Pop the corks: nuclear is back! The UK government has finally agreed a deal (subject to EU approval) for the building of two new nuclear reactors at Hinkley Point, already home to two ageing reactors. Due to be completed in 2023, Hinkley Point C should provide up to 3,200 megawatts (MW) of electricity - equivalent to seven per cent of UK electricity demand. It’s been quite a wait. The last new nuclear station to come online in the UK was Sizewell B in 1995.
After years of attacking nuclear, then offering mere permission for new nuclear build, the UK government has finally admitted that nuclear energy is needed and it requires substantial financial support. The new station will cost a cool £16 billion. However, rather than simply build the power stations itself, it has agreed to pay a high price for the electricity generated, offering the operators - EDF and its partners - at least £92.50 per megawatt hour (MWh). The only way this looks good is in comparison to renewables; offshore windfarms currently receive £135 per MWh. The difference is the tie-in: Hinkley Point C will receive that inflated price for 35 years; offshore windfarms only get the guarantee for 15 years. By comparison, electricity generated from coal and gas currently costs £55 per MWh.
This could be the start of a renaissance for nuclear power in the UK. Included in the current deal is the potential for another nuclear station at Sizewell. Other groups are waiting in the wings to agree deals for new stations at Anglesey and Sellafield.
But it’s hard to shake the feeling that we’re paying over the odds. EDF claims it will make a return on its investment of just 10 per cent per year. But looked at another way, it’s a great deal for EDF. As one Telegraph writer puts it: ‘Accumulated revenues over the contract amount to £83 billion – not bad for an asset meant to cost £16 billion and with very low operating costs once built.’
The deal highlights a few obsessions of recent government policy - and not healthy ones, either.