Cost of UK’s flagship nuclear project blows out to more than $A92 billion
But it also has implications for Australia, because one its main political groupings, the right-wing Liberal and National Party coalition, has decided that Australia should abandon its current plan to dump coal for renewables and storage, and wait for nuclear instead.
Australia currently has a target of 82 per cent renewables by 2030, and AEMO’s latest Integrated System Plan suggests it could be close to 100 per cent renewables within half a decade after that.
Giles Parkinson, Jan 29, 2024, https://reneweconomy.com.au/cost-of-uks-flagship-nuclear-project-blows-out-to-more-than-a92-billion/
The cost of the flagship nuclear project in the United Kingdom has blown out again, this time to a potential $A92.6 billion as a result of yet more problems and delays at the Hinkley C project.
The latest cost blowout was revealed last week by the French-government owned EdF, whose former CEO had originally promised in 2007 that the Hinkley project would be “cooking Christmas turkeys” in England by 2017, at a cost of just £9 billion.
But like virtually every major nuclear project built in western economies, that ambitious deadline was never going to be met. The new start-up date is now for 2030, but more likely 2031 – and that is only for one of the two units.
The budget has leaped from the original promise of £9 billion, to £18 billion, and has since blown out multiple times to now reach £31 billion and £34 billion, and it could be more than £35 billion “in 2015 values,” according to EdF. This translates into current day prices, according to Michael Liebreich, the former head of Bloomberg New Energy Finance, of £48 billion, or $A92.6 billion.
“The cost of civil engineering and the longer duration of the electromechanical phase (and its impact on other work) are the two main reasons for this cost revision,” EdF said in its statement. It has also experienced massive cost over-runs and delays at other similar projects in Flammanville in Fance and Olkiluoto in Finland.
It is yet another crippling blow to the UK plans to make nuclear a centrepiece of its green energy transition. EdF has already had to be bailed out by its own government, and ultimately nationalised, because of the cost blowouts and the huge costs of buying replacement power when half its French nuclear fleet went offline in 2023.
China’s CGN had to be brought in to fund one third of the Hinckley project, but is refusing to contribute more funds because China has been frozen out of other UK projects.
Alison Downes of Stop Sizewell C, a campaign group opposed to the planned Suffolk nuclear plant, told the Financial Times that EDF and the Hinkley project was an “unmitigated disaster”.
She added the UK government should cancel Sizewell C, saying state funding for the project could be better spent on “renewables, energy efficiency or, in this election year, schools and hospitals”.
But it also has implications for Australia, because one its main political groupings, the right-wing Liberal and National Party coalition, has decided that Australia should abandon its current plan to dump coal for renewables and storage, and wait for nuclear instead.
The Coalition had been pushing so-called small modular reactors, but after the failure of the leading technology developer in the US last year, and confirmation by the CSIRO and the Australian Energy Market Operator that SMR costs would be three times more expensive than renewables, several key Coalition members pointed to large scale nuclear such as Hinckley.
Australia currently has a target of 82 per cent renewables by 2030, and AEMO’s latest Integrated System Plan suggests it could be close to 100 per cent renewables within half a decade after that.
This switch to low carbon electricity is critical for Australia’s emissions targets, and for emission cuts in other parts of the economy. Any delay in the roll-out of renewables, in the expectation that nuclear would fill its place, will push that timeline out by at least another decade, if not, and blow out the costs of the energy transition.
“It is not like cost over-runs in nuclear projects are a big secret,” Liebreich writes on his Sub-stack blog.
He cites the world’s leading academic expert on project management, Danish Professor Bent Flyvbjerg, author of How Big Things Get Done, who shows that nuclear plants are worse only than Olympic Games in terms of cost over-runs.
“On average they go 120% over the budget, with 58% of them going a whopping 204% over budget,” Liebreich writes.
The Coalition energy spokesman Ted O’Brien complained in December that the CSIRO/AEMO report focused only on the “investment” cost, and not the “consumer cost.”
It’s not clear what he means by that. But as Liebreich notes, while Hinkley’s construction costs are in the £42 to £48 billion range, its first 35 years of electricity at £87.50 or £92.50/MW in 2012 money, adjusted for inflation, will cost UK energy users a gargantuan £111 or £116 billion, or up to $A223 billion.
Are the French going cold on UK nuclear?
‘It would be madness to give Sizewell C the final go-ahead while the questions of whether Hinkley C can be finished, and who pays, are not resolved. Sizewell C is bound to take longer and cost more, but this time it would be we consumers who would bear the risk and pay the price through the “nuclear tax” on our energy bills.’
The French government, which was previously relaxed about EDF’s forays into UK nuclear, now wants its energy company to work on projects back home in France.
