nuclear-news

WindEconomics: Nuclear escalates as wind prices keeps falling, WindPower monthly, 31 October 2019 by David Milborrow

Nuclear power is too expensive. That is the implicit conclusion of the UK government, which has issued a consultation document on possible ways of reducing the electricity price.

This would be possible if the government — which can borrow money cheaply –shouldered some of the risks and/or provided some finance.

The consultation focuses on “regulated asset base” models. The document describes these models as “typically used for funding UK monopoly infrastructure” and involving “an economic regulator who grants a licence to a company to charge a regulated price to users of the infrastructure”.

One of the advantages for developers is that charges can be levied before the project is completed.

The range of possible prices quoted in the consultation document, shown in the top below, bears out the maxim that “prices are what you want them to be”.

They range from a minimum of -£6/MWh, when the state shoulders all the risks and the rate of return for the government is 2%, to £137/MWh, when the investors demand a 12% rate of return and bear all the risks. In the first case, the cost to the taxpayer would be £18 billion.

The present contract for the under-construction Hinkley Point C power station, which has been widely criticised, is based on a 9% rate of return and an electricity price of £92.5/MWh (2012 prices). That is about £106/MWh (€119/MWh on 1 October) in 2019 prices.

It was announced on 25 September that the estimated cost of the project had risen by nearly 10% — to £21.5-22.5 billion.

The price of electricity to the consumer will not increase, but the profitability for developer EDF will be reduced. This gives a new benchmark price for nuclear of £6,750/kW, as the facility’s output will be 3.26GW.

The effects of moving away from state funding can be illustrated by looking back to the first public inquiry for Hinkley Point….. https://www.windpowermonthly.com/article/1663433/windeconomics-nuclear-escalates-wind-prices-keeps-falling