Can Sizewell C revive UK nuclear ambitions?
The hovercraft, the radar, the treasure of Sutton Hoo… Ed Sheeran – Suffolk has a colorful track record of innovation and discovery.
Prime Minister Boris Johnson hopes the county can add another fascinating chapter to its checkered history: as a springboard for Britain’s nuclear revival with the Sizewell C.
The government’s security of supply strategy, which was unveiled in April following Russia’s brutality against Ukraine, includes a “big new bet” on nuclear.
Downing Street has targeted an expansion of nuclear power generation from 7GW to 24GW and a minimum 25% role in UK power generation.
He also announced Great British Nuclear, a state-backed vehicle that will help push projects through the development pipeline, with eight sites already selected for development as part of Johnson’s push to get eight reactors approved. here the end of the decade.
Sizewell is one of these eight potential sites and is likely to be the first to be approved under the current government.
|Power plant||Closing Date|
|Point Hinkley B||2022|
It is a proposed 3.2 GW twin reactor nuclear power station of identical design to Hinkley Point C – the Somerset-based development which is due for completion in 2027.
Both projects are overseen by French energy giant EDF.
If approved and completed, Sizewell will provide reliable, low-carbon energy to six million homes and meet around 7% of the country’s consumer demand.
Sizewell’s Chief Funding Officer, Julia Pyke, said AM City that Sizewell will be a crucial cog in a greener future, and that nuclear power is not in competition with renewable projects.
It will also supply power to the grid and industry, while helping to fuel hydrogen projects.
She said: “Some people in the nuclear industry are almost useless in their passion for nuclear because they present it as an alternative to renewable energy. This is not the case. It’s part of a system, and that system has to work together.
On track: Sizewell gets a little closer to construction
Earlier this month, Sizewell was selected as a viable candidate for Regular Asset Base (RAB) model funding – meaning it could receive ratepayer support during the initial construction phase to secure the start of the project (a similar approach was taken in the construction of the Thames Tideway Tunnel).
This model was outlined in the government’s Nuclear Funding Bill last year, which was designed both to ensure projects could finally get going and to incentivize domestic investors over foreign backers. .
EDF is expected to eventually hold a 20% stake in the project, with the government holding a special 20% share and the remaining 60% made up of pension and infrastructure funds.
Currently, the Chinese state-backed CGN Group holds a 20% stake, but they are expected to be reduced when the financing is finalized.
Apart from that, planning consent is finally expected next month – after an eight-year process – meaning work on the site could start as early as this fall, with the construction process likely to take 10-12 years. .
Pyke joined EDF five years ago to work on Hinkley and Sizewell – focusing exclusively on Sizewell for the past four years.
His work has focused on the viability of private nuclear financing – through the introduction of the RAB model more recently.
She is currently going through an indicative rating process for Sizewell – to ensure the factory can get an investment grade rating for its debt.
Pyke also had to make the case for ESG for the project to lay the groundwork for the project.
The country’s existing aging nuclear fleet has been mainly publicly funded, making private sector expansion a new challenge for Britain’s energy sector.
Commenting on the funding process, Pyke said: “People exaggerate who people are anti-nuclear to. They are not anti-nuclear, they simply never had reason to think of financing nuclear, because there was nothing to finance.
Show Me the Money: Costs and Delays Affect Energy Projects
The opacity of funding has been the main source of criticism leveled at Sizewell.
The government said energy users would collectively save more than £30 billion over the life of Sizewell and on each new large-scale nuclear power plant, compared to existing funding mechanisms.
He claimed the RAB model would only add a few pounds a year to typical household energy bills during the early stages of construction, and on average around £1 a month during the full construction phase of the project.
However, in its draft designation grounds, it wildly defined the value to consumers in all scenarios as “XX” – leaving the official calculations blank.
Pyke conceded that she probably wouldn’t have published an X chart, but argued the concealment was in the public interest as EDF and the government scramble to contain costs.
She said: “I think we are at a point in the project where we are negotiating