On Hinckley Point Bart'at.

[danieldwilliam]

I doubt that Hinckley Point C will ever generate a megawatthour of electricity.

I'm not saying that it definately won't happen but my money is on it not happening.

It's a risky project. Building nuclear power stations is difficult and fraught with technical and political risk. They are vast, difficult and very regulated construction projects with plenty of scope for things to go wrong. They are also subject to risk of legal challenge or outright civil disobedience actions from opponents.

It's expensive in interesting ways. At a budgeted £18bn for construction it puts a lot of money at risk for EDF and any of the investors. Which include both the French and Chinese state. They should be looking at the project execution risk and worrying whether £18bn will buy them a working power station. My view is that they won't get a working power station for £18bn and might not be able to get a working power station at any money.

It's also expensive in terms of the price for any electricity produced. £92.50 / MWH in the 2012 market was expensive. That strike price is index linked and estimated to be £120 / MWH. You can buy onshore wind today for about £60 / MWH. The price of that is falling. As is the cost of solar PV.

Now there is some value in having a diversified energy supply. What would we do if we discovered that all our new wind turbines had a latent defect or that solar PV caused cancer? I'm not sure it's worth paying double the going rate for electricity.

So, it's a difficult project that represents a financial risk to its investors and a bad deal for consumers.

And it won't be finished for ten years, probably longer.

By which time technology and the economics that go with that technology will have moved on. Solar PV will be cheaper, wind will be cheaper, I'd expect storage to be cheaper. All available in small increments. The oil price looks like it won't get much above the value implied by the long term cost of US fracking - so about $80 a barrel. In 2012 oil was above $100 a barrel.

if you can't build the project unless you can sell the power at £92.50 plus then I don't see how you can build the project.

This was true in 2012. I mean that had the plant gone ahead when first planned we would be looking at a one third complete power station that had started as expensive and was now out of the money but we'd have been committed to it. We now have four more years of information about the likely trajectory of energy prices. By the time the UK government conducts its review we'll have another year, perhaps two of information.

If my major premise about energy prices (that over the coming decades they are capped by the cost of fraking and then the cost of solar PV) is correct then Hinckley Point will look like a worse idea with every quarter that passes.

Comments

Re: Strike Price of Hinckley Point C

[danieldwilliam.livejournal.com]

I think the Spartan answer to this is..

If.

Those EPR's aren't just late. The Finnish one is about a decade behind schedule. Flammenville 3 is eight years late with further defects found. The Taishan ones are about three years late.

If actually built and put in to operation then it clearly makes sense to run the plant. Between 90-95% of the levelised cost of electricty from a nuclear plant is in the construction and financing process - so having incurred the cost and assuming the thing works then one definately runs it for as long as possible. 50, 60, 100 years. I'm just sceptical that EDF can get the plant built, at all, but also before politicians, investors and the general public come to believe that the long-term economics have moved firmly against them and move to can the project.


Is that on-shore wind strike price of £95.50 the 2016 price? If so then the £92.50 Hinckley Point C price isn't the correct comparative. Depending on your inflation assumptions you're looking at a price of closer to £98 today for HPC and a price of £120 by the time the plant is in operation.

The costs of on-shore wind are falling. I think a price of £120 / mwh compared against a current market price of £50 / mwh and a price of £96 and falling is expensive. By the time the plant sees operation it will probably be significantly more expensive than off-shore wind (assuming they hit their target cost of £100 / mwh for 2020 projects.) At 7% of UK electricity production what is the impact on market prices when Hinckely Point C goes off for maintenance or re-fuelling?

£18bn buys you a lot of wind turbines. At about £1m a MW of installed capacity, if you spent half the Hinckley Point C budget of £18bn on 4,500 2MW wind turbines with a capacity factor of 35% get approximately the same capacity factor adjusted output as Hinckley Point C with enough money left over to buy something like 18 BritNed sized interconnectors allowing you to import or export 9 GW of power. And that leaves you between 10% and 200% of the construction budget in avoided over runs to spend on R&D on battery and other storage technology. Now finding somewhere to put that number of wind turbines is difficult. We'd need to go off-shore

(A better use of the £18bn might be to build more houses to Passive House standards and make a dent in the the UK's housing problem and reduce our overall energy needs.)

And yes, clearly the higher than warranted strike price is a deliberate inducement to build a project that isn't otherwise economical. The reactors might be in operation for 60 years. One would hope to get 60 years operational life out of it or more. One might easily get much less if the construction is done badly or someone decides to start flying jumbo jets in to nuclear reactors or any of a host of what-ifs that you have to consider in a different way to the way you have to do risk assessments of thousands of wind turbines or solar PV installations.

I think for me the persuasive factor is that the renewables industry has credibility when it says it can deliver projects on time and on budget and for a steadily reducing cost and the nuclear industry doesn't.

