New Hinkley Point nuclear plant will be ‘the most expensive power station in the world’ and is a ‘massive bet’ on future energy prices, analysts say
Britain’s new nuclear power station at Hinkley Point will saddle householders with overpriced energy for decades to come, according to respected analysts.
By guaranteeing a set return for the plant owners far into the future, the Government is taking “a massive bet” that the cost of fossil fuels such as oil and gas will rise dramatically, said Peter Atherton and Mulu Sun, who analyse the finances of energy companies for Liberum Capital, the stockbroker.
If the bet proves wrong, the contract signed earlier this month between the Government and EDF, the French company that will build the Hinkley Point station, will seem “economically insane”, they said.
The deal effectively guarantees that the operators of Hinkley Point will get a minimum price for the electricity it generates, no matter what other forms of power cost. The Liberum analysts estimated that this minimum price would be more than £121 per megawatt hour. Wholesale prices were about £60 last year, according to Ofgem, the energy regulator.
This means that, in order for Hinkley to avoid supplying overpriced electricity when it starts operating in 10 years’ time, the wholesale price of gas would have to increase by about 127pc over the period. This is equivalent to an oil price of well above $200 a barrel, compared with about $110 this week.