Learn the lessons from nuclear projects elsewhereby Malcolm Grimston / February 27, 2017 / Leave a comment
Read more: The folly of Hinkley
The recent troubles at Toshiba concerning their US nuclear arm, Westinghouse, for which costs have substantially overrun, demonstrate again that nuclear construction is an economically risky business. Since most of the cost of nuclear power goes on building the machine in the first place, anything that results in overruns in the initial schedule, in terms of time or cost, represents a serious threat to the finances of the scheme and indeed its investors.
The building of the first new UK nuclear power station in over twenty years is now underway at Hinkley Point in Somerset, to be financed by EDF Energy and CGN from China at a total projected cost of £18bn. It is to use the Evolutionary Power Reactor (EPR) designed and built by Areva, the French nuclear plant service company. Hinkley Point C will represent the fifth and sixth such reactors to be ordered, behind one for each of Olkiluoto (to be operated by TVO, Finland), Flamanville (EDF, France) and two at Taishan in Guangdong Province, China (CGN). The two European schemes are heavily over time and budget, while a further six-month delay in commissioning the two Chinese plants has just been announced.
So—what lessons can be learnt from the existing EPR projects, and especially Olkiluoto, the first to be ordered and the first to be under construction?
For background, fifteen years after the first “dash for gas” the UK is getting rather short of reliable electricity capacity. In recent months we have seen some extremely high power prices in the “balancing” market which plays a vital role in keeping the lights on from one moment to the next—£2,500 per MWh in early November against a normal price of around £35 over the last couple of years. The challenge will grow as most of our existing coal and nuclear power plants come to the end of their lives over the next decade or so.
So the Hinkley Point C nuclear project—as well as its proposed “twin” at Sizewell in Suffolk—represent two key infrastructure projects. Each would generate about 7 per cent of the UK’s electricity demand, a total of 6.4 GW of low-carbon output which will not depend on favourable weather conditions to make its contribution. A prompt start would just…