Comment & Analysis
Nuclear power has always had strong support among PE readers. All the 8 Questions surveys that we have ever run on energy urge the government to move forward with the new-build programme, citing nuclear as the only proven, low-carbon, baseload provider of the amounts of energy that this country needs. And it is hard to argue with that rationale.
So why does there feel an increasing sense of unease around the arrangements for the construction of the first plant at Hinkley Point in Somerset? If we leave the politics aside – a mainly French-government owned company, EDF, backed by Chinese state money – there are other factors that cause concern.
First there’s the cost. Hinkley Point C will see the construction of a 3,200MWe nuclear power station with two European Pressurised Reactors. But attempts to build the same design in Olkiluoto in Finland and Flamanville in France have been plagued by delays. Work started on the Finnish plant in 2005 and was expected to be finished in 2009. That proved hopelessly optimistic. Now, it is expected to come online in 2018. Note the word ‘expected’.
Construction at Flamanville commenced in 2007 and was due to come online in 2012. But problems with the strength of the pressure vessel caused setbacks, and the new date for readiness is now slated as the last quarter of 2018. In both cases, these delays have caused costs to rocket.
EDF says that lessons learned on these two projects will feed into Hinkley Point, so costly mistakes will be avoided. But each nuclear newbuild is different – certainly when the peculiarities of national laws and regulations are taken into account. So there are no guarantees that a ‘first of kind’ project here will fare any better.
Then there’s the terms of the ‘strike’ price agreement made between the previous government and EDF – £92.50 per megawatt hour for Hinkley’s output, inflation linked over the lifetime of the plant. If the market price of electricity falls below this level, the government has in effect said it will make sure EDF receives the difference between the two prices. That seems a bountiful deal for the energy provider, especially when you compare the strike price with the current wholesale price of electricity of around £44/MWh.
Finally, there’s emergence of new technology that casts questions over the construction of large-scale plants, essentially commercialised from variants first used in the 1950-60s. These require a complex nuclear ‘infrastructure’ including immense engineering capability and, ideally, robust electricity grid systems.
Since the nuclear new-build programme was announced by the Labour government way back in 2006, there has been growing interest in the development of Small Modular Reactors (SMRs), which some argue could provide a faster route to new-build, potentially deployable within a 10-year timeframe. The current administration has registered its interest: the Department of Energy and Climate Change has announced a feasibility study into the technical performance of SMRs.
Hinkley Point is the single most important infrastructure decision this country has seen for many years, but its tortuous progress has led some critics to label it as over-complicated, overpriced and overdue. Has big become too big?