UK customers to pay in advance for Hinkley nuclear power, AND cop the financial risk?

EDF’s EDF seeks to charge customers upfront for UK nuclear plants, Ft.com , 23 Nov 18, Financing scheme modelled on London’s ‘super sewer’ aims to cut cost of power from reactors Jonathan Ford in London NOVEMBER 22, 2018 EDF is pushing a plan to finance nuclear investment in Britain that it claims would cut the cost of power from new reactors to levels competitive with gas and renewable energy. The French state-backed power utility wants to use a technique commonly used in utilities such as water, airports and power distribution. This allows companies to charge customers upfront for new infrastructure. It is being used in the £4.2bn project to build a “super sewer” under London’s river Thames. But the mechanism has never been tried for a project as technically complicated and lengthy as a nuclear power station, which can take a decade to build. This and other challenges mean any gains are not assured.

With capital-intensive, long-life assets such as sewers and power transmission networks, financing represents a substantial chunk of the overall cost that needs to be recovered ………

Why nuclear revival is struggling to take hold EDF’s proposal comes at a time when Britain’s much touted nuclear renaissance is in danger of shorting out. The first deal — which will see the French group and its Chinese partners build a £20bn station at Hinkley Point in Somerset — was struck in 2016 at a guaranteed strike price of £92.50 per megawatt hour (MWh) in 2012 prices, indexed for 35 years and worth about £105 in current terms. Heavily criticised for being excessive, it was at least similar in headline terms to the prices required for renewables, nuclear’s main zero carbon competitor. However, renewable costs have since fallen sharply, with some deals for offshore wind farms being signed for as little as £55-60 per MWh with 15 year contracts. ……….

Observers agree that RAB financing could potentially secure substantial reductions in nuclear power costs. “While it should always be cheaper for the state to finance nuclear construction directly, this would clearly lower the prices from the Hinkley approach,” said Dieter Helm, a professor of energy policy at Oxford university

But it has prompted concerns about the equity of the structure. “What RAB financing does is transfer project risks to customers, who are least well placed to bear them,” said Martin Blaiklock, an infrastructure expert who likens the technique to “being forced to pay for a meal at a restaurant before the restaurant has even been built, let alone served any food”.

Will consumers benefit? Consumers who paid up front for five to 10 years would run the risk that if the reactor were delayed, over-budget or ultimately not commissioned, the power savings would not materialise and they might suffer a total loss. Nuclear has a poor record for delivering on time and to cost. Two projects in Europe using the same technology, at Olkiluoto in Finland and Flamanville in France, are running 10 and six years late respectively. Both are about three times over budget. EDF has yet to prove that its EPR reactor design can even generate electricity at commercial scale.

There are also legal question marks over whether the technique would be deemed an illegitimate subsidy under state-aid rules. “A nuclear power station isn’t like a sewer, a monopoly infrastructure asset,” said Peter Atherton, analyst at consultants Cornwall Energy. “It competes with other private sector generators, which means legally it could be shades of grey.” Lower costs may be necessary to get nuclear back on track, but most observers think they are not sufficient. “Ultimately it comes down to whether you strategically think as a nation you should do nuclear,” says Prof Helm. “But if you do think you need it, then clearly it’s right to seek to do it at the lowest cost.” https://www.ft.com/content/f9a96304-e980-11e8-885c-e64da4c0f981

1.This Month

DEFEND WIKILEAKS Julian Assange Under Threat. Defend Wikileaks and the right to publish https://defend.wikileaks.org/

Why we’re heading for a ‘climate catastrophe’ – BBC Newsnight

David Attenborough on climate change: ‘The world will be transformed’

PETITIONS

Stop False Climate Solutions – Do Not Support Nuclear Power at COP24

Tell Congress: Stop Trump from ordering a nuclear first strike without a Congressional declaration of war.

PREVENT UNNECESSARY RADIOACTIVE RISKS ACROSS THE USA NATION

Protect Idaho’s water. Stop nuclear waste.

nuclear-news

The News That Matters about the Nuclear Industry Fukushima Chernobyl Mayak Three Mile Island Atomic Testing Radiation Isotope