|By Sharryn Dotson, Editor|
A colleague and I were talking about the fate of the 3.2-GW Hinkley Point C project in the United Kingdom. She said she was not ready to make a final decision about whether the project would ever proceed, though she did admit that it’s not looking too promising. I was very forthcoming with my opinion: I don’t think it’s going to happen. UK government officials say Hinkley Point C is needed to replace aging nuclear plants and coal plants set to retire by 2025, but I don’t think this project will be the answer.
Before you say I’m a pessimist or anti-nuclear, let me explain. I am forming my opinion on the current circumstances surrounding the project that would use two Areva-designed European Pressurized Reactors (EPRs). The U.S. obviously isn’t the only country dealing with issues surrounding new nuclear power projects, and the UK and France have some doozies they are trying to overcome to get construction started.
Here’s what we know:
- The project as it stands costs more than the fair market value of owner EDF. Construction of the EPRs are expected to cost 23.3 billion euros ($25.6 billion). EDF’s value, as of mid-March 2016, is at 22.8 billion euros ($25.2 billion). Journalists are notoriously bad at math, but even I can tell you that doesn’t add up.
- Areva is in financial trouble. Not only has the French government, which also owns 85 percent of EDF, bailed it out, but EDF bought Areva’s troubled nuclear reactor unit. Will that move stretch the government in the end?
- EPRs under construction in France and Finland are behind schedule and over budget, and units in China are delayed because Areva found weak spots in the reactor vessel steel that have since been fixed.
- EDF is having trouble securing investors for Hinkley Point. China’s nuclear development arm CGN only bought a one-third stake in the project, leaving EDF to foot the remainder unless, again, they can bring in other investors.
- UK consumers are not happy about paying double the current electricity prices when the plant is operational.
- According to Bloomberg, the Cour des Comptes, considered the French equivalent of the UK’s National Audit Office, said the project and the financing is potentially risky for EDF, given the company’s cash flow and debt limit its capacity to invest abroad. RBC Capital Markets also said the project is “uninvestible.”
Maybe there is some huge deal in the works that will make everyone from bill-payers to politicians to EDF officials happy. I’m okay with being proven wrong (sometimes). The EU’s anti-trust regulators approved the financing plan with CGN, and the French government said it would finalize financing by May. Still, there are too many things working against Hinkley Point C than working for it. The Intergenerational Foundation said in a report that renewable energy, specifically wind and solar, could generate the same amount of electricity as Hinkley Point but cost 40 billion pounds ($56.6 billion) less. There was also a huge uproar against the UK government’s agreement to buy the output of the project at twice the current wholesale price for 35 years.
The start of operations for Hinkley Point C has been pushed back to 2025, but construction won’t begin until financing is finalized, which EDF claims will happen “in the near future.” Again, the project hinges on if more investors can be brought in. Looking at all the information surrounding the project, I wouldn’t want to put any of my money into it.
Nuclear Power Internaional Issue Archives
View Power Generation Articles on PennEnergy.com