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UK energy analysts unhappy with super costly Hinkley nuclear project

Planned Hinkley Point nuclear power station under fire from energy industry, Guardian, Nils Pratley and Sean Farrell, 10 Aug 15  Energy analyst says that for same price as Hinkley Point C, providing 3,200MW of capacity, almost 50,000MW of gas-fired power capacity could be built. Hinkley Point, the planned £24.5bn nuclear power station in Somerset, is under intensifying criticism from the energy industry and the City, even as the government prepares to give the final go-ahead for the heavily subsidised project.

The plant, due to open in 2023, will cost as much as the combined bill for Crossrail, the London 2012 Olympics and the revamped Terminal 2 at Heathrow, calculated Peter Atherton, energy analyst at investment bank Jefferies. He said that, for the same price as Hinkley Point C, which will provide 3,200MW of capacity, almost 50,000MW of gas-fired power capacity could be built.

“This level of new gas build would effectively replace the entire thermal generation fleet in the UK – much of which is old and inefficient – with brand new, highly efficient, low carbon, gas generation,” said Atherton.

Doubts about Hinkley Point have deepened after a detailed report by HSBC’s energy analysts described eight key challenges to the project, which will be built by the state-backed French firm EDF and be part-financed by investment from China.

These challenges include: declining demand for power in the UK, currently falling at 1% a year as energy-saving measures take effect; a three-fold jump in the UK’s interconnection capacity with continental Europe by 2022, massively increasing the country’s ability to import cheaper supplies; and “a litany of setbacks” in Finland, France and China for EdF’s European Pressurised Reactor (EPR) model, the same type as planned for Hinkley Point.

HSBC’s analysts described the EPR model as too big, too costly and still unproven, saying its future was bleak. They also pointed out that wholesale power prices have fallen by 16% since November 2011 when the government agreed a “strike price” for Hinkley Point’s output – effectively a guaranteed price of £92.50 per megawatt hour, inflation-linked for 35 years and funded through household bills. “With the problems encountered by France’s EPR model and a strike price likely to be double the UK wholesale price at the scheduled 2023 time of opening of the proposed Hinkley C EPR, we see ample reason for the UK government to delay or cancel the project,” they said…….. http://www.theguardian.com/environment/2015/aug/09/planned-hinkley-point-nuclear-power-station-energy-industry

August 10, 2015 - Posted by Christina Macpherson | business and costs, politics, UK