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Matt Ridley: Let’s Kill Off This Nuclear White Elephant

Matt Ridley, The Times

EDF can’t afford to build Hinkley Point and Britain can’t afford to pay for it. There are better options elsewhere

Last week the British and French governments announced that they remained confident that the Hinkley Point C nuclear power station in Somerset will be built. But EDF, the company that wishes to build it, declined again to say when a “final investment decision” will be made. That decision, originally intended for 2012, was then expected last October, when the Chinese president was in London — a third of the finance is coming from China. Then it was expected in November, then December, then at the February board meeting of the company, then last week. Still no sign of Godot.

It is time to pull the plug. EDF cannot afford to build it and we cannot afford to buy its premium-price electricity. At two other sites, in Finland and France, the European pressurised reactor (EPR) design is beset by technical problems, many years behind schedule and several times over budget. The Chinese are building two and have also encountered technical obstacles. Apart from Hinkley, the order book is empty, so ours would probably be the last EPR to be built.

The cost of building it has roughly trebled before a brick has been laid. At £18 billion, or more like £24 billion including finance costs, Hinkley Point C would be the most expensive power station ever built. The Three Gorges Dam on the Yangtze is its nearest rival and that generates ten times more electricity than Hinkley’s planned 3.2 gigawatts. If we spent that much on gas-fired power stations, we would get roughly
48 gigawatts of dependable capacity, or 15 times more — and each unit of electricity would cost one third as much.

When Hinkley was first considered it was going to charge about £45 per megawatt-hour, a cost comparable with gas or coal. The strike price eventually agreed by the coalition government with EDF was £92.50 per MWh, comparable with onshore wind. Even that was not the end of the negotiation; the government has agreed to index-link that price so that by the time Hinkley opens in the mid-2020s, it might charge not much less than offshore wind, about £120 per MWh.

This was all fine, explained the clever folk in charge of our energy policy at the time, because by the time Hinkley opens the price of gas and oil will have gone through the roof as they start to run out. Even £120 will seem a reasonable price. Those of us who said otherwise, who saw the American shale-gas glut coming and worried that industries such as steel, chemicals and aluminium would be unable to keep operating here if our energy prices went too high, were dismissed as simpletons. As it is, the price of gas-fired electricity, far from shooting up, has plunged and looks likely to stay low for a long while yet. The Hinkley deal looks worse and worse. […]

Don’t get me wrong: I am pro-nuclear (though I have no financial interest in it). But Hinkley risks doing to British nuclear power what Monsanto did to genetically modified crops: killing it for a generation….

The long-run answer is that smaller is more beautiful. With the right political push, and some streamlining of the regulations, small modular reactors could be rolling off production lines, needing less up-front financing and shorter lead times while generating economies of scale through repeat orders. We have to get away from these behemoth schemes, built like one-off moon-shots, and harness the cost-cutting benefits of the mass production of smaller units.

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