Wednesday, 23 October 2013

Hinkley Point C - a bad deal

A somewhat provisional deal between the French electricity generator EDF (majority French government owned) a duo of Chinese-government owned companies and the UK DECC (Department of Energy and Climate Change) has been reached for the foreign companies to build and operate a pressurized water reactor (PWR) nuclear power plant at Hinkley Point in Somerset.

It's provisional since the European Union could nix it on illegal subsidy grounds.

The deal is basically that EDF & Co will build the nuclear power plant at a cost of £16bn and then for 35 years (after 10 years of construction) they will be able to sell as much electricity as they can generate to the British consumer for a guaranteed price of £92 per megawatt hour. (The current market price for wholesale electricity is about £50 per MW/hr.) The plant will be able to generate about 3.2 gigawatts of power so with a simple sum (35 years x 365 days x 24 hours x 3200 MW/hr x £92) we can calculate that the builders will be taking home roughly £90bn of our money. A nice return on a £16bn outlay.

The government had to guarantee a wholesale electricity price of £92 per MW/hr to tempt EDF & Co to take the deal.

Not so long ago, back in 2007, the first of a new series of British submarines was launched from Barrow-in-Furness. Called the HMS Astute, it was powered by a 2 gigawatt pressurized water reactor built by Rolls-Royce Marine Power Operations Ltd in Derby. For this reactor Rolls-Royce charged the Royal Navy less than £3bn. The reactor is a sealed unit that will not be opened during the operational life of the submarine and is safe enough to have mariners living for months on end practically on top of it.

Rather than handing over our generating capacity to what effectively amounts to foreign governments, and then paying them through the nose for our electricity for decades to come, would it not have been better to ask Rolls-Royce to build a few more of these reactors and pay for them from public funds?

Ironically EDF & Co will almost certainly subcontract a lot of the nuclear engineering to Rolls-Royce anyway, and will fund  the whole operation by borrowing from British banks.

Hopefully the EU will revoke this rather bad deal and we can build our own nuclear plants.

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