One thing we have learnt this week – Hinkley C

One thing we have learnt this week – nuclear power is back or is it?  This week we have had an announcement that two reactors will be built a Hinkley point in Somerset by a French/Chinese consortium. Supposedly the first to be built without public subsidy, although as we will see this is not strictly true. So what have we learnt?

Whilst there is no public money per se going into the deal the UK government has guaranteed a price for the electricity (strike price). In the week where there has been almost constant controversy over energy prices we learn this is 9.25p/kWh approximately double the current price of electricity on the wholesale market. We can learn from this that this is what the government thinks this price will be competitive with the wholesale price of electricity in 2023 when Hinkley C is supposed to open. Its also linked to the prices index so will rise with inflation. This implies the cost of electricity in 2023 will be double the current price for the consumer.

Second, we know the projected cost is £16 billion for 3.2GWp of installed capacity. This is up from £14 billion on Monday, which I assume was a reporting mistake.

The department of energy and climate change rushed out a dodgy infographic on land area. People have questioned particularly the land area attributed to the same capacity of solar and wind. I have not done the math on this, but in any case its missing the point since the best place for solar is on a roof, of which there is plenty available. However, the graphic did give some useful information that is the projected output (presumably of both reactors). This allows the calculation of the projected installed cost and the price of electricity and the capacity factor. The installed cost is easy, that is £16 billion divided by 3.2GWp or £5/Watt installed. This compares with a domestic solar installation of reasonable size which has an installed cost of around £1.2/Watt, large ground mounted systems are even cheaper.

But how much will the electricity cost and has the consumer got a good deal? For any renewable energy installation you can consider that as the costs of running it are minor the cost of installation determines the cost of the electricity (or heat) you have effectively bought up front over the projected lifetime of the system. Conventional plant (and renewable biomass) is not the same since the price of the fuel is not free and may change but we can get an indication. To do this calculate the installation cost divided by the average output per year. So we are told this yearly output over 35 years of support will be 26TWh. I prefer to think in kWh and pence.

So 26 TWh = 26000GWh = 26000,000MWh = 26000,000,000kWh

£16 billion = £16,000,000,000 (assuming US billion)

cost per watt of generation is therefore

£16,000,000,000 / (35 x 26000,000,000) = £0.0175

or 1.75p/ unit

The capacity factor is the actual projected output divided by its theoretical output if the plants operated 24/7/365 expressed as a percentage by multiplying it by 100.

So 26000,000,000/(3.2*1000*1000*24*7*365)*100 (all in kWh)

= 13.2%

These last two figures seem implausibly low. Even allowing for the fact that EDF will not get a return on their money for over 10 years and running costs are not included, this does not look like a good deal for the consumer. The load factor also seems amazingly low. If I have made a mistake in either calculation then please correct me.

The likelihood is that EDF will not be able to build Hinkley C for this cost in any case. The question is will they coming running to the government and if they do what will happen? One thing is for certain solar will be cheaper by 2023. The solar trade association are asking for a strike price of less than 9.25p/unit for 2018.

Personally I will believe Hinkley C when I see it open….

Neil

 

 

 

 

 

 

 

 

 

 

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