UK
What a Turkey: Hinkley Point C Costs Hit a New High
The Great Mosque of Mecca is considered the most expensive building in the world at $115.2 billion. Right behind it comes….a nuclear power plant! The two-reactor 3,260MW Hinkley Point C nuclear site still under construction in the UK will now cost at least £46 billion ($59 billion) according to the latest figures released by its developer, the French energy giant, EDF.
As such, Hinkley Point C has now earned the dubious honor of becoming the second most expensive building in the world. And it’s not even finished. The price could soar still higher.
EDF originally bragged that Britons would be baking their Christmas turkeys powered by Hinkley Point C by 2017. The completion date has now been pushed to “after 2029”.
The nuclear power industry is very good at tripling things. Perhaps not global nuclear installations by 2050 as it bragged would happen during an announcement at the COP28 climate summit last December. But the price tag for a new reactor? Timelines for new reactor construction? Straight A grades all around!
That’s almost what’s happening at Hinkley Point C where the new price is more than double the original estimated cost of £18 billion ($23 billion). Getting to triple the cost still seems eminently achievable given the new completion date.
This not-so-shocking news, given nuclear power’s track record, comes after the recent, overblown announcement by Rishi Sunak’s Conservative government that Britain would launch its “biggest expansion of nuclear power for 70 years to create jobs, reduce bills and strengthen Britain’s energy security.” The plan will of course achieve none of these things.
Far from reducing electricity bills for British consumers, the Hinkley nuclear project will in fact increase them “far above the market electricity price,” predicted Dr Norbert Allnoch, CEO of the International Economic Forum for Renewable Energies (IWR), based in Münster, Germany.
According to estimates by IWR, the cost of the electricity generated by Hinkley Point C will be “significantly higher than the 15 cents/kWh mark” and will continue to rise. This is because the UK government agreed a “state-guaranteed price for nuclear power being paid to EDF, which is linked to the inflation rate,” says IWR.
All of this came after the recent announcement that UK authorities had granted a Development Consent Order (DCO) to EDF’s identical twin EPR reactor project on the Suffolk Coast at Sizewell, while committing £1.3 billion ($1.6 billion) in funding for the project. The French company has already been tearing up pristine countryside there, destroying habitat and disturbing wildlife at the adjacent Minsmere Nature Reserve.
Meanwhile, France is pushing the UK to pay for the cost-overruns at Hinkley and the expected ballooning bills at Sizewell once work begins. France reportedly blames Britain for prompting the Chinese firm CGN to withdraw its 33.5% share from the Hinkley plant after Britain booted China out of the Sizewell C nuclear project.
Chinese investment in UK nuclear projects has been a hot political potato for some time, and came to be viewed as “an unacceptable national security risk.” A proposed new reactor project at Bradwell in Essex, a joint project between China and France, looks unlikely to go forward, at least in part due to security concerns about Chinese involvement.
These challenges prompted the UK government to seek alternative sources of funding, inevitably settling on ratepayers using something called a Regulated Asset Base (RAB). RAB effectively funds future nuclear projects by charging ratepayers up front in their electricity bills for the anticipated costs of nuclear plant design, construction, commissioning, and operation.
“Hinkley Point C has been a shambolic money pit,” said a spokesperson from Together Against Sizewell C on X (formerly Twitter). “It’s been hit by delay after delay and the costs are escalating at an alarming rate. Nobody can say with any confidence when it will go live or how much money will have been wasted on it.”
The story of Hinkley C illustrates that the nuclear sector is “out of control economically,” said Paul Gunter, director of the Reactor Oversight Project at Beyond Nuclear. The cost of EDF’s EPR reactor being built in France at Flamanville and still incomplete, has more than quadrupled to close to $15 billion. Another EPR, at Olkiluoto in Finland, went from $3.2 billion to more than $12 billion and launched 12 years late.
On U.S. soil, two AP 1000 reactors at the Vogtle nuclear power plant site in Georgia, will likely come in at a total price tag of at least $35 billion, $20 billion more than originally estimated, with the second of the two reactors still not on line.
This first appeared on Beyond Nuclear International.
Is this the World's Most Expensive and Most Delayed Power Project?
Yes, they are still building the Hinckley Point C nuclear power station in the United Kingdom, and yes the latest estimated cost is more than the previously estimated cost and the completion date has receded another two years into the future.
This nuclear project received its license for construction in 2012, with an estimated cost of £18 billion and completion date in 2025. The last estimate calls for 2029-2031 completion at a cost of £46 billion. To the extent that these estimates can be trusted, the plant would end up costing double the original estimate in real terms. In the same time period, solar and wind costs will decline by at least one half. We are not sure yet whether Hinckley Point will set an all-time record as the most expensive and most delayed power-related project in history, but it certainly will be a contender.
As is the case for so many climate- or security-related projects, the UK government offered significant subsidies to the builder. But in a different way. Most governments, nowadays, offer start-up subsidies in order to bring production levels up to a point where economies of scale kick in, after which costs drop rapidly and consumers get real benefits. The cost curves for wind, solar, and energy storage show how well this strategy works. Give the industry a kickstart and watch the action take place. Not so with nuclear, where costs seem to rise with encouragement rather than fall. Opting for nuclear, then, seems more like an ideological rather than a technological or economic choice, especially for British Conservative politicians. “Nuclear has to be part of the package”, they seem to say. Even if the nuclear cost per kW installed is five-eight times higher than non-fossil alternatives. But, fortunately, the UK government is not directly on the hook for the added costs, the Chinese co-investor in the project has declared that it will not contribute more, and it looks as if French utility EDF will bear the increased costs if it does not get a new power contract. But if the UK decides to stick EDF with the bill, what will that decision do to discourage further nuclear construction? Given the perilous nature of that construction (namely the danger of cost inflation), who could take the risk of initiating new projects other than a government agency?
Hinkley Point might cause us to examine the premises underlying nuclear projects. Building a nuke has two purposes: to ensure national security and to reduce carbon emissions. As for reducing carbon emissions, those reductions could take place anywhere in the world and still benefit the planet. Some contractors (Russians or South Koreans?) in some countries apparently can build nuclear plants for less than contractors in Europe or the United States. So why not let them build nukes where it is economic to do so and pay the host countries for the carbon reductions? And maybe, if there still are savings, the paying countries that have natural gas supplies and wish to use that gas for national security reasons could contribute the savings to an international carbon reduction fund. In other words, the substantial nuclear savings made possible by differences in construction costs might create an opportunity for nuclear cost arbitrage. Just a thought. Our point: Hinkley Point C could put the kibosh on new nuclear construction in the West, but it need not discourage nuclear building everywhere.
By Leonard Hyman and William Tilles for Oilprice.com
