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

[andrewducker]

What are efficiency levels like? High enough that we can actually generate enough energy from solar/wind without covering the whole country in them?

[momentsmusicaux.livejournal.com]

But wouldn't politicians have to be seen to do a U-turn, and mightn't they be likely to forge on ahead regardless because of that?

I do hope you're right though.

[gonzo21.livejournal.com]

This whole project has always felt like a gigantic bribe being paid to keep the Chinese happy.

Strike Price of Hinckley Point C

[nojay.livejournal.com]

If the EPRs get built they will run since operating costs are minor compared to the capital cost of building the reactors. However there's something wrong with the EPR construction process, I'm not sure what but all four current EPR builds (France, Finland and two in China) are still not complete and operational and they should have been working by now. There's an element of prototype build in this delay but that's not the whole story.

As for the strike price it slightly undercuts the legally-mandated buy-in price for grid wind in the UK (on-shore wind pricing is £95.50 per MWhr, off-shore is £149.50 per MWhr) on the basis that it's carbon-free like wind so it should receive the price supports wind does. In addition the amount of power delivered will not vary depending on weather conditions unlike wind -- I've seen the UK's grid wind output reported to be as low as 50 MW during a very still day and that's from a dataplate installation of about 8GW of turbines.

I think the aim of the high strike price being asked for Hinckley Point C is to boost the initial return on investment in the first few decades of operation. Remember though that these reactors will be in operation for at least 60 years, possibly more so the large investment in the build is actually not that much considering the amount of electricity the reactors will produce during their lifespan.