Nuclear plants face shutdown over tax on windfalls

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By Paul Homewood


Two nuclear power stations crucial to keeping Britain’s lights on risk being closed next year as a result of Jeremy Hunt’s windfall tax, their French owner warns today.

EDF, which operates all five of the country’s serving nuclear plants, said the Chancellor’s raid on power producers will make it harder to keep the ageing Heysham 1 and Hartlepool stations open as long as hoped.

It would mean the sites close in March 2024, potentially removing the “cushion” of spare capacity used by the National Grid to avoid blackouts and reducing nuclear power generation in Britain to its lowest level since the 1960s.

Mr. Hunt’s windfall tax levy on electricity generators, which was announced in the Autumn Statement in November, comes into force today. Conservative MPs have warned that the raid will reduce investment in the UK’s energy market at a time when the country needs dependable energy sources to balance more intermittent wind and solar power.

The two nuclear stations supply more than two gigawatts of electricity to the grid, typically providing enough power for four million homes per year and around four per cent of the power the UK uses on a cold day.

Rachael Glaving, commercial director of generation at EDF UK, which is owned by the French state, said the windfall tax will damage the business case for the facilities at a time when inflation is already pushing up other costs.

She told The Telegraph: “We accept there’s definitely a need for a levy of some kind – you’ve got to break the link between really high gas prices and the impact they have on power prices.

“But of course that’s going to factor into the business case of life extension and we’ll have to take that [the windfall tax] into consideration. It’s not going to make it easier.

“We will review the technical aspects but we also need a business case to support any life extension, so that has to be factored in as well, and we will have to work out what the right balance is between those two things.”

Experts last night warned that closing the two nuclear power stations would mostly wipe out the four-gigawatt spare capacity the National Grid maintains to avoid blackouts on still, overcast days when wind and solar generation is limited.

Kathryn Porter, an energy analyst at consultancy Watt Logic, said: “Going into winter 2024, we will lose all the coal power stations and could also lose two nuclear plants, so we will be losing roughly the same amount of power as we currently have in spare capacity now.

“We will pretty much be replacing it with wind – and that is replacing readily dispatchable generation with intermittent generation.

“So if you have periods of still winter weather where wind output drops, then you could be in a situation where you really struggle to keep the lights on.”

Two of EDF’s fleet in the UK have already closed this year due to age, making it more difficult for National Grid to cope with power shortages.

Heysham 1 in Lancashire and Hartlepool are meant to close in March 2024 because they are getting old, but EDF is considering a two-year extension to their lifespan to ease the energy crunch.

The move is regarded as feasible following recent safety inspections, although it would depend on regulatory sign-off.

EDF is expected to take a decision on Heysham 1 and Hartlepool within the next two months.

I don’t place too much store in EDF’s threats. If market prices had stayed around £50/MWh, would they have gone ahead with the extension anyway?

The real issue of course is the energy crunch, whether it hits in 2024 or two years later. As the Telegraph note, Heysham and Hartlepool have 2GW of capacity, while the 3GW of remaining coal capacity at West Burton and Ratcliff will also disappear next year, as the government was delighted to brag about two years ago: