Hinkley C — Where are we going?
I have a significant professional stake in the future of the UK nuclear industry, as I direct the MSc in Advanced Nuclear Engineering at Imperial College London and I have a rich research portfolio with a keen focus on materials in energy solutions. I have been following
developments with EdF and Hinkley C rather closely.
As ever, I write this blog in my personal capacity. I am most easily found on twitter as @BMatB.
Hinkley Point C is a significant opportunity for the UK to invest in a low carbon energy future. It will offer 3.2 GWe, powering ~6m homes for 60 years. The design is an EPR (formally called the European/Evolutionary Pressurised Reactor) and it uses uranium dioxide fuel in a classic pressurised water circuit with lots of engineering innovations to improve reliability, efficiency and safety. Thermal power is extracted from the heated water through a classic steam generation system and used to generate electricity.
This project represents a significant investment in the future of the UK and offers a great opportunity to re-invigorate the UK nuclear industry, creating jobs and securing a low carbon energy future.
The Hinkley story started in 2008, with a strong commitment towards new nuclear build in the UK. In the last 8 years, there have been several major issues to overcome — which through hard work and perseverance have been managed well and we continue to look forward to a rosy future of this major project. We thought that our last hurdle was the final investment decision by the EdF main board yesterday (28th July 2016) but it turns out that the UK government have stalled things for the moment.
The final investment decision by the EdF main board was positive and immediately there was much excitement and enthusiasm for the go ahead. This decision was not taken lightly, and it represents a very strong show of confidence by a foreign company in this major capital infrastructure project. It comes off the back of some heavy lifting to raise capital within EdF group. The project is estimated to cost £18bn, with £2bn already spent by EdF. The UK government issued a £2bn guarantee towards the build, with the strike price providing significant reassurance to financiers and interested parties. For a capital project of this size, this is tremendously important. Investment is also underpinned by a 33% equity stake in the project by China General Nuclear.
The scale of this project is not be trifled with — an equivalent solar farm would cover an area the size of the Isle of Wight (~94,000 acres). As I have repeated elsewhere, at £2k per kW (cheap for solar) this farm would cost £6.4bn. The warranty of a typical solar farm is 25 yrs. Hinkley comes in at a projected price of £20bn, an initial lifetime of 60 years, and occupies a 160 acre site.
While I quote figures of comparison using a solar farm, I should emphasise most strongly that our target is to decarbonise our energy generation and that nuclear plays its role as a significant base load producer within the UK. It has the ability to provide a high capacity factor source of electricity for many generations to come, and any legacy it has is far less damaging than the fossil fuel solutions it offsets. Nuclear will play a role alongside a diverse range of other lower carbons solutions, such as wind, solar and tidal power.
The Hinkley C project is not without controversy. There are three major sticking points: builds of the EPR design is fraught with delays and complications (in Flamanville and Olkiluoto); the project has a relatively high energy strike price compared to current market; and there are security concerns regarding the Chinese and the Bradwell development.
The EPR design is rather complex. However it is also built to match expectations of the European regulators and to provide long term reliability. It also reflects current design considerations in large reactor designs. The economic incentive of a large and high power reactor design is that, long term, you can get better value for money. However this increases risk in build times and ultimate time to grid, as well as complications in funding and planning a major project.
The strike price argument is tricky to engage with properly. It stems from difficulties in convincing a private company to undertake a huge capital project. However, EdF do not enter this blind and with only the strike price in mind, they have to consider forward thinking investment in a friendly market and demonstration of the EPR. Without this product, it is unclear what EdFs export market would look like (and also the future of the remaining nuclear fleet in the UK). As such, the EPR project is rather important to them and they have significant expertise of working in the UK already.
Security issues with respect to the investment by China General Nuclear (CGN) are worth discussing. The company is state owned and this would be another major power having a degree of control over a significant UK infrastructure project. However in light of the UK government’s austerity agenda and therefore its reluctance to financially back the project to the tune of £6bn (which could have been engineered through private finance initiatives and low cost government debt), it is not surprising that Osborne went shopping around and China stepped up. Partnering with CGN is a significant asset to the programme, as it provides an experienced partner with a good build record and they are keen to show the west that they play fair. Fundamentally China are playing a long game and likely see UK investment as an opportunity to open up the west for their exports (principally through Bradwell).
While I write this grumpy with the fact that there is yet another delay to the UK nuclear renaissance, I confess that I remain hopeful. There is still strong support across the UK for the Hinkley project (it creates jobs, electricity and is a step forward), but there are other exciting games in town to look forward to — such as SMRs, and the other new build projects, as well as fusion and GenIV design. We must remain pragmatic and continue to push ahead if we are to achieve engineering solutions for major societal challenges.
Fundamentally, EdF’s final investment decision is a strong show of confidence in our shared future and our collective commitment to delivery of low-carbon energy solutions. The UK governments delay to proceedings is a surprising development, both in light of strong support from previous administrations, cross party consensus, and combined with recognition of our needs to deliver of reduced CO2 emissions as part of the global initiatives such as the Paris Climate Agreement.
Exciting engineering grand challenges, such as Hinkley C, offer positive encouragement and global investment represents concrete support for UK partnerships across science, engineering and technology. This is especially important in light of the EU referendum. I hope that the government will be able to clarify their position quickly and that we as a community can come to a positive outcome to secure energy for all our futures.
I declare no personal financial conflicts of interest in writing this piece. For clarity, I also note that some of my students have received bursaries sponsored by members of the EdF group.