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New Nuclear : Britain’s Danse Macabre

NuClearNews No 104  New Nuclear –Dance Macabre

With the Japanese media reporting somewhat prematurely that the UK and Japanese Governments have agreed to provide the lion’s share of financing for two new reactors at Wylfa on the Island of Anglesey, and EDF Energy claiming it can build Sizewell C for at least 20% less than Hinkley Point C, one has to wonder if there is some sort of battle going on between EDF and Hitachi to get their hands on limited taxpayer funds.

 But all either company seems to be getting from Government at the moment is warm words. In the meantime, as we shall see in a subsequent story, the Government has cut its projections for nuclear capacity in 2035 from 17GW to 14GW.

Two other EPRs are under construction at Taishan (China). (2) The latest commissioning delay at Taishan is the third in two years and will lead to a further deferral of 5 billion yuan (US$770 million) in annual revenues and potentially more cost overruns, according to ratings agency Moody’s. CGN said right at the end of December that generation at the two reactors had been delayed to 2018 and 2019, from the second half of 2017 and the first half of 2018 respectively. (3) CGN, which is building the plant in a joint-venture with EDF, admitted, in December, to ’partial defects’ in the welding of the three parts of the deaerator. But the state-owned company stressed that the component, which helps cool down the reactor, ’is not part of the nuclear safety system’.

But international consultant, Mycle Schneider, says the problem goes way deeper than that. It poses questions about lax quality control which could impact on nuclear safety. He says this goes beyond a lack of transparency and constitutes a major indictment of CGN. (4)

Sizewell C

EDF claims it can build a second nuclear power station to follow Hinkley Point C (HPC) for20% less. HPC is expected to cost it at least £19.6 billion, and as much as £20.3 billion if delays push the start date back from 2025 to 2027, (although EDF says it is confident HPC will come on linein 2025).

The majority French Government-owned company says it can cut the construction cost for Sizewell C (SZC) thanks to efficiencies from “copying and pasting” large elements of HPC. (1)

This is for a reactor type which has yet to be built successfully anywhere in the world, with projects in France, Finland and China all delayed. CGN, the Chinese company working in partnership with EDF in Britain and China, confirmed further delays at their Taishan project in January. (See Box 1)

EDF expects to be able to make savings at SZC by eliminating the majority of the £2 billion costs it spent on pre-construction work at HPC. It also expects to make billions more in savings by using contractors and equipment that have already gone through training and certification processes for use on nuclear sites. Cutting the cost of building to about £15 billion could help to reduce the subsidy contract price to nearer £70 per megawatt hour (MWh) (See Box 2).

The Company believes that significant further reductions could be made if the government were to agree a new financing model so that developers did not have to bear all the upfront construction cost. EDF, along with the rest of the industry and the House of Commons’ Public Accounts Committee, is urging ministers to look at alternative funding models that the National Audit Office said would have significantly reduced the eventual cost to consumers had they been used for HPC. These include the government taking a direct equity stake or adopting a regulated asset base model similar to that used for the Thames Tideway Tunnel, under which developers would receive income during construction. Without such a change, the project is unlikely to go ahead since EDF, which required a French state bailout to afford HPC, could not fund another plant in advance. (5)

The Guardian explained that the Thames Water approach for London’s £4.2bn super-sewer allows the project to be taken off the company’s balance sheet by creating a new company that other investors pour equity into. Pension funds are among the potential investors EDF is hoping to court. Unlike a consortium seeking a public stake for a separate nuclear power plant at Wylfa in Wales, Simone Rossi, EDF’s new chief executive said government finance was not a prerequisite. (6)

Rossi says he’s is in talks with major investment funds to support the project. He confirmed to The Daily Telegraph that early stage talks have already begun and a deal may be agreed before the end of the year. The pressure to drive nuclear subsidies lower follows a dramatic decline in costs for other low-carbon energy technologies such as wind and solar power. Offshore wind in particular has halved its costs in recent years with recent projects accepting deals of under £58/MWh to build turbines. (7)

Dr Dave Toke, reader in Energy Politics at Aberdeen University, said EDF’s ‘cheap nuclear’ plan will ruin taxpayers. If the plan involves getting taxpayers to pay for a large chunk of the ‘equity’ financing of the plant and getting the Government to guarantee the bulk of the rest of the costs, this could lead to the biggest black hole in the nation’s finances since the financial crash which would have a catastrophic effect on public finances and deprive the Exchequer of many billions £s that could otherwise be spent on public services. This will be the subsidy to top all subsidies


February 2, 2018 - Posted by | politics, UK

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