The UK’s Next Nuclear Power Plant Could Collapse Before It’s Built
Finance issues plague Hinkley Point C, with energy company EDF still to sign off on the project.
A CGI image of Hinkley Point C power plant. Image: EDF
The UK could face power outages and missing emissions targets if the nuclear plant isn't built – but that doesn't mean it should be
Nuclear power stations are always controversial, but the UK's proposed Hinkley Point C is particularly so. It may well be the most expensive object ever built; it guarantees higher power bills; and it's already taken down executives, despite construction yet to start.
Hinkley Point C is set to be the first new nuclear power station built in the UK since 1995, poised to hit the grid as older nuclear sites and coal are ditched. However, its high costs are now leaving the project—and the future of the UK's power supply—in danger.
Set to be built in Somerset by energy company EDF, which is majority-owned by the French government, there's a chance Hinkley Point C may collapse before it's built, and it's nothing to do with protesters or environmental complaints. The problem with Hinkley is money: its costs risen to £18 billion ($25 billion)—with some projecting the final cost to be £24 billion ($34 billion)—and EDF has yet to finalise funding. Though it is expected to sign off on the project soon, financial analysts stressed last week that EDF can't afford to build it.
The delays may already cause shortages in the UK's electricity supply as it's currently planned, which would naturally worsen if the project fails to get off the ground. The plant is supposed to start operations in 2025, when several older nuclear sites are decommissioned and the deadline hits for shutting down coal plants. Tony Roulstone, a professor setting up the University of Cambridge's new MPhil in nuclear energy, believes the project will take ten years to construct, and given work isn't expected to start until 2018 or 2019, will miss its deadline. "This will put the UK in a difficult position because they were counting on electricity from Hinkley by 2025," Roulstone said.
"As some have said, the UK does not have a plan B," he added. "The AGRs [advanced gas-cooled reactors, which make up most of the UK power stations] will close down by 2030 and at that stage we would have just one nuclear power station, Sizewell B."
Hinkley Point C is expected to provide 7 percent of the UK's energy. At the moment, about a fifth of the UK's power comes from the eight currently-operating nuclear plants, but seven of those are due to be decommissioned. That, alongside the planned closure of coal plants, which make up 22 percent of our power today, led the Institution of Mechanical Engineers to claim in a report we could see a potential supply gap of 40 to 55 percent by 2025.
"If you follow these policies then a gap is likely," explained Jennifer Baxter, head of energy and environment at the Institution of Mechanical Engineers. "What is not clear is how long extensions to current nuclear and coal fired power stations will be [able] to account for the lack of new build power stations."
For its part, EDF has said it is confident the nuclear plant will go ahead. To see where it's headed next, it's necessary to recap its history.
Hinkley Point C has been in the works for six years, and will—as the name suggests—be built alongside decommissioned Hinkley Point A and still-operating Hinkley Point B, which is set to be decommissioned.
The project was first announced during a five-year span in which the British government decided it wasn't going to offer public funds for nuclear projects, leaving EDF to stump up the cash. Last year, with help from Chancellor George Osborne, EDF convinced China General Nuclear Power Corporation to pay a third of the project's cost for a 33.5 percent share.
The British government stepped in to help on another front, promising a minimum price per megawatt hour of electricity of £92.50 ($130)—which many have pointed out is twice the current cost and well above that from other power sources, including wind farms.
EDF is set to make a final decision on funding the project soon, ahead of a board meeting in April, after multiple delays. However, back in February the project's director, Chris Bakken, stepped down to "pursue new professional opportunities," and more recently the company's finance director, Thomas Piquemal, departed, with rumours suggesting he believed the project would damage EDF's finances too much.
The board-level turmoil might actually be a sign that EDF's remaining executives plan to approve the project, according to Martin Freer, director of the Birmingham Centre of Nuclear Education and Research and a professor of physics at the University of Birmingham. "My take on the resignation of the chief of finance signals that the HPC [Hinkley Point C] decision is being pushed through against the judgement of financial caution," Freer told me. "EDF are at a point in their history where they roll the dice and hope to be lucky."
Roulstone noted that the new plant's construction cost is the same as EDF's capitalisation. "Only major sales of assets and/or funding by the French government can rescue EDF and hence Hinkley," he said.
If Hinkley fails, the UK may have to turn to other sources. While giving a reprieve to coal won't be good news for emissions targets, stepping back from nuclear could help spur the take-up of alternatives such as renewable resources (solar, tidal and wind, for example). However, the most likely source of energy will be Combined Cycle Gas Turbines (CCGT), which use natural gas. "Because CCGT plants can be built quickly, supply can be filled, but it will not be low-carbon," Roulstone said.
Hinkley's failure need not mean the end of Britain's nuclear ambitions. There are other nuclear projects in the pipeline, though there's debate as to how Hinkley Point C failing could impact those too. "If Hinkley does not go ahead the other projects led by Hitachi and Toshiba will also be negatively affected, with either delays or perhaps cancellation," Roulstone predicted, saying investors could lose confidence in the UK's abilities to successfully back such large projects.
However, Freer believes Hinkley failing would be a "real setback, but not a disaster." He pointed to Hitachi's Advanced Boiling Water Reactor (ABWR). "This is a cheaper, simpler and demonstrated reactor design, which is widely believed to be a safer bet in terms of the potential for delivery," he said, adding that the ABWR will likely be built by 2025 regardless of what happens with Hinkley. The Chinese firm that's backed Hinkley could also step in with a different design, with sites already "earmarked for this purpose," Greer said.
Freer suggested that there's more than power supply and emissions targets at risk. "The governments of the UK, France, and China have invested huge amounts of political capital in seeing Hinkley Point C come to the point of construction," he said. "This political capital lies with the public, convincing them that nuclear is part of a low-carbon future; [with the] the financial institutions, convincing them that when the UK makes a decision it sticks to it and hence the UK is an investable proposition; and with international governments—when the UK makes an international agreement it is binding."
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- China General Nuclear Power Corporation
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