Hinkley Point C is an expensive gamble—especially for the customersby Simon Taylor, Bronwen Maddox / April 21, 2016 / Leave a comment
British electricity customers will soon find out whether they will be saddled with paying for the world’s most expensive power station, Hinkley Point C. The first new nuclear station to be built in the UK for 21 years, Hinkley is the centrepiece of the government’s plan to cut carbon emissions and reduce British dependence on imported gas. In order to persuade French and Chinese investors to commit £18bn for this project the government, having repeatedly stated there would be no subsidy for nuclear energy, has promised that British electricity customers will pay for all the power the station produces at a price of £92.50/MWh (megawatt hour)—more than double the current market price of £35/MWh—for 35 years after the station is completed, and indexed to inflation (the price includes £2/MWh for decommissioning). On top of that, the government will guarantee (for a fee) that lenders to the project bear no risk. And it has undertaken that no future government can pass any law or policy that would hurt the investors, on pain of compensation.
There is no British nuclear company involved in the project because we have not had a British nuclear reactor design for 40 years. The project, if it goes ahead, will be a combination of French and German technology, funded by French and Chinese government-owned companies. The only role of the British will be to pay for the power it produces.There is a case for building new nuclear power stations in the UK, as the existing ones are nearly all scheduled to close within 15 years and it’s hard to see how we can meet the decarbonisation targets set in law by the 2008 Climate Change Act without new ones. But Hinkley is an unacceptably costly way of doing so. There are other nuclear projects in the pipeline and, while little is certain in the world of nuclear economics, there is…