The long-awaited final investment Decision (FID) for EDF Energy’s planned 3,200-MWHinkley Point C nuclear power station in western England, scheduled to take place at a board meeting of French utility EDF in Paris July 28, will not only give the go ahead for the first new nuclear plant in the UK since 1995, but could also serve as the starting gun for a total of 16,000 MW of new nuclear capacity due to be built in the country.
Key to Hinkley’s significance for other new nuclear construction, not only in the UK but elsewhere in the European Union, is the Contract for Difference, or CFD, a 35-year offtake price guarantee and debt protection.
Hinkley’s strike price was agreed at £92.50/MWh, or £89.50/MWh, if a positive FID is taken on further EPR units at Sizewell C. EDF estimates that it will make a rate of return on the project of around 9% over a 60-year lifetime.
The CFD mechanism was approved as legal state aid by the European Commission after an in-depth investigation, although it is still the subject of a legal appeal by Austria to the European Court of Justice, or ECJ.
NuGeneration Limited, or NuGen, a consortium that is 60% owned by Japan’s Toshiba and 40% owned by France’s Engie, and Horizon Nuclear Power Limited, a subsidiary of Japan’s Hitachi, have both said that all of their new nuclear construction plans will be funded by a similar CFD model.
NuGen plans to build 3,800 MW of new nuclear capacity at its Moorside facility adjacent to the existing Sellafield fuel reprocessing and nuclear decommissioning complex in Cumbria in north England.
Horizon plans to build a two reactor, 2,700 MW plant at Wylfa Newydd, or New Wylfa, on the Isle of Angelsey in north Wales and another 2,700 MW, two reactor plant at Oldbury in Gloucestershire in western England.
Further afield, Lithuania and the Czech Republic have both indicated that they could use a similar CFD funding mechanism if they proceed with new nuclear construction, although Poland appears to have cooled on the funding model, under a new, coal industry-friendly government.
All this should be taken with a pinch of salt, however. The UK has a history of ambitious new nuclear construction programs that end up as something of a damp squib.
The last nuclear plant built in the country, the 1,250-MW Sizewell-B, the UK’s only PWR reactor, was commissioned in 1995. At the same time that this unit was approved, there were also ambitious construction plans for a series of PWRs, including at Wylfa-B, Sizewell-C and, indeed, Hinkley Point C. While these plans were expected to come to fruition by the late 1990s, only Sizewell-B eventually got built.
Going further back, the UK’s Minister of Power, Fred Lee, in May 1965 rather melodramatically called the Advanced Gas-Cooled reactor, or AGR, the “the greatest breakthrough of all time,” heralding another ambitious nuclear construction program in the country.
The reality is rather different, and while the AGR currently remains the backbone of the UK’s nuclear power industry, the reactor design today is viewed as a rather exotic, technologically-challenged hybrid that is unique to the UK.
A total of 14 AGRs were eventually built which today have a combined capacity of around 7,500 MW. While the units comprise the majority of exiting UK nuclear generation, they have suffered a series of technical setbacks and generally not performed as well as the reactors of other advanced nuclear countries such as the US, France or Japan.
Looking further back still, the first indigenous UK nuclear reactor design, the magnox reactor, was the subject of large scale construction and export plans, most of which did not come to fruition. Only two reactors were ultimately exported and the design is arguably best known for the worst nuclear disaster in the UK, the 1957 fire at the Calder Hall site, within the present day Sellafield complex. This event resulted in the worst nuclear disaster in the UK’s history and a significant radioactive release.
This is not to say that Hinkley Point C will not be the new dawn of a successful UK nuclear construction program. The aging existing reactor fleet and UK policy of not using coal-fired power after 2025 threaten potential regular power cuts by the late 2020s if there is not significant new nuclear.
Yet, the history of nuclear construction in the UK indicates that any aggressive construction plans are likely to be subject to later modification.
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