Hinkley Point Set To Cost £48.9 Billion In Subsidies
By Paul Homewood
Plans of how the new Hinkley Point C nuclear power station could look.
Now that Hinkley Point has finally got the go ahead, it is time to take a closer look at the costs and subsidies.
A few basic facts:
Hinkley will have a capacity of 3.2 GW
Assuming 90% loading (an assumption made in the Committee on Climate Change’s calculations), this would yield 25.2 TWh annually
The strike price is £92.50/MWh, @2012 prices
This inflates up to £97.87/MWh at 2016 prices
The current wholesale electricity price is £42.40/MWh
On current prices, therefore, the subsidy equals £55.47/MWh, totalling £1398 million a year, or £48.9 billion over the period of the 35-year strike price contract.
This is substantially less than the estimate of £29.7 billion, made by the National Audit Office earlier this year.
The difference lies in the assumption by the NAO that electricity prices will gradually rise in coming years:
They have used DECC projections, which state that the wholesale price will have risen to £65.58/MWh by 2030 (at 2015 prices).
Although they anticipate higher fossil fuel prices, the main reason for the increase is our old friend, the carbon price. We know from the Committee on Climate Change’s calculations behind the Fifth Carbon Budget that the carbon price will add an extra £19.50/MWh to the wholesale price by 2030.
Of course, the term, “carbon price”, is a bit of a euphemism. In reality, it is a tax on fossil fuel plants. Without this tax, the wholesale electricity price projection would only be slightly higher than now (again, in current prices).
In reality, nobody has a clue what will happen to electricity prices in the future, or for that matter oil and gas. What we can safely say, though, is that the cost of the 25.2 TWh, which is due to be produced each year at Hinkley Point, will more than double from its current level of £1068 million to £2466 million, at today’s prices.
Whether prices would have risen to some extent anyway without Hinkley or not, consumers will still be much worse off.