Hinkley Point — Deal or No Deal?


Exactly half a century after the world’s first commercial nuclear plant began operation in 1956, British politicians decided to reverse the decline of the industry their predecessors had pioneered.  Back in the ‘50s, it took just five years to plan, commission and build Calder Hall, which began producing energy in October 1956.  But it has taken two governments seven years to draft energy bills, planning bills, design assessments, and much more besides to get to the point where we are now. French and Chinese state-owned companies will invest $16 billion on the new reactors at Hinkley Point.  I’m delighted that at last we’re building new nuclear.  But is the financial package a good deal for the energy consumer?

The short answer is No. The operators of Hinkley will receive a strike price £92.50 /MWh fully indexed to the Consumer Price Index (with a small discount if they proceed with a similar project at Sizewell).  Leaving aside the jargon, this means that electricity from Hinkley point will cost roughly double the current wholesale price. This has been justified on the basis that it’s a “first-of-kind” for the UK and that future reactors will be cheaper. But they will have to be a hell of a lot cheaper to live up to this promise.

The two reactors at Hinkley Point will cost £8 billion each, which, as Peter Atherton of Liberum Capital points out in a damning analysis, makes our shiny new toy “the most expensive power station in the world (excluding hydropower)”.

Power stations, like cars, are rated in terms of the energy they produce. The new reactors at Hinkley Point will be capable of producing 3,200 megawatts (MW). In other words, Hinkley Point costs £5 million per megawatt of capacity. In order to establish whether or not this is a good deal, we should compare it to alternative plants. The new gas-fired plant at Pembroke is capable of producing 2000 MW, but cost just £1 billion. In other words, it costs £500,000 per megawatt of capacity. In terms of upfront costs, Hinkley Point costs ten times more than Pembroke. For the price of Hinkley   Point, Britain could have bought an entire fleet of gas-fired power stations, saving us from the looming energy gap in good time.

Nuclear power, although it has its drawbacks, has advantages which I haven’t described here. It’s a very reliable, clean way of producing a constant supply of energy and its fuel costs are much lower than conventional power generators.  We can expect a new nuclear plant to operate two or three times as long as a gas-fired plant, and in all probability uranium prices will be much more stable than gas prices over the long term.  And of course, the promise of nuclear power is immense. These reasons, amongst others, make nuclear power essential. However, the price of Hinkley Point suggests that other priorities than cost, and security of supply — the consumer’s interest — were foremost in the minds of the politicians who negotiated the deal.

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34 Responses to Hinkley Point — Deal or No Deal?

  1. neilfutureboy says:

    checked what you said about Calder Hall and though it took a whole 5 years from the drawing board it was only 3 years from the start of construction. But they only had engineering problems back then like nobody ever having done it before, or no computer aided design or pretty much everything, whereas now we have massive government parasitism.

    Does tend to prove that state parasitism is responsible for 90% of the cost and it teking 10 years now.

    The 1950s were the era of the very first commercial jets. Clearly had progress been allowed equally in the more vital industry of energy production we would long ago have reached the “to cheap to meter” stage.

  2. Me_Again says:

    Be nice if they designed smaller modular reactors which had the ability to be swapped out with Thorium reactors when they become available. As far as I can ascertain, a thorium reactor’s requirements would be very similar so it would be real nice of them to design them to swap out from uranium units.

  3. maureen gannon says:

    Is anyone really surprised Roger at the incompetenceof the people that get elected to govern. . as my Nan used to say ” Dustmen who believe they are Directors.”
    they have been to busy stomping the global stage to give two hoots about this little island.

  4. cosmic says:

    As I said before, given that there’s a need for base load generation coming on-line in the next few years and given that under current legislation, it has to fit in with emissions requirements (at least has to tick the boxes), then it can’t be coal with totally unproven CCS, and it can’t be hydro because we don’t have even the potential, and we’re pretty much stuck with Hinkley C.

    The answer, of course is to get rid of the legislation which puts us in the bind in the first place, but that’s something the legacy parties are keen to avoid even talking about.

    As for the government negotiating a large contract, e.g. with IT companies to provide systems, sheer incompetence and a natural profligacy with the public purse explains a lot.

    • www.rogerhelmer.com says:

      Fortunately, it’s the thing that UKIP is only too keen to talk about. Scrap the Climate Change Act. Defy Brussels. Cancel green subsidies, taxes and incentives. Abandon the EU’s Emissions Trading Sceme. Focus on coal, gas (including domestic shale gas) and nuclear. And no more silly talk about CCS!

    • PCAH says:

      We’re not stuck with Hinkley C which cannot go ahead because it is illegal to discharge poisonous radioactive gases into the atmosphere. This is an infringement of our right to life under the EU Human Rights Act. Nuclear is not clean, not safe, not necessary. The Hinkley site should have been ruled out in the site selection process due to the geology being crumbly blue lias limestone. There are currently 4 Hinkley reactors, all discharging poisonous gases through chimneys/stacks/vents. Hinkley C would treble these discharges through its own chimneys and vents. In addition, all spent fuel would remain on site for thousands of years at increasing risk of spontaneous combustion due to overcrowding of the spent fuel ponds. Taxpayers would pay for all waste and decommissioning costs, all insurance, and the costs to the NHS would be huge due to the rapidly increasing cancers, cardiovascular premature deaths and heritable genetic mutations. Its been happening in the UK around all the UK sites for at least 50 years if you include all the atom bomb test veterans who are still trying to get compensation from the MOD.

      • neilfutureboy says:

        If it were truthfully illegal no coal or oil burning plants would exist or indeed any cars or sewage plants.

        Coal generators not only give off more gases they even give off much more radiation that nuclear ones. Nuclear is, in fact at least thousands if times safer than any other generation method including windmills.

        This is publicly acknowledged by all remotely honest “environmentalists”.

      • Me_Again says:

        …have to ban cows as well then. One cow emits more greenhouse gas in farts per annum than the CO2 emitted by 12,000 cars.

  5. Chris says:

    The solution to nuclear power in the UK, is to buy a design from Westinghouse; the company which we owned until Gordon Brown sold it to the Japanese. The government to own and fund the new reactors, using government debt (gilts). Using Rolls-Royce who build the Royal Navy nuclear reactors, Babcock and Sheffield Forgemaster, the government could maximise UK content in the new reactors, providing jobs and revenue. It would re-ignite large scale civil nuclear engineering in the UK.

    Of course, this would require logic and foresight, which none of the three main parties have.

    • Me_Again says:

      Yeah to keep the nationalization moaners at bay, it could be done as a ‘mutual’. A company made from an amalgamation of certain divisions of the companies named. Not for profit, no shareholders all with modern management and working practices. Quid pro quo for the participating companies would be cheaper energy.

      Knocks domestic tariffs on the head and gives British industry cheaper energy and therefore a big boost. This rakes in more money at the exchequer. Everyone wins.

      Of course it won’t happen because the energy cartel won’t let it.

      • neilfutureboy says:

        If the energy companies had that much power they wouldn’t be letting the politicians falsely accuse them of making excess profits. Power lies with those who control the state and currently all parties are Luddite, which explains why we are prevented from having cheap power.

      • Me_Again says:

        Power isn’t a single thing Neil. In this case I refer to money being the power. Lobbyists and vested interests would prevent the government -even if it had the desire- taking control of energy in this country.
        All sorts of unelected folk would be moving puieces behind the scenes, IMF, world bank to name but two.
        The people at the top on either side of the house are entirely happy with ripping people off and squeezing us until we squeak so that they can give our money away and line their own pockets in the future.
        There is no other reason for this drive to make people pay for absolutely everything AS well as being taxed.
        The benefits of being in a so called 1st world country are diminishing daily. First world should be about getting the best from and giving the best to, our citizens. Our country should be easily recognised as being at the top of the tree by it’s low cost mass transport, its low cost energy, its low crime rate, its non existent poverty rate and lack of homeless people who don’t choose to be homeless and of course its health system, free for those entitled.

        Instead what have got? A society which becomes more polarised and selfish by the day. Leaders who are convinced that taking most our money is the answer to everything and businesses that think they have no moral obligations, run by crooks for crooks. Leaders who ignore the people’s voice when it suites and think they know better than us -immediately after the elections. A newly discovered method of ignoring ones pre-election pledges [coalition] is likely to figure in the future as the 3 usual suspects finally get around to the idea that such a system means they can do what they want without the tedium of having to explain themselves.

        A society steadily going backwards, instead of 1st world it is rapidly sliding down the pole of achievement due to mass importation of other cultures and their people a disregard for the rights and history of the indigenous rather a slow manageable influx with integration in a steady, prescribed manner.

      • neilfutureboy says:

        I agree with almost all of that except:

        “Lobbyists and vested interests would prevent the government -even if it had the desire- taking control of energy in this country.”

        No they couldn’t if government wanted it. There are far more vested interests – virtually every industry and individual with an interest in cheap energy and thus a growing economy. When politicians really want something the lobbyists merely lobby to get the greatest costs laid on some other interest.

        There were a lot of very rich Jews in Germany but when the rulers put his mind to it all the money could do was buy an exit for a few of them. History shows state power trumps money almost every time.

      • Me_Again says:

        Fair points. I just wonder when it if ever it will occur to those in power that there are at least three models they can choose from. So far we’ve had a socialistic notion that the state should control and organise all industry, then a business model that has it that all state assets should be sold and that business is the only form of regulation we need, putting our entire country into the hands of non domicile global consortiums -rather like some of those Hollywood films we scorned because they had corporations in control and not governments; I just wonder if we will ever have a goverment that can say, well we like the idea that the state has some influence with things but we don’t want to run it directly, we also like the idea of modern business management systems but don’t want shareholders and profits to put costs up for both industry and the public.

      • Russellw says:

        I seem to remember a consortium named TNPG building the Magnox stations, so it does work – but of course the customer was CEGB (see http://en.wikipedia.org/wiki/Hinkley_Point_B_Nuclear_Power_Station 0

    • cosmic says:

      Are you sure they could maximise UK content under EU rules?

      Of course in Germany and France, there’s no doubt that German and French content of such a project would be maximised, but one of the reasons I think we should leave the EU is that we have a boy scout naivete about it all which means we don’t play the EU game very well.

    • www.rogerhelmer.com says:

      For me, the only excuse for nationalisation is the inability of capital markets to finance very large, long-term projects at high risk from regulatory uncertainty. This is a case in point. And what a wonderful discipline for hyper-active government regulators, when the business they regulate (and the damage they do) is their own!

  6. PCAH says:

    Far from being delighted, those of us living downwind of the Hinkley C nuclear site are horrified that we shall again be expected to pay with our lives and the lives of our children and grandchildren for EDF to make profits from the most dangerous, most expensive and least necessary source of electricity. The UK must follow Germany’s lead and become self sufficient in electricity by 2030, without nuclear. We’re already linked into the European smart grid. We’re at last getting going with wind, wave, solar, tidal and hydro power which will be producing electricity well before 2020. Hinkley C would not even become operational before the end of 2025. Nuclear is an infringement of our right to life under the EU Human Rights Act so it cannot legally go ahead anyway.

    • Me_Again says:

      What complete and utter tosh. Not even worth deconstructing the silly notions you espouse.

    • Berényi Péter says:

      Don’t be pathetic, please. You are not expected to pay with your lives and the lives of your children and grandchildren, because the market value of those entities is negligible; you will pay in hard cache for a horribly overpriced & obsolete plant, that’s all. And what helps drive prices up and suppresses innovation is public fear, including yours, nothing else.

      Make up your mind, please. If you want to decrease carbon dioxide emissions, in the long run there is no other way to do that than going nuclear. Hydro power is expensive and no additional potential is available in the UK anyway. Wind, wave, solar &. tidal all try to exploit low energy flux densities, which makes their footprint excessive, that is, highly damaging to the environment. So called biofuels are even worse in this respect.

      Of course, you can reject old style Plutonium factories, demand high fuel efficiency in nuclear plants, no long half life isotopes in waste and inherent safety with passive cooling, but you can’t do that while rejecting nuclear power altogether. Those features were all available decades ago in experimental designs, but development &. commercialization was abandoned because of the likes of you.

      On the other hand, if you are not worried about carbon dioxide, you should go for coal fired plants with proper scrubbers installed, which are clean, safe and way cheaper than gas fired ones, even if they are fed with natural gas acquired by fracking.

    • clive says:

      Another Green Nazi .

  7. Simon Clark says:

    You have failed to mention that in this strike price is the decommissioning costs which are not going to saddle the tax payer later on unlike our current nuclear power stations. The decommissioning costs of those continues to rise. The second point that I would make here is that fossil fuels is just going to get more and more expensive as time goes by. They are not going to stay static or get cheaper. The government have actually in all probability got a reasonable deal for the country. We are going to have to build many more nuclear power stations yet as this is the only real zero carbon way of generating power on a large scale that we have available to us.

    • neilfutureboy says:

      Fossil fuel costs are falling right now because of shale.

      The era of cheap energy will dawn as soon as the politicians stop preventing it.

      Decommissioning is largely a political not engineering “problem”. The actinides in reactor waste are valuable and future generations will not understand why we tried to throw them away.

      • John Knowles says:

        I heartily agree. Some nuclear wastes are likely to be a fuel within 50 years. My father worked out a sensible glassification program with the UKAEA during the 1980s where most of UKs waste would have ended up in deep Cornish tin mines. In it’s wisdom the UKAEA destroyed all his work after 20 years. One has to wonder who runs the show these days.

    • Me_Again says:

      Decommissioning costs are based on disposal of waste nuclear fuels and will virtually disappear when Thorium reactors come on line since they can use spent uranium and plutonium as fuel themselves. Looking forward 20 and 30 years, if homo sapiens survives -and that is by no means assured for a variety of reasons- the advent of either cold fusion or fusion of other kinds will make even thorium reactors redundant.

      hopefully we can arrive at a point when fossil originated products cease to be burned and are used for the zillion and one other things that make them so incredibly valuable.

      • Brian H says:

        Clue: we began burning fossil fuels because we finally got it that bio-renewables like wood and whale oil weren’t.

      • Jo Brown says:

        Thorium reactors will never come on line because they are no safer than other nuclear reactors. They would also routinely discharge poisonous radioactive gases into the atmosphere and liquids into the sea. We don’t need any nuclear electricity. The UK can be self sufficient in electricity by 2050 if we follow Germany’s example and convert to wind, wave, tidal, solar and hydro power. Initial costs of renewables rapidly diminish as they become operational; nuclear costs start at double the cost of renewables and continue to rise for thousands of years after they cease operation.

      • Me_Again says:

        What complete, unmitigated and erroneous nonsense. Where to start?…………………

  8. Keith Willshaw says:

    It should be pointed out that Calder Hall was primarily built to produce Plutonium for the British nuclear weapons program and was therefore regarded as a top priority by the Government of the day. It was pretty small scale generator producing only 50 megawatts from each of its 4 reactors.
    As a primarily weapons plant it was effectively immune to the planning delays that add so much to the costs and schedule of modern developments. A better comparison would be with the AGR program of the 1970’s on which I worked, That was a massive clusterf**k due to the overt political interference by the the government of the day that lead to five stations being ordered to four different designs to ensure the work went to the maximum number of constituencies. Construction was ordered to begin on Dungeness ‘B’ before the design was complete simply so the minister in charge, Anthony Wedgewood Benn, could announce it in parliament.

    Then shocked at the inefficiencies this produced they abandoned all nuclear developments for the next 30 years and were amazed to find in the 21st century that Britain had no nuclear industry left I was a young engineer on Dungeness ‘B’ and am now nearing retirement.


  9. catweazle666 says:

    Half a century ago, this country led the World in engineering in practically every field. We held World speed records on land, on water, in the air and on the railway. We produced the World’s first commercial nuclear power station and had a thriving space program.

    Now, after half a century of creeping “Progressivism” AKA Socialism, we can’t even manage to keep our lights on without going cap in hand to our erstwhile Communist enemies, thank you politicians.

  10. hunter says:

    All over the world the state encroaching into industry and science turns out bad for the tax payer, rate payer and citizen.

  11. clive says:

    Vote UKIP!

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