News

EDF Expected to Announce Hinkley Point Decision This Week

           News

EDF is expected to make a decision on its investment in the proposed Hinkley Point C nuclear plant this week, according to French news reports.

Under a Strategic Investment Agreement, EDF and China General Nuclear (CGN) would invest in Hinkley Point C on the basis of a 65.5% share to EDF. Other potential investments for these partners are new nuclear constructions at both Sizewell and Bradwell. The Bradwell site would be on the basis of a 66.5% share for CGN and would showcase China’s nuclear technology. EDF also invests in projects in China, where 30 nuclear reactors are currently under construction.

Hinkley Point C would have a capacity of 3.2GW and deliver 7% of the UK’s electricity while avoiding 9 million tonnes of CO2 when compared to gas. Plans are to build the new reactors next to an existing nuclear plant that is due to be decommissioned, with an expected completion date between 2025 and 2030.

Government financing will be provided in the form of a Contract for Difference (CfD) contract at an agreed strike price of £92.50/ MWh for the first project, based on 2012 prices, and reducing to £89.50/MWh if the Sizewell project goes ahead. This compares to other strike prices agreed for large renewable projects in a range of £80/MWh to £120/MWh, all at 2012 prices. Under the CfD scheme, if wholesale prices rise above the strike price, payments from the generator will return to the customer. If they fall below this price, the generator receives a top-up payment. The cost of CfDs is passed through to consumers’ electricity bills. The project will also receive £17 billion of government-backed loans.

At a recent meeting of the All Party Parliamentary Group on Energy Costs, evidence was given on the proposed nuclear power station at Hinkley Point. It was demonstrated that new sources of generation will be required given that, on the basis of existing power plants contracted and under construction, capacity is predicted to decline from 2021, falling from approximately 75GW today to 55GW in 2026.

Of the UK’s existing 15 nuclear reactors, the majority will be retired by 2023 with only Sizewell B continuing to operate until 2035. DECC statistics show that nuclear generation fell by 10% between 2013 and 2014, although coal output saw a greater decline of 23% year-on-year. In contrast, renewables increased by 21% and gas-fired generation by 5%.

A combination of a reduction in capacity and increased reliance on intermittent sources of generation has led to concerns over the ability of the system to meet peak demand, which the government is taking a number of steps to address. One of these is to build new nuclear power plants to provide a reliable baseload supply, and the government aims to have 16 GW of nuclear capacity operating by 2030, with a total of 19 GW planned. The development of battery storage at scale would remove a large part of the intermittency that results from renewable generation, if the technology could be implemented quickly enough. However, the issue would still remain as to whether enough power could actually be generated and stored to meet peak demand. A recent report on battery storage published by the Renewables Energy Association and KPMG finds that many gridscale storage projects are already economic in certain circumstances, although barriers to securing funding could be a problem.

The technology planned for Hinkley Point is a new pressurised water reactor known as a European Pressurised Reactor (EPR), which has a reduced level of uranium consumption. Four EPRs are currently under construction, two in China, one in Finland and the other at Flamanville, France. The European builds are both years behind schedule and safety concerns have been raised at the Flamanville site, with nuclear regulators delaying their final decision on its safety until the end of 2016. The problems experienced during the build could provide good experience ahead of the Hinkley Point project, but environmental groups point to the risks that EPR technology could bring.

EDF has said that the EPRs are now built to new designs and it expects to build more in France in order to replace some of its ageing nuclear fleet. France has a high proportion of nuclear generation, at 75% of the generation mix, but has set itself a target of reducing its nuclear generation to 50% by 2025.

Written By – Nikki Wilson


Alfa Energy Group

Alfa Energy Group, an Edison Energy company, is an international energy, sustainability and technology consultant partner with 200 employees over 4 international locations. For over 25 years, Alfa has been servicing its clients’ needs through energy and water management, sustainability, and compliance consulting, and an intuitive ecosystem of user-driven energy, water, and carbon management software platforms. With coveted awards, an international industry-wide recognition, and clever simple solutions, today Alfa is partnering with clients to establish and deliver pivotal net zero strategies. Through smart energy management, the expertise and diligence of its people, transparent processes, and data management, Alfa continues to lead through its recognised gold standard of service delivery.