Today Hinkley C contract would cost £180 per MWh
- around 3xs the cost of offshore wind!
There’s been a lot of talk about how offshore wind has ‘increased’ its costs since the last Government contract auction - but that’s not a patch on nuclear power a la Hinkley C, courtesy of EDF. Capital costs for the project have increased in real (not just inflation) terms by around 50 percent since 2012, and there’s probably a lot worse to come.
The figure of £92.50 per MWh is often mentioned as the price of the contract for Hinkley C, and that is the contract price in 2012 prices. In today’s money using the Government’s preferred CPI calculator that is £124 per MWh - higher even than the currently gas-inflated wholesale power price.
But it is worse, much much worse than that, because Hinkley C’s real, not just inflation-adjusted price, has increased. In 2012 the capital cost was estimated at £16 billion by EDF. Now the capital cost in 2012 prices has risen to around £33 billion in 2023 money or around £24 billion in 2012 money.
That means that if Hinkley C’s contract was set up today at the revised capital cost then the equivalent contract price would be about £138 per MWh in 2012 prices and around £180 per MWh in today’s prices. That is of course if the contract was assessed on the same contract length - 35 years, and on a similar rate of return. The rate of return certainly would not be less since interest rates are a lot higher than they were in 2012.
The estimates published by EDF do not include interest rate charges. They are called ‘overnight’ costs, which in itself is highly ironic since the last thing nuclear power stations are noted for is being built overnight. Their construction takes many years, racking up immense interest charges on the way. If this was a private company they surely would have gone bust by now. The only way that EDF could get themselves into this position is because everybody knows that the French Government will inevitably bail them out.
Of course, as far as Hinkley C costs go, the only way is up. Heaven knows how high they will go! And the Government is going to make electricity consumers pay for the next EDF nuclear disaster at Sizewell C!
So let’s reflect a bit on the apparent horror apparently experienced by the UK Treasury that they might have to offer more than £44 per MWh (at 2012 prices) for offshore wind contracts.
It seems so many people in the governments of all nations are still owned or hoodwinked by the belief that nuclear power is the savior from climate change and the eventual end of fossil fuels. That we can and must burn every drop of oil, cubic foot of natural gas and every ounce of coal before transitioning to renewable energy. Now they are touting SMR technology as the new savior. Nuclear power is too dangerous, too expensive, and totally unnecessary for our energy needs. Go to the website of the Solutions Project who have developed plans for 146 countries and all 50 states of the United States with just wind, hydroelectric, geothermal, and solar energy.
And EDF are refusing to update their original £20bn estimate to build Sizewell C “Baroness Sheehan directly asked the Minister for an updated cost estimate for Sizewell C, which was refused on grounds of "commercial confidentiality"”. Horlicks! Sizewell is a more complicated, less accessible site if Hinkley is clocking in at £33bn to date, you can bet your bottom dollar Sizewell is looking at £40bn. No wonder they daren’t mention the price.