‘Almost inevitable’ UK will burn more gas and import more energy after Hinkley nuclear plant delayed, experts warn
The fresh delays to Hinkley Point C nuclear power station will “very likely” force the UK to burn more gas and import more energy than expected, analysts have told Sky News.
The already delayed project had been due to provide 7% of the UK’s electricity from 2027, until it was pushed back again last week by another 2-4 years.
The likely uptick in dirtier gas power would also add more greenhouse gases just as the UK is trying to slash them by 2030, the industry voices warned.
The UK government did not deny that gas and energy imports will likely increase, but insisted climate targets would not suffer as a result.
An energy department spokesperson said: “Hinkley Point C will serve Britain until well into the next century, making an important contribution to the UK’s net zero commitments.”
Professor Rob Gross, director of UK Energy Research Centre (UKERC), said the delays to Hinkley made increasing gas burn in the meantime “almost inevitable”.
Wind or solar are unlikely to plug the gap because the UK is already “struggling to connect all the renewables schemes already in the pipeline for 2027/28″, he said.
Glenn Rickson, who analyses the UK power sector for S&P Global Commodity Insights, also said it is “almost inevitable” that UK gas generation “will be higher” than if Hinkley had fired up in 2027.
He added: “Albeit well below current levels, mostly due to increased wind generation in the meantime.”
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UK’s electricity grid problem
Increased energy imports and emissions likely in short term
But the “the single biggest change may be an increased pull on power imports from the UK’s neighbours”, said Mr Rickson.
Prof Gross also said the UK “might import more power” by increasing the use of undersea electricity cables known as interconnectors.
The extra electricity imports might come from nuclear in France, wind in Denmark or hydro in Norway, but it could also mean more from gas generation too.
“Certainly the net impacts will be to lift overall fossil fuel generation, whether that’s in the UK or elsewhere in Europe,” said Mr Rickson.
With more fossil fuel generation comes more emissions of greenhouse gases, which governments are trying to cut in order to reign in climate change.
The prime minister Rishi Sunak in September watered down some climate measures on the basis the UK was on track to meet its target to cut emissions by 68% by 2030.
But the country is now missing an important part of that plan – Hinkley was due to provide 3.2GW of clean power from 2027.
That’s about 7% of the UK’s electricity, and enough to power six million homes.
“The most significant impact from a UK perspective will be higher greenhouse emissions,” said Robert Sansom, energy consultant for the Institution of Engineering and Technology.
Tom Greatrex, chief executive of business group the Nuclear industry Association, said: “Without more nuclear and renewables, it’s inevitable that we’ll burn more gas.”
“Hinkley will produce clean, reliable power for around 80 years, stretching into the next century, and alongside other stations it will complement wind and solar with a baseload of power available whatever the weather.”
UK plans to ‘revive’ nuclear power
Once upon a time Hinkley was slated to produce power from 2017, but it has been plagued by setbacks and delays, as have two similar plants in Finland and France.
Operator EDF blames Hinkley’s woes on inflation, the COVID-19 pandemic, Brexit and reportedly thousands of extra additional design changes required by the UK regulator.
The government last month set out plans to radically increase the UK’s nuclear capacity and simplify and accelerate the process.
Industry says future projects can be built faster and cheaper if projects are less spread out in time, and thanks to what is learned from building Hinkley.
The UK hasn’t built any new nuclear projects since Sizewell B was finished in 1995.
Eight of its 9 reactors are due to retire by 2028, and have already had their lives extended, meaning they are unlikely to plug the gap left by Hinkley either.
A spokesperson for the energy security and net zero department said: “We have the right energy mix to meet our net zero targets – investing in renewables, building the five largest operational offshore wind farms in the world, and supporting the revival of nuclear power.”
Prices in the UK rose even faster than expected last month, reaching the highest level in 18 months, according to official figures.
Inflation hit 3.8% in July, data from the Office for National Statistics (ONS) showed.
Not since January 2024 have prices risen as fast.
It’s up from 3.6% in June and is anticipated to reach 4% by the end of the year.
Economists polled by Reuters had only been expecting a 3.6% rise.
More unwelcome news is contained elsewhere in the ONS’s data.
Train tickets
Another metric of inflation used by government to set rail fare rises, the retail price index, came in at 4.8%.
It means train tickets could go up 5.8% next year, depending on how the government calculate the increase.
This year, the rise was one percentage point above the retail price index measure of inflation.
These regulated fares account for about half of rail journeys.
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Inflation up by more than expected
Why?
Inflation rose so much due to higher transport costs, mostly from air fares due to the school holidays, as well as from fuel and food.
Petrol and diesel were more expensive in July this year compared to last, which made journeys pricier.
Read more:
Energy bills expected to rise from October – despite previous forecasts
Something odd is happening in the markets – with no compelling explanation
Coffee, orange juice, meat and chocolate were among the items with the highest price rises, the ONS said. It contributed to food inflation of 4.9%.
What does it mean for interest rates?
Another measure of inflation that’s closely watched by rate setters at the Bank of England rose above expectations.
Core inflation – which measures price rises without volatile food and energy costs – rose to 3.8%. It had been forecast to remain at 3.7%.
It’s not good news for interest rates and for anyone looking to refix their mortgage, as the Bank’s target for inflation is 2%.
Whether or not there’ll be another cut this year is hotly debated, but at present, traders expect no more this year, according to data from the London Stock Exchange Group (LSEG).
Economists at Capital Economics anticipate a cut in November, while the National Institute of Economic and Social Research (NIESR) expect one more by the end of the year.
Analysts at Pantheon Macroeconomics forecast no change in the base interest rate.
Political response
Responding to the news, Chancellor Rachel Reeves said:
“We have taken the decisions needed to stabilise the public finances, and we’re a long way from the double-digit inflation we saw under the previous government, but there’s more to do to ease the cost of living.”
Shadow chancellor and Conservative Mel Stride said, “Labour’s choices to tax jobs and ramp up borrowing are pushing up costs and stoking inflation. And the Chancellor is gearing up to do it all over again in the autumn.”
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