So far, Britain has put £2.5billion into the project in total and taxpayers are the biggest shareholders. Campaigners who vehemently oppose the project are alarmed by the recent comments from Paris, pointing out that if the French back off from Sizewell, taxpayers could be on the hook for huge extra amounts of cash via their bills.
By FRANCESCA WASHTELL , 28 January 2024, https://www.thisismoney.co.uk/money/markets/article-13015713/Are-French-going-cold-UK-nuclear.html
Our nuclear industry is reawakening,’ energy secretary Claire Coutinho
declared in a Government strategy document published earlier this month. In
between invoking Winston Churchill’s enthusiasm for nuclear power and its
ability to help the UK reach net zero, Coutinho added that setting up new
plants would ensure our energy security ‘so we’re never dependent on the
likes of [Vladimir] Putin again’. Fighting talk. But in the space of a
fortnight, Coutinho’s gung-ho attitude has already been dented as a
diplomatic row brews over who should pay for the controversial power
stations.
French state-owned energy company EDF last week lit the blue
touchpaper with the revelation the UK’s flagship Hinkley Point C nuclear
plant in Somerset would be delayed until 2029 at the earliest. The cost, it
added, could spiral to as much as £46billion, from initial estimates of
£18billion.
Few in the industry will have been surprised, particularly as EDF has experienced delays on similar projects in Finland and France. But what was a shock were some incendiary remarks from the French government.
The Elysee Palace began pressing the UK to help plug a funding gap at Hinkley and for good measure cast doubt over its commitment to Sizewell C, the next nuclear power station in the pipeline.
A French Treasury official suggested the Government was trying to leave EDF in the lurch on Hinkley.
The official added that it cannot, at the same time, abandon the French firm to ‘figure it out alone’ on Hinkley and also expect it to plough money into Sizewell. It is, the official said, ‘a Franco- British matter,’ and not one for the French to resolve single-handedly.
This is a bad moment for two critical new nuclear plants – and our broader energy security – to be dragged into a cross-Channel tussle.
The French government, which was previously relaxed about EDF’s forays into UK nuclear, now wants its energy company to work on projects back home in France.
Well-placed UK sources deny the French claims that EDF has been left to shoulder the financing burden alone at Hinkley, or that it has been jettisoned by the British state.
They point to the fact EDF has all along had contractual obligations to shoulder the costs at this stage of the project. The early stages of developing Hinkley were undertaken by EDF along with China General Nuclear.
The Chinese firm has fulfilled its part of the bargain, leaving the onus on the French. ‘It’s all down to the French state,’ a senior industry source told The Mail on Sunday. ‘It’s tough, but they’ve not managed it at all well.’
A Department for Energy Security and Net Zero spokesman said: ‘The Government plays no part in the financing or operation of Hinkley Point C. The financing of the project is a matter for EDF and its shareholders.’
As well as backing Hinkley, EDF several years ago began serious talks with the Government over Sizewell C in Suffolk. Each could power an estimated 6 million homes for 60 years, meaning the two projects are linchpins for meeting future energy demand.
The French group is due to take a 20 per cent stake in Sizewell. The Government has previously indicated it will take 20 per cent. It was hoped the rest would be funded through money from the private sector, such as pension funds and sovereign wealth funds.
So far, Britain has put £2.5billion into the project in total and taxpayers are the biggest shareholders. Campaigners who vehemently oppose the project are alarmed by the recent comments from Paris, pointing out that if the French back off from Sizewell, taxpayers could be on the hook for huge extra amounts of cash via their bills.
The new type of funding structure for Sizewell C means consumers will already face an added tax to help pay for the plant.
Alison Downes of the Stop Sizewell C campaign group said: ‘It would be madness to give Sizewell C the final go-ahead while the questions of whether Hinkley C can be finished, and who pays, are not resolved. Sizewell C is bound to take longer and cost more, but this time it would be we consumers who would bear the risk and pay the price through the “nuclear tax” on our energy bills.’
And another area of the industry is watching the fracas with mounting frustration.
Companies vying to build ‘mini’ stations known as small modular reactors (SMRs) hope this prompts the Government to commit instead to their projects, which are quicker to build and cheaper [?]
The firms include Rolls-Royce SMR, which has already received significant funding from the Government. New nuclear plants of whatever size will almost certainly be part of the UK’s energy mix in the years to come.
The sector had already been championed by Boris Johnson before soaring oil and gas prices in the wake of Russia’s invasion of Ukraine highlighted Britain’s dependence on overseas energy.
Any fisticuffs with France over Hinkley and Sizewell would strain the sector and could fatally damage the level of public. Industry figures are urging ministers to resist stumping up cash the French had agreed to pay.
One senior source said: ‘I hope the Government doesn’t lose its nerve, though there’s no sign of that at the moment. It would be a terrible precedent.’
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