The Government’s new nuclear power construction financing mechanism, the so-called ‘Regulatory Asset Base’ (RAB), is likely to cost energy consumers an average of well over £1000 each added onto their electricity bills. On top of that energy consumers will have carry on paying on top of this for an as-yet-undecided amount for each kWh generated by Sizewell C.
According to EDF planning figures the cost of Sizewell C will be £20 billion. Experience suggests that there is little faith to be placed in EDF’s claims. For example, the actual cost of the Flamanville nuclear power plant being built by EDF (the same EPR model) has cost upwards of 5 times as much as their original estimate. So we can probably expect a bill of at least £30 billion to be paid by consumers through their electricity bills. That is because the RAB mechanism will ensure that consumers pay the cost overruns, which are certain to occur when building these nuclear power plant. Given that there are around 26 million domestic electricity consumer bills to be paid in the UK, this means each consumer will be paying over £1000 each to build the power plant.
It isn’t as if this is a new technology whose costs will be reduced in the future. The costs of new nuclear power plant have never, in general, gone down – unlike renewable energy technologies. Indeed, when Sizewell C starts generating (probably not until at least 2035) it will then be paid at least as much as the solar farms and windfarms now being constructed (in which case, it must be emphasised, their developers are given absolutely nothing to support their construction). And of course by then the windfarms and solar farms that are starting production in 2035 will be even cheaper. But Sizewell C generation will be paid premium prices according to a contract that is still to be negotiated with the Government.
The EPR is fast looking like an even bigger disaster as time goes on. The reactors being built in France and Finland have had a series of problems and are still not finished despite bneing started in 2005 and 2007 and the first (very late) EPR built at Taishan has suffered serious breakdowns. This is now being connected to the possibility of a generic fault in the design of the EPR which is likely to throw the completion of the EPR being built at Hinkley C into the long grass, with EDF suffering mounting losses.
The twist in the tail of this story is that after commissioning Sizewell C will probably be guaranteed a rather higher price for the electricity generated. This will be done to reward the likely shareholders of this project, that is EDF and the Treasury (despite the fact that the shareholders will be protected against any construction cost overruns by the RAB mechanism). Since the Treasury will be a shareholder on account of the fact it will have to buy the 20% stake currently owned by the Chinese nuclear company CGN they will have an interest in ensuring consumers will pay a high price for the electricity generated by Sizewell C, so that the Government can make some good profits.