Hinkley C update – Chaos and TINA

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Figure 1: Hinkley C and delays, like peas in a pod!

Well it would appear that Theresa May, for all her faults, is the sort of person who reads the small print of any document before signing it. The UK was on the verge of signing the deal with EDF to proceed with Hinkley C when at the last minute business secretary Clark announced a delay while they “evaluated” the contract (I have this vision of May reading the Hinkley C contract details over breakfast and spitting in her coffee when she realised what a crap sandwich the country was being expected to swallow).

And this decision to push ahead despite Brexit, by EDF (who brought forward the schedule) must have come from orders from the top. Likely Hollande himself, likely hours after he met Theresa May and with her letting slip she had reservations about the project. She had done this before, as a cabinet minster, notably about the Chinese dimension to the project, so some objections from her or her minions is not that surprising. But it naturally spurred the French into action to try and get things signed off before such reservations could be raised to a level that would stop the project.

Consider that for several months now the EDF board has been deadlocked on whether or not to approve Hinkley C. The approval for the project last week only came about due to an 10 to 7 vote by the board, which was only a majority because several executives have resigned over the last few months (in protest against the deal), and at least one more did so immediately afterwards. For those who don’t know, it is unheard of for a company board to approve a contract this critical, a deal that could literally make or break a firm, on the basis of a simple majority. Generally they will aim for a consensus decision with unanimous support from the board (or as near to that as they can get).

After all, if you are one of those 10 who voted for Hinkley C, its now on your head, your future career prospects hinges on this project. When the bad news inevitably starts filtering back of delays and cost overruns (just look at Flamanville, a project half the size of Hinkley), you will be the ones passed over for promotion or pushed forward for sacrifice when a head is called for to appease the critics. Meanwhile the ones who voted against the deal, or resigned, see their stock soar. They get to sit back with a smug “we told you so” grin. They will likely be promoted (or rehired) to fill the “vacancies” that emerge. I won’t be the least bit surprised if one of those who resigned from EDF in protest at Hinkley C is running the firm in a few years time.

So clearly for so many of the EDF board to more or less sacrifice their careers like this, you know the pressure must have been on them to sign quickly before the British pulled out and exposed EDF’s little ponzi scheme.

UK takeover of the project?

 

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Figure 2: LCoE costs for Hinkley C compared to German Renewables [Source: energytransition.de (2015)]

The fact is that Hinkley C represents terrible value for money. The cost to the UK taxpayer for the project is now estimated at £37 billion, and this estimate was made prior to Brexit (so who knows how high it is now). By contrast the estimated construction cost (the cost to EDF) is estimated at £18-24 billion, although you can count on one hand the number of people who thing it will be built for that amount. The total costs of Hinkley C (e.g. construction, subsidy, security, insurance, running costs and decommissioning) may end up being much higher. I’ve seen estimates in excess of £100 billion in the past.

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Figure 3: Even Wind power to gas costs on top of CCGT’s might now work out cheaper than the cost of subsidies to Hinkley C [Source: The Ecologist, 2016]

What you consider to be the true cost of Hinkley boils down to who you are, EDF, the taxpayer or the billpayer, noting that if your a UK resident your likely to be the latter two of these. So regardless of what the true figure is (i.e. where the subsidy ends and the bill payers contributions start), suffice to say you’re going to get royally screwed one way or the other. Nothing short of leaving the UK (another argument in favour of Scottish independence perhaps) will stop that.

However from the government’s point of view they are being asked to essentially pay +£37 billion for a +£18 billion plant, which is just crazy. The obvious solution, if the government really does want a nuclear plant at Hinkley, would be to throw the whole strike price contract out, tell the Chinese to beat it and build the plant as a national infrastructure project (subcontracting the French in to build it, with the government directly financing it), with the costs of its construction (whatever they turn out to be) added on to the country’s national debt.

As the government would then own the plant, they would have control over it and they could set the price of the electricity it generates. So they could lower the price (as the French do with their nuclear plants) to sell electricity cheap and undercut fossil fuel plants, meaning bills could be forced down at times of high demand. Or at times of slack demand, they could drive the price up and bring some level of order to the energy market. Alternatively, while the French plan to operate Hinkley to supply base load at a capacity factor as high as they can make it, a state owned plant could be operated at a lower capacity factor and used to provide load following electricity (as the French do) which would make it a more useful component on a future renewables heavy grid.

However, such a plan is unlikely because it would amount to the use of the “S word”. The whole point of this messy merchant of Venice type deal is so that the Tories can pay Chinese and French state owned companies to do the whole “socialism” thing for them, because its against the Tories religion of Thatcherism.

Also such an unprecedented level of state aid is almost certainly illegal and against EU competition rules. And no, Brexit doesn’t change a lot in this regard, not if the UK is still be part of the single market and a member of the WTO. Naturally the renewables industry, smarting from 12,000 job losses to pave the way for Hinkley will point out that for the same price they could install many times more renewables (offshore wind has recently been priced at a value as low as 73 euro’s /MWh v’s Hinkley’s subsidy adjusted price of £164-174/MWh) and have change left over to pay for a large block of energy storage too. Energy efficiency measures also work out much cheaper.

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Figure 4: Estimated LOCE’s wind v’s nuclear v’s fossil fuels with CCS

In short, nationalising the project would eliminate much of the smoke and mirrors surrounding that project. But that ignores the fact that the smoke and mirrors are there to stop public or parliamentary scrutiny that would reveal what a crap sandwich the project is.

Alternative suppliers

It is strange when you learn that there are still people, who have been following the Hinkley C mess, yet who still think building more nuclear plants is a good idea. They favour switching to another supplier. However, this amounts to a case of grass is greener on the other side syndrome. We know all of the bad news about the EDF’s proposal already, the other ones only look better because they haven’t been subjected to the same level of scrutiny.

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Figure 5: There are delays too to AP1000 construction in China

The US AP 1000 for example, no such reactors exist. Only a handful of these reactors are under construction, and that’s going on in China, so its difficult to point to much in the way of reliable information. And even then it would appear that all of them are behind schedule and probably well over budget. And likely they would be in an even worse position if it weren’t for much corner cutting by the Chinese in an effort to get things back on schedule (The first EPR build in Finland unravelled because the Finns stopped such corner cutting and insisted the plant be built as specified).

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Figure 6: BWR’s v’s PWR’s [Source: Tepco, ND]

The Japanese Horizon deal proposes using boiling water reactors. However BWR’s are generally considered to be less safe than PWR’s. Recent designs do have a number of novel safety features which should resolve these concerns, but no new BWR’s have been built since Fukushima (which was a BWR), so its unclear what the costs of those reactors will be in future. Also the Horizon plan is to use an obsolete pre-Fukushima design called the ABWR (Advanced Boiling Water Reactor), specifically an untested upgrade to this design. However the ABWR’s has shown poor reliability with capacity factors ranging from 70% to as low as 46%.

In my opinion, I reckon some of these proposals might work out as somewhat cheaper than Hinkley C (simply because I don’t believe anyone could be as incompetent as EDF have shown themselves to be), but probably more expensive that renewable based alternatives. Also inevitably there will be a delay, were talking about installing untested designs here that have not been fully certified for use in the UK. Getting any of them built before the critical date of 2026 (when the UK will shut down all of its remaining coal plants and several of its nuclear plants hit their end of life date) is extremely unlikely. In essence, we can’t wait.

Fantasy options

Of course the real head cases in the nuclear cheerleaders club will invoke what I consider to be the equivalent of the lords prayer for nuclear supporters – small modular reactors (SMR’s) as an alternative to EPR’s at Hinkley. Its equivalent to me proposing to use invisible pink unicorns running on pixie dust as an alternative source of energy.

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Figure 7: SMR’s – Small Modular Reactors

Despite all the talk over the last few decades about them, no commercial SMR’s exist today (save one small non-commercial prototype running in China). All of these designs only exist on paper (i.e. unproven and untested, your guess is as good as mine as to how much they’ll cost or how long they’d take to build), generally being pushed by paper companies (or subsidiaries) whose main product over the last few years has been powerpoint slides and photoshoped images. As I discussed before, if you think EDF are going to shaft you, you’d want to be pretty damn naïve to put any of these guys in charge instead.

Furthermore, SMR’s amount to sacrificing economies of scale. Instead of two reactors at Hinkley your talking of building perhaps 30 reactors scattered in batches all over the country, which is inevitability going to work out as more expensive and take longer to build. This is a view shared by the NNL, who have previously concluded that SMR’s will only ever fulfil niche energy roles. Indeed, my view is that they would be better deployed as a source of industrial heat generation, rather than electricity.

And mass producing them, running them off the production line like sausages (as some fantasise) isn’t as straightforward as is often suggested. It would require a very large run of reactors to be economically viable, likely you’d need an order for thousands if not tens of thousands of them. There is simply no market for that right now. The infrastructure costs would be colossal, far exceeding Hinkley C’s.

Consider that Elon Musk is currently building the world’s largest factory at the cost of several billion just to shave perhaps 30% off the cost of his batteries (i.e. an existing product). Nuclear energy supporters would need to cut the cost of nuclear by at least 50% or more and increase productivity 20 fold to make it a viable proposition. So the amount you’d need to invest in such an enterprise would be enormous, likely hundreds of billions of dollars.

And given how fault intolerant reactors are, very high engineering tolerances with 100% inspection and testing of finished parts would still be needed, as many components would be “reassuringly expensive” (like in the airline business). There would in short be a floor to how cheap you could build them, even with mass production. And my guess is that that floor price will still be higher than future renewable prices (or those batteries from Elon Musk’s giga-factory).

Pi$$ or get off the pot

In short, critical of Hinkley as I am, I’m forced to the conclusion that its a classic case of TINA (There Is No Alternative), at least if you are pro-nuclear. The options for the government are either press ahead, grease yourself up and prepared to spend the next forty years getting shafted by the French and Chinese governments.

Or alternatively not only abandon Hinkley C, but announce a moratorium on any future subsidy of nuclear energy contracts and reverse Osborne’s cuts on renewables. This is really the only way that the UK can meet its obligations under the Paris climate treaty

Of course one must note that there are many in the cabinet who favour abandoning action on climate change and going for a future mix of coal and fracking. My worry is, the longer this dithering Hinkley goes on, the more likely this becomes the likely outcome.

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About daryan12

Engineer, expertise: Energy, Sustainablity, Computer Aided Engineering, Renewables technology
This entry was posted in clean energy, climate change, economics, efficiency, energy, fossil fuels, France, Fukushima, Global warming denial, Japan, nuclear, politics, power, renewables, Shale Gas, Shale oil, subsidy, sustainability, sustainable. Bookmark the permalink.

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