Loan guarantee for Hinkley Point C

When pushed to give an indication of the level of strike price EDF was seeking, Mr de Rivaz told us that the figure of £140/MWh was “rubbish”, but would not comment on the figure of £100/MWh

Jean-Paul Chanteguet, is reported to have stated that the revised build cost of Flamanville is expected to deliver a price for electricity at 74/MWh. It will be important to establish whether this is directly comparable to the UK context in relation to the ongoing negotiations for the strike price for Hinkley Point C.

28 June 2013

http://www.world-nuclear-news.org/NN-Loan_guarantee_for_Hinkley_Point_C-280613ST.html

The UK government has announced that EDF Energy’s proposed Hinkley Point C nuclear power plant is eligible for a multi-billion pound loan guarantee.

In a speech to Parliament on 27 June, chief secretary to the Treasury Danny Alexander outlined the government’s infrastructure plan, which includes measures aimed at enabling up to £110 billion ($167 billion) of private sector investment in electricity infrastructure by 2020. The plan includes the extension of the UK guarantees scheme by two years to December 2016. A guarantee under this scheme is expected to help EDF Energy to secure financing for its Hinkley Point C project at a lower rate than would be possible without government backing.

EDF Energy is planning to build two Areva EPR reactors at Hinkley Point. Planning consent for the estimated £14 billion ($21 billion) project was announced earlier this year, but EDF Energy is still locked in negotiations with the government over terms of the so-called contracts for difference (CfDs). These are intended to set a long-term price of electricity generation from low-carbon sources.

A key element of a CfD is the ‘strike price’- the price that generators receive for electricity. Should the market price be below the strike price, then generators are paid the difference; should the market price exceed the strike price, then generators must pay back the difference.

While the terms of the CfD strike price for the Hinkley Point C project are not yet finalised, the government has now announced the draft strike prices for renewable projects. These range from initial rates of £100 ($152) per megawatt hour (MWh) for onshore wind to £305 ($464) per MWh for tidal stream and wave technologies. The strike price for offshore wind would initially be £155 ($236) per MWh, dropping to £135 ($205) per MWh by 2019. The renewable CfDs would run for fifteen years and be linked to inflation.

The energy policies announced this week would result in £60 billion ($91 billion) worth of investment in new nuclear plants by 2030, according to energy and climate change secretary Ed Davey. CfDs form a core component of the government’s strategy to bring forward investment in affordable low-carbon electricity generation – including renewables, carbon capture and storage and new nuclear,”he said.

Researched and written
by World Nuclear News

UK spells out draft strike prices

The contract for difference (CfD) draft strike price for onshore wind will fall only modestly in 2018-19, to £95/MWh; for offshore wind the price will fall more sharply, to £135/MWh.

The government believes that CfD strike prices at these levels will deliver up to 16GW of offshore wind and 12GW of onshore wind by 2020.

Large-scale PV will receive £110/MWh in 2018/19, a level the government feels could deliver up to 3.2GW of capacity by the end of the decade. The government’s goal of 22GW of PV by 2020 is largely centred on….  (subscription)

http://www.rechargenews.com/wind/article1331059.ece

Building New Nuclear: the challenges ahead – Energy and Climate Change

Prepared 4 March 2013

At the most recent estimate, the price for each reactor at Hinkley Point C was expected to be £7 billion.[47] In the current economic climate, finding such large sums of money is difficult.

[…]

There is a great deal of uncertainty about the so-called “strike price” for new nuclear (the price that generators will receive for each unit of energy produced). At the time of writing, the Government was still in negotiations with EDF over the strike price level for Hinkley Point C (despite the Minister’s hope to have reached an agreement by the end of 2012).[61] Some witnesses believed that the Government was not in a strong negotiating position and that there was a perverse incentive for EDF to inflate costs in order to receive a higher strike price.[62] Vincent de Rivaz (EDF) rejected this accusation, arguing that “if I was increasing the cost to get a strike price that would not be competitive, I would be saying that nuclear is not competitive, that is not my job, I am in the job to demonstrate that nuclear is competitive”.[63] The Minister appeared to be convinced by this argument.[64] When pushed to give an indication of the level of strike price EDF was seeking, Mr de Rivaz told us that the figure of £140/MWh was “rubbish”, but would not comment on the figure of £100/MWh.[65] Nick Butler (author of a blog on energy and power for the Financial Times) thought that “£100 [per megawatt hour] would be the absolute top band” and that “That figure [£100/MWh] is valid if supported by an open demonstration of the cost calculations but must include a complete and unequivocal acceptance of all the risks by the plant operators.

It would be unacceptable to find that such a figure had been agreed and then discover that the risks had been transferred to the taxpayer or the consumer.[66] 48.  We note that the President of the Sustainable Development Committee in the French Assemble Nationale, Jean-Paul Chanteguet, is reported to have stated that the revised build cost of Flamanville is expected to deliver a price for electricity at 74/MWh. It will be important to establish whether this is directly comparable to the UK context in relation to the ongoing negotiations for the strike price for Hinkley Point C.

[…]

As discussed in paragraphs 50-51, above, there is still a great deal of concern about the level of transparency of the strike price negotiations between nuclear developers and the Government. Although Mr de Rivaz told us that construction cost overruns would not be incorporated into the strike price for the Hinkley Point C project, the Minister was less clear on this point.

[…]

http://www.publications.parliament.uk/pa/cm201213/cmselect/cmenergy/117/11706.htm

June 29, 2013 - Posted by arclight2011part2 | Uncategorized