Re: Strike Price of Hinckley Point C

[nojay.livejournal.com]

The number one problem with renewables such as wind is their unreliability. There are occasional days when the wind doesn't blow over a very large area of the United Kingdom. As I said earlier, we have about 8GW of dataplate grid wind generating capacity, more than we have nuclear power capability. The average output is about 2GW annually from wind but that's an annual figure. I've seen the figure go as high as 5GW in stormy conditions and fall to as low as 50MW or 0.04% of the dataplate figure. Either we pay large amounts for backup generating capacity to fill that sort of a hole and burn fossil carbon like there's no tomorrow on those days or we freeze to death in the dark.

(Just had a look -- the grid wind total today right now is 310MW or about 2.5% of dataplate installation and about 1% of demand. We're buying in 2GW of French nuclear electricity as usual and burning fossil carbon gas like crazy but it's cheap.)

Storage isn't going to get much cheaper, not by factors of ten or a hundred as it would need to to make renewables a predictable and safe primary energy source. There is no miracle physics we can exploit to store large amounts of energy and recover it when we need it without paying for it in large amounts of cash (and land area for the cheapest options such as pumped storage). If there was a cheap storage option the wind generating companies would be deploying it today but they free-wheel on the grid using the nuclear baseload and the assorted CCGT carbon-burning generators (I presume we can agree burning wood pellets shipped across the Atlantic is not truly a renewable energy source...) to cover their downtimes when the wind doesn't blow. We really REALLY need to stop burning fossil carbon, like a decade ago and gas is only slightly better than coal, not a magical not-really-fossil-carbon fuel.

As for nuclear power plants shutting down for refuelling and refurbishment this is a scheduled operation done at a time when other nuclear plants, CCGT and some hydro can cover for the drop-outs. The nuclear industry has gotten very good at minimising the time for such operations to the point where modern reactors have an uptime of over 80% (see for example the operating record of Sizewell B, the only PWR in the British fleet).

http://www.world-nuclear.org/reactor/default.aspx/SIZEWELL%20B

Note that this single GenIIa reactor produces about 50% of the entire existing British wind annual generating capacity by itself.

The planned EPRs are expected to operate for 18 months or even longer between outages. Both reactors at Hinckley Point C won't be down at the same time so the 7% dropout you envisage won't happen and, in a better world, there would be overcapacity of nuclear to cover such individual or group dropouts anyway. The French schedule their nuclear refuelling operations for the summer when electricity demand is lower and even shut a few reactors down at that time since the Italians, Swiss, Germans, Britons and other export markets don't take enough electricity from their generating system.

Myself I find the idea of building a range of different reactor designs to be puzzling; I'd be tempted to go for something like the APR1000/Hualong 1 GenIIa design which the Chinese are building on a six-year timescale for about £5 billion each and reap the savings in design, licencing, mass manufacture of components, operations, fuel cycle etc. but nobody asked my opinion.

As for cost, remember that spending £18 billion on wind turbines today means spending another £18 billion in 20 years time when they wear out and need to be replaced, and another £18 billion twenty years after that. The reactors being built today will still be working at rated capacity sixty years from now, possibly longer. The Russians are building VVER1200 reactor vessels they expect to last for a century in operation.

Re: Strike Price of Hinckley Point C

[danieldwilliam.livejournal.com]

(Just had a look -- the grid wind total today right now is 310MW or about 2.5% of dataplate installation and about 1% of demand. We're buying in 2GW of French nuclear electricity as usual and burning fossil carbon gas like crazy but it's cheap.)

This in a nutshell is why I'm sceptical about Hinckley Point C specifically. In the long term it might be necessary to build some new nuclear capacity in the UK. I, personally, think we won't need to. I don't think it's Hinckley Point C right now.

May's decision is either to approve the Hinckley Point C deal with prices currently at about £100 / mwh and rising or let the market stick on wind whenever it can and burn cheap gas like crazy. Add a few more big interconnectors to improve the market conditions for wind and counter the intermittency issue. Jobs a good 'un.

May won't be Prime Minister in 2050 when Hinckley Point C is (perhaps) belting out carbon free electricity with all the financing paid off. She will be Prime Minister through 2017-2020 when Greenpeace occupy the site, the pressure vessels experience their first delay, the lowest ever UK price for wind power is achieved and then bettered.

Interconnectors, wind turbines and CCGT's take a few years to stick up. If you are May you can avoid committing to Hinckley Point C for years and still add generating or transmission capacty if needed in a few years time for a lower price with less technical risk.

I think the British public's willingness to commit to spending significantly more than the current electricity price to avoid climate change is limited. Especially when there is the alternative of burning cheap gas when the free wind isn't blowing. I definately think the Conservative Party is less fussed about burning cheap gas than the average Brit.

I *think* gas stays cheap for the next decade as OPEC, then fracking and then global supply of solar PV and wind keep the price down.

If as you suggest the offer was for a couple or three APR1000 Hualongs at $5bn each and they could offer the electricity for a price of £70 / mwh or less then I'd be less sceptical.

But I think the question isn't about whether we need to solve the entire island of Great Britain's electricity industy in order to for May or EDF to not proceed with Hinckely Point C. It's about wheher the certainty of paying more than the current going rate coupled with the project risk of actually building the thing is more or less of a headache then waiting to see how many CCGT's, wind turbines and interconnectors get build over the next ten years.