UK nuclear reactor gets go-ahead, at double cost of electricity

The Conversation

There has long been talk of the need for a “nuclear renaissance”, and now it seems underway. The deal has been struck that would see the first new British nuclear power station in a generation. But is this the first of a whole fleet of new nuclear power plants, or just a one-off project? The latter has happened before – at Sizewell B in Suffolk, the single reactor built in 1995 was to have been the first of a new generation of planned plants.

Today’s news is that a two reactor power station is to be built at Hinkley Point near Bristol capable of supplying 3,340MW, or roughly 7% of British electricity in the 2020s. This has come at a price, called the “strike price”. French company EDF Energy, the lead firm of the construction consortium, has secured a long-term commitment from the government that the nuclear-powered electricity it generates will be bought at the hefty price of £92.50 per megawatt. That wholesale price is almost double today’s market price, and isn’t far off what the end consumer is paying today to keep their lights on. When wholesale prices meet retail prices things are unsustainable. Don’t forget that between power generation and use there are businesses that deal with transmission, distribution and supply, and they all need their cut.

New nuclear power by numbers. EDF

New nuclear power stations will help us with our ambition to decarbonise the power sector and will do much to improve energy security. But nuclear power stations are not cheap, especially the French European Pressurised Reactor (EPR) chosen for Hinkley Point C. The high upfront costs of nuclear power today run into a political reality that for consumers, and hence voters, the dominant consideration in electricity is the bill and most especially the policy component of that bill.

EDF Energy has done well to win a high strike price for the new reactor at Hinkley Point. Prime Minister David Cameron has explained to the nation why it is a price that should be paid. The government believes in this step towards a renaissance of nuclear power in Britain, and he is willing to absorb the political heat even on the day that another of the big six power firms, NPower, hiked its electricity price by 9.3% and gas price by a whopping 11.1%.

While the UK can probably afford to build Hinkley C, it would struggle to afford a fleet of such low carbon nuclear power stations at such prices – consumers are just too tightly squeezed. If the UK’s low carbon targets are to be achieved, then the costs of low carbon electricity options including nuclear and renewables must fall if we are to succeed in replacing our polluting coal and gas power stations.

The two reactors to be built at Hinkley will be the third and fourth of a kind in Europe. Experience with the first two in Finland and France – have been mired in time and cost overruns. With lessons learned there and with recent successes such as the Olympics in mind, Britain’s engineering firms are quietly confident that they will do better. It is my hope that construction improvements can indeed be translated into lower costs for later units.

For a nuclear renaissance to take hold in Britain, then costs must fall. Those looking at new nuclear power stations for other proposed sites in Britain should plan to receive a lower strike price, not least because they cannot expect the Prime Minister to provide top-level rhetorical support again. That said, the government cannot relax, and with the industry it should now focus on the goal of further new nuclear power stations developed with affordability in mind.

William Nuttall is Professor of Energy at The Open University. He has received funding from the European Commission, the Institute of Physics and Next Generation Infrastructures NL. His research has been supported by UK Research Councils and European Commission Framework Programmes.

This article was originally published at The Conversation.
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Comments

5 responses to “UK nuclear reactor gets go-ahead, at double cost of electricity”

  1. Chris Fraser Avatar
    Chris Fraser

    It appears to be a contradiction, and the opposite of (thanks to RenewEconomy) what i have perceived as energy market common sense, to have expensive energy that can’t easily be switched off !

    1. Bob_Wallace Avatar
      Bob_Wallace

      Apparently the agreement that the UK is entering into guarantees that the new nuclear reactors cannot be switched off just because there is cheaper electricity available. Hinkley is to be a privileged provider and given priority over other producers.

      15 US cents per kWh, guaranteed for every kWh produced, for 35 years. And the price will be adjusted for inflation.

      You’d think the UK government was in an air tight box and contracting for the delivery of oxygen.

  2. juxx0r Avatar
    juxx0r

    I notice from the prices quoted:

    1) The capital cost is 5.5 times that for wind power in the UK at today’s prices.
    2) The construction price of Nuclear is increasing
    3) The construction price of Wind is decreasing
    4) The contract price for the power in ten years time is double the cost price for Wind now.

  3. patb2009 Avatar
    patb2009

    this reactor will get built and never switched on. It will take 10 years to build, and by then the political impact of buying expensive nuclear electricity, when wind and PV will be even cheaper by then, will force the then government to renege. We saw this before, the Nuclear plants brought up on the 70’s were shutdown when energy prices crashed in the early 80s.

    If Germany can be producing 30% of Electricity from Renewables, expect the UK to be moving this way soon enough.

    1. Bob_Wallace Avatar
      Bob_Wallace

      If it does not get switched on then the owners apparently are due full refund of their expenses.

      “4. And reviewed in 7.5, 15, and 25 years to “protect” Hinkley C, as the plant will be called, “from being curtailed without appropriate compensation”

      http://www.renewablesinternational.net/uk-grants-feed-in-tariffs-to-nuclear/150/537/74096/

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