” as coal and will be hit accordingly by the carbon tax that it attracts. Nevertheless, with more renewable energy on the grid, support has to come from continuously available sources. If gas prices remain low beyond the completion date of either of these new stations, we can expect to see them arrive before the new technologies or new nuclear. Despite the added costs of using gas-fired plants to support renewable generation (capacity payments), the short and medium term future for UK generation looks like another Dash for Gas.
Written By- John Hall
