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Flagship Energy’s Tejal Shah Energy Markets Update – 24th January 2024

Tejal Shah, Head of Trading & Risk at Flagship Energy provides a market update

Earlier this week 6 out of the 10 nuclear reactors in the UK were offline on either planned or unplanned outages. Whilst it’s not had a significant impact on wholesale UK power prices due ample gas supply and wind generation, there has been a lot of news on UK nuclear over the last few weeks.

As you may know nuclear power is seen as a key part of meeting the UK’s net zero goals, as it does not produce significant emissions once operational and is not dependent on weather conditions, unlike wind and solar. A decade ago, nuclear power was producing more than 60 TWh of energy in the UK however over the past 12 nuclear generation provided only about 15% of the UK’s electricity needs. Last year the government launched its ‘Great British Nuclear’, with the aim of accelerating the development of new nuclear projects. The government hopes to quadruple nuclear generation from 6 GW to 24 GW by 2050.

Earlier this month EDF announced it would delay four UK nuclear plants earmarked for closure to remain on stream for at least a further two years as it aimed to halt seven years of declining output. On Monday, the UK government also committed an extra £800mn to a planned £20bn nuclear power plant as ministers seek to attract outside investors to the project. It means the government has now committed £2.5bn to pave the way for the proposed Sizewell C nuclear power station in Suffolk in south-east England, up from £1.7bn previously. Sizewell C is meant to be the second next-generation nuclear power plant to be developed in the UK after Hinkley Point C, which EDF is building in Somerset. However only yesterday EDF confirmed the latter has now once again been pushed back with a possible start date being in 2029 and a new estimated cost of between £31bn and £34bn based on 2015 values. The project, Britain’s first new nuclear plant in more than two decades, was at the last update expected to start operations in June 2027, which also was a revision of a previous 2025 start date.

The Hinkley Point C delay will add to concerns over project delays and costs, as well as skills in an industry earmarked to deliver a quarter of the national electricity demand by 2050.

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