Skip to content

Hinkley Point Set To Cost £48.9 Billion In Subsidies

September 21, 2016
tags:

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.

 

ScreenHunter_4593 Sep. 21 18.48

https://www.nao.org.uk/wp-content/uploads/2016/07/Nuclear-power-in-the-UK.pdf

 

 

The difference lies in the assumption by the NAO that electricity prices will gradually rise in coming years:

 

ScreenHunter_4594 Sep. 21 18.52

https://www.nao.org.uk/wp-content/uploads/2016/07/Nuclear-power-in-the-UK.pdf

 

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. 

14 Comments leave one →
  1. Joe Public permalink
    September 21, 2016 7:07 pm

    Typo alert:

    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.

  2. September 21, 2016 7:45 pm

    ‘Assuming 90% loading’ – not guaranteed at all. The more renewables like wind power get connected to the grid, the harder it will be for other non-priority power sources to claim their share of the market.

    • September 21, 2016 9:33 pm

      Yes, REF has been looking at this aspect.

      In fact I think it is the opposite of what they think, which is bad news for wind farms.

      I’ll try to knock a post together tomorrow

      • It doesn't add up... permalink
        September 21, 2016 9:45 pm

        The wind curtailment bill will increase, which will be another cost.

  3. Harry Passfield permalink
    September 21, 2016 9:04 pm

    That’s why fracked gas has been sidelined. Can’t have that disrupting the price-point of this white elephant. And it’s why the CCC keep telling us that fracked gas will not be cheaper. They are running scared of the market.

  4. September 21, 2016 9:41 pm

    A billion here and a billion there.
    Pretty soon one is talking real money !!!

  5. CheshireRed permalink
    September 22, 2016 8:18 am

    Beyond satire.

  6. AlecM permalink
    September 22, 2016 8:34 am

    What’s the Point?

  7. BLACK PEARL permalink
    September 22, 2016 10:02 am

    How many hospitals could be built for that ?

  8. September 22, 2016 10:26 am

    With these public projects I always do the simple arithmetic.

    £48.9 billion divided by 60 million (population) is, rounding down a bit = £800 each – what a bargain….

    As I’ve said elsewhere – if only half the PR budget was given to Flibe Energy – I’d be a happy taxpayer….

  9. David Brown permalink
    September 22, 2016 11:41 am

    Anyone noticed how near the sea it is or how near sea level it is? Apparently it will be submerged before its finished, if the consensus is right.

  10. Gerry, England permalink
    September 22, 2016 12:42 pm

    This is based on the assumption that it will actually work and be completed in our life-times.

  11. tom0mason permalink
    September 22, 2016 1:58 pm

    For those wondering what happens when a major power outage happens and all the electricity fails just ask the people of Puerto Rico today…

    http://www.npr.org/sections/thetwo-way/2016/09/21/494931135/massive-power-outage-reported-in-puerto-rico

    ChiefIO has it covered at https://chiefio.wordpress.com/2016/09/22/puerto-rico-goes-dark/

    Still at least the weather is warm there, so it could be worst than no hospitals, refrigeration, lighting, phones, transport, etc., ….

    • AlecM permalink
      September 22, 2016 5:40 pm

      I have for some time been agitating for politicians and civil servants who systematically destroyed our power grid to be charged with Corporate Manslaughter when we have the first 4-5 day outage, which will kill about the same number of people as Hitler did in the London Blitz.

      This figure, 40,000, was predicted for Germany in a 2011 Wargame by the Committee which oversees their grid. A year ago, a similar exercise was done by the UK Cabinet Office, the result of which is to bribe owners of coal fired plants to keep them in oerational state for a Black Start, which cannot be achieved by windmills.

      You couldn’t make up this level of stupidity, but most politicians are sociopaths, so don’t care.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: