nuclear-news

Is this the World’s Most Expensive and Most Delayed Power Project?

By Leonard Hyman & William Tilles – Jan 31, 2024,

Yes, they are still building the Hinckley Point C nuclear power station in the United Kingdom, and yes the latest estimated cost is more than the previously estimated cost and the completion date has receded another two years into the future. 

This nuclear project received its license for construction in 2012, with an estimated cost of £18 billion and completion date in 2025. The last estimate calls for 2029-2031 completion at a cost of £46 billion. To the extent that these estimates can be trusted, the plant would end up costing double the original estimate in real terms. In the same time period, solar and wind costs will decline by at least one half. We are not sure yet whether Hinckley Point will set an all-time record as the most expensive and most delayed power-related project in history, but it certainly will be a contender.

As is the case for so many climate- or security-related projects, the UK government offered significant subsidies to the builder. But in a different way.  Most governments, nowadays, offer start-up subsidies in order to bring production levels up to a point where economies of scale kick in, after which costs drop rapidly and consumers get real benefits.  The cost curves for wind, solar, and energy storage show how well this strategy works. Give the industry a kickstart and watch the action take place.

Not so with nuclear, where costs seem to rise with encouragement rather than fall. Opting for nuclear, then, seems more like an ideological rather than a technological or economic choice, especially for British Conservative politicians. “Nuclear has to be part of the package”, they seem to say. Even if the nuclear cost per kW installed is five-eight times higher than non-fossil alternatives. But, fortunately, the UK government is not directly on the hook for the added costs, the Chinese co-investor in the project has declared that it will not contribute more, and it looks as if French utility EDF will bear the increased costs if it does not get a new power contract. But if the UK decides to stick EDF with the bill, what will that decision do to discourage further nuclear construction? Given the perilous nature of that construction (namely the danger of cost inflation), who could take the risk of initiating new projects other than a government agency?………………………………………….

Oil Price 31st Jan 2024

https://oilprice.com/Latest-Energy-News/World-News/Is-this-the-Worlds-Most-Expensive-and-Most-Delayed-Power-Project.html

February 3, 2024 Posted by Christina Macpherson | business and costs, UK | Leave a comment