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DW Monday: New Nuclear

By December 23, 2013 November 28th, 2019 No Comments

DW MondayThe announcement that a consortium led by EDF Energy will build the UK’s first new nuclear power station in two decades has been heralded as a major step forward by the government. The two Hinkley Point C reactors will have a capacity of 3,260 MW, 7% of the UK’s electricity demand and be based on the European Pressurized Reactor (EPR) design marketed by the French corporation Areva. The EPR is a third generation design incorporating lessons learned from previous pressurized water reactors (PWR) and a combination of passive and active safety systems intended to minimize risk. According to Areva, a full design review was also conducted in response to Japan’s Fukushima disaster.

Three EPR projects are currently under construction worldwide with the Olkiluoto 3 plant in Finland being the most high profile example. Originally intended to come online in 2009 the 1,600 MW single reactor plant is still under construction with 2016 viewed as a realistic online date. Delays have been caused by a wide range of factors including a failure to gain timely regulatory approval for the complex control systems. TVO, the Finnish Utility which will operate the plant has declined to comment on the budgetary over-run although a sister plant in Flamanville, France is estimated to be more than €2.5 billion over its original budget.

The larger UK project has a planned construction period of 10 years and an estimated price tag of £16 billion. After coming online the plant will receive a guaranteed, index-linked payment – known as a strike price – for every Megawatt-hour (MWh) of electricity generated. Following a lengthy negotiation the strike price was set at £92.50 per MWh, a level thought sufficient to balance the commercial risks associated with such a technically demanding project. While the nuclear strike price is close to double the current wholesale price of electricity, it is significantly lower than the strike price for offshore wind which is stated to be £155 per MWh. While a great deal of uncertainty surrounds UK energy policy, one can be certain that nuclear energy’s boosters and opponents will be following the Hinkley Point C project with great interest.

Frank Wright, Douglas-Westwood Aberdeen
+44 1224 264972 or frank.wright@douglaswestwood.com