(Bloomberg Opinion) -- Massive infrastructure projects are almost always delivered late and over budget. The bill for London’s Crossrail project has risen to 17.6 billion pounds ($21.9 billion), while the country’s north-south HS2 rail link may end up costing an unfathomable 88 billion pounds.
Even so, there’s a place in budgetary hell reserved for new nuclear power plants, for whom financial commitments and completion dates seem to be entirely malleable concepts (at least outside China).
A pair of reactors under construction at Hinkley Point in the west of England are a case in point. The project’s chief backer Electricite de France SA warned on Wednesday of up to 2.9 billion pounds in cost overruns, meaning the bill could rise to a whopping 22.5 billion pounds. The risk of delays has also increased.
The hope is that Hinkley will start delivering power at the end of 2025 and will then supply about 7% of the country’s electricity. But in view of previous delays, EDF’s assurances on this are about as cast-iron as a soggy croissant.
When British trains are delayed, rail companies are known to blame the wrong kind of snow, leaves or even sunlight. EDF says “challenging ground conditions” caused the latest setback, which is worrying because you’d think digging a hole would be the easy bit.
EDF’s setbacks at Hinkley are far from isolated. It has yet to get other nuclear projects using the same advanced reactor design up and running in Europe — projects in Finland and France are delayed too — and it’s facing troubling questions about technical flaws in existing French plants.
The company’s struggles, which have precipitated a 27% decline in the stock this year, present a strong argument for rethinking its structure. A tentative plan to nationalize its nuclear activities and spin off its renewables and distribution networks makes more sense by the day.
The cost overruns at Hinkley are a reminder too that those still hoping giant new nuclear power plants will help solve the climate crisis may be sorely disappointed. The power Hinkley will deliver, if it’s ever completed, is ludicrously expensive, even if the benefit to EDF is less now that it’s having to shoulder higher construction costs.
EDF’s contract with the U.K. government guarantees a price of 92.50 pound per megawatt-hour (in 2012 prices). Last week companies competing to deliver offshore wind in the U.K. were happy to do so for about 40 pounds a megawatt hour.
To be clear, it’s wise to keep existing nuclear plants running as long as possible. HBO’s dramatization of events at Chernobyl was chilling but nuclear power has a pretty decent safety record and it doesn’t produce carbon. Cutting carbon emissions to net zero is an epochal challenge and we have precious little time to do it. Decommissioning nuclear plants now, as Germany is doing, is wrong-headed because fossil fuels will have to take up some of the slack.
New nuclear plants, especially the large and expensive ones EDF wants to build, are another matter. The best that could be said for Hinkley was that it would provide a valuable learning experience, building up technical knowledge and supply chains that would allow future projects to be built much more cheaply. Unfortunately the lesson could turn out to be just the opposite: New nuclear power plants won’t save us.
To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.
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