Why the U.K. Is Pushing Nuclear Power as Others Waver

(Bloomberg) -- Even as some nations move away from nuclear power, the U.K. is forging ahead. Hinkley Point C, under construction in southwest England, will be Britain’s first new nuclear power station in about three decades and is its largest construction project ever. With a price tag that has soared to 22.5 billion pounds ($29 billion) -- necessitating an unusual repayment plan that saddles British ratepayers with extra costs for decades -- Hinkley Point is a high-stakes test of one way to cut down on the carbon emissions that contribute to climate change.

1. What’s the case for a new nuclear plant?

Nuclear power supplies about a fifth of the U.K.’s electricity, but most of the existing facilities are old and need to be shut down in the next decade. Hinkley Point’s two new reactors, which are being built by French utility Electricite de France SA in partnership with China General Nuclear Power Corp., are expected to satisfy about 7% of the the nation’s overall electricity demand, or enough for about 6 million homes. The British government says that by 2050, the U.K. will need to get 38% of its power from similar such low-carbon power sources that are more reliable than wind and solar. Greater use of nuclear power could be a key part of the country’s road map to becoming carbon neutral -- a net-zero emitter of carbon dioxide, the biggest contributor to global warming -- by mid-century.

2. Why aren’t other countries doing the same?

The reactor meltdowns at Japan’s Fukushima plant in 2011 convinced some governments that the dangers of nuclear power outweighed the benefits. Germany committed to shutting down all its plants by 2022, though Chancellor Angela Merkel is being urged in some quarters to reconsider. In Spain, where seven nuclear reactors produce about one-fifth of the nation’s electricity, the government has pledged to close the plants by 2035 as part of a switch to renewable energy. Some other countries are less eager to cut ties with their nuclear fleets. In Sweden, there’s growing support for nuclear power to help combat the climate crisis and Swiss voters have rejected a timetable for phasing out plants. Even Japan, despite considerable public opposition, began restarting nuclear facilities in 2015 after after curbing virtually all its nuclear power output after Fukushima.

3. Why is Hinkley Point so expensive?

The plant is huge, with output equivalent to about three large coal-fired stations. Early in the construction process, EDF carried out the largest single pour of concrete in U.K. history, which took 10 days to put 9,000 cubic meters of the material into a nest of steel reinforcement bars. EDF later installed the biggest crane in the world, known as “Big Carl,” which arrived on 280 trucks and took about three months to erect. Adding to the expense, it’s among the first nuclear plants anywhere to use a new technology, originally called a European Pressurized Reactor and now referred to simply as EPR, that produces more electricity with less nuclear fuel. The cost overruns and potential delays announced in September were attributed to “challenging ground conditions” at the site, which overlooks the Bristol Channel on the west coast of England.

4. Who’s paying for all this?

The increased construction price will cut into EDF’s expected rate of return on the project, which will be 7.6% to 7.8% instead of 8.5%. To make the project viable, the U.K. pledged to pay EDF 92.50 pounds for every megawatt-hour of electricity it produces, more than double the current market price, for 35 years. The subsidy raises questions about the economics of nuclear as a power source, given its cost and complexity. British consumers will be paying higher electricity bills for decades ahead to underwrite the cost of Hinkley Point.

5. When will it go into service?

EDF’s first project to use EPR technology is in Flamanville, in northern France. It’s years behind schedule and billions over budget. The company is now struggling to repair faulty welds, possibly using robots to access hard-to-reach areas. Despite the setbacks at Flamanville, EDF still says it will start delivering power from Hinkley Point C at the end of 2025.

6. How many other reactors is the U.K. building?

None, at present, which makes Hinkley Point something of a test case. EDF wants to build another new facility called Sizewell C on the Suffolk coast of England that would be an exact replica of Hinkley Point (and, by applying lessons learned, much cheaper to build and finance). Still, future projects will likely need some kind of government support to get off the ground. Soon after taking office in July, British Prime Minister Boris Johnson called for a “nuclear renaissance” in the country, but plans for how to fund that ambition are still in early stages. Hinkley Point’s costs could spoil the government’s appetite to nurture future projects.

The Reference Shelf

• A Bloomberg QuickTake explainer on the continuing debate over nuclear power.
• A Bloomberg story on the competition between nuclear and renewable energy.
• The world’s largest nuclear power producer, confronts serial glitches: Bloomberg.
• A QuickTake on Germany’s difficult path to end nuclear power generation.
• Photos from the construction site of Hinkley Point.
• BloombergNEF founder Michael Liebreich: We need to talk about nuclear power.

To contact the reporter on this story: William Mathis in London at wmathis2@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Andy Reinhardt, Lars Paulsson

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