UK households could pay £50bn for the new Hinkley Point C nuclear plant in Somerset, new government figures reveal. That number is more than eight times greater than the National Audit Office’s initial 2013 estimate that a public investment of £6bn would be required. The spiralling costs are due to the terms of the Government’s agreement with EDF, the French state-owned electricity company, which is building the plant in conjunction with China General Nuclear Power. That deal guarantees EDF a £92.50 “strike price” for every megawatt hour of electricity that the new plant generates, a figure that critics have said is far too high.
Independent 19th July 2017 read more »
Figures published this week suggest that households could end up paying eight times more for the Hinkley Point nuclear power station than was originally estimated four years ago. This should have come as no surprise. Last month, a devastating report by the National Audit Office (NAO) laid bear the full horror of this policy fiasco, for which the Treasury shoulders much of the blame. Given that Chancellor Philip Hammond is now trying to take the de facto lead on Brexit, alarm bells should be ringing. The poor judgement that led the Government to rubber- stamp the disastrous Hinkley deal only last September is all but certain to lead to a bad Brexit deal. Britain’s pro-nuclear policy was set out in a 2008 white paper, since when, as the NAO pointed out, the economic case for nuclear has deteriorated. Estimated construction costs have increased, while low-carbon alternatives have got cheaper, and the price of fossil fuels has fallen. The Government agreed the key commercial terms of the Hinkley deal with EDF in 2013. But the significantly lower fossil fuel prices now expected over the life of the deal mean that the cost of top-up payments that consumers will be forced to make to subsidise the plant will rise from £6 billion to £30 billion. On its way to striking this parlous deal, the Government crossed every one of its red lines bar one. The team negotiating the agreement had been told to fix the strike price – the guaranteed price France’s EDF will get – at no more than £85 per MWh. The strike price ended up at £92.50 per MWh (indexed to inflation).
CapX 20th July 2017 read more »