The cost of the flagship nuclear project in the United Kingdom has blown out again, this time to a potential $A92.6 billion as a result of yet more problems and delays at the Hinkley C project.
The latest cost blowout was revealed last week by the French-government owned EdF, whose former CEO had originally promised in 2007 that the Hinkley project would be “cooking Christmas turkeys” in England by 2017, at a cost of just £9 billion.
But like virtually every major nuclear project built in western economies, that ambitious deadline was never going to be met. The new start-up date is now for 2030, but more likely 2031 – and that is only for one of the two units.
The budget has leaped from the original promise of £9 billion, to £18 billion, and has since blown out multiple times to now reach £31 billion and £34 billion, and it could be more than £35 billion “in 2015 values,” according to EdF. This translates into current day prices, according to Michael Liebreich, the former head of Bloomberg New Energy Finance, of £48 billion, or $A92.6 billion.
“The cost of civil engineering and the longer duration of the electromechanical phase (and its impact on other work) are the two main reasons for this cost revision,” EdF said in its statement. It has also experienced massive cost over-runs and delays at other similar projects in Flammanville in Fance and Olkiluoto in Finland.
It is yet another crippling blow to the UK plans to make nuclear a centrepiece of its green energy transition. EdF has already had to be bailed out by its own government, and ultimately nationalised, because of the cost blowouts and the huge costs of buying replacement power when half its French nuclear fleet went offline in 2023.
China’s CGN had to be brought in to fund one third of the Hinckley project, but is refusing to contribute more funds because China has been frozen out of other UK projects.
Alison Downes of Stop Sizewell C, a campaign group opposed to the planned Suffolk nuclear plant, told the Financial Times that EDF and the Hinkley project was an “unmitigated disaster”.
She added the UK government should cancel Sizewell C, saying state funding for the project could be better spent on “renewables, energy efficiency or, in this election year, schools and hospitals”.
But it also has implications for Australia, because one its main political groupings, the right-wing Liberal and National Party coalition, has decided that Australia should abandon its current plan to dump coal for renewables and storage, and wait for nuclear instead.
The Coalition had been pushing so-called small modular reactors, but after the failure of the leading technology developer in the US last year, and confirmation by the CSIRO and the Australian Energy Market Operator that SMR costs would be three times more expensive than renewables, several key Coalition members pointed to large scale nuclear such as Hinckley.
Australia currently has a target of 82 per cent renewables by 2030, and AEMO’s latest Integrated System Plan suggests it could be close to 100 per cent renewables within half a decade after that.
This switch to low carbon electricity is critical for Australia’s emissions targets, and for emission cuts in other parts of the economy. Any delay in the roll-out of renewables, in the expectation that nuclear would fill its place, will push that timeline out by at least another decade, if not, and blow out the costs of the energy transition.
“It is not like cost over-runs in nuclear projects are a big secret,” Liebreich writes on his Sub-stack blog.
He cites the world’s leading academic expert on project management, Danish Professor Bent Flyvbjerg, author of How Big Things Get Done, who shows that nuclear plants are worse only than Olympic Games in terms of cost over-runs.
“On average they go 120% over the budget, with 58% of them going a whopping 204% over budget,” Liebreich writes.
The Coalition energy spokesman Ted O’Brien complained in December that the CSIRO/AEMO report focused only on the “investment” cost, and not the “consumer cost.”
It’s not clear what he means by that. But as Liebreich notes, while Hinkley’s construction costs are in the £42 to £48 billion range, its first 35 years of electricity at £87.50 or £92.50/MW in 2012 money, adjusted for inflation, will cost UK energy users a gargantuan £111 or £116 billion, or up to $A223 billion.
