The need for new nuclear investment to provide clean baseload for the future energy system has been “overplayed”, according to Dong Energy’s UK managing director Matthew Wright.
In an interview with Utility Week, the former chief executive of Southern Water said that concerns about the limitations of intermittent renewable power will “become less of an issue” in the future as distributed demand side flexibility technologies mature.
He also insisted that the increasing operational effectiveness of offshore windfarms, especially in the North Sea, mean that these “intermittent” sources of power can achieve load factors equivalent to those which characterise conventional baseload power sources.
Wright’s comments come in the wake of renewed debate over the relative cost of new nuclear power compared to offshore wind, triggered by the record low prices achieved by the latter in the recent contracts for difference (CfD) auction.
The September auction results showed offshore wind developers securing contacts at half the price seen two years previously. Dong – now known as Orsted – secured a strike price of £57.50 for the build of Hornsea 2, a 1.8GW wind farm off the cost of North East England.
Critics said this highlighted the poor value for money represented by the £92.50/MWh strike price awarded to EDF Energy for the construction of Hinkley Point C in 2013.
Wright said that it is “good” to have this debate and suggested “it is easy with the benefit of hindsight” to challenge whether the Hinkley Point deal represented value for money. He said “the better point” is that future new nuclear schemes “must do better, now that we know what an alternative cost is”.
But advocates of new nuclear investment argue that, despite the higher technology costs involved, it is necessary to bring forward a fleet of new nuclear plants to provide low carbon baseload which can counteract the system instability brought on by increasing amounts of intermittent renewable energy connecting to the grid.
Asked if he agreed with this argument, Wright said: “This idea of baseload is overplayed, because what we are seeing is more flexibility in the demand side. So yes, it’s true we are getting more intermittent sources on the supply side, but equally, there is going to be storage flexibility on the demand side. People are getting excited– I think with good reason – about electric vehicles, and the ability to store energy in a very distributed way.”
He also said that it is wrong to “write off” renewables as “intermittent, and therefore not baseload”.
“The best offshore wind projects today have got a 50 per cent load factor. So on average, they are generating name plate capacity 50 per cent of the time.
“If you look at the diversity benefits of the some of the projects in the North Sea you can probably get that to more like 70 or even 80 per cent…True, that still means there are times when the wind isn’t blowing and you need something else in the mix.
“But something else that was generating 80 per cent of the time would be called baseload.”
Speaking at Energy UK’s annual conference yesterday, Wright expressed his belief that offshore wind costs will continue to fall below the record levels seen in the recent CfD auction.
And in his interview with Utility Week he emphasized that “the job’s not don’t yet” on cost reduction.
He declined to set a figure on how low he believes the technology’s costs can tumble, but added: “I do continue to be staggered that even in mature technologies you can keep finding more efficiency.
“Think of the internal combustion engine and how we are still getting more and more fuel-efficient vehicles. You are never done….are we out of the steepest part of curve now? Probably. But does the cost now just plateau? No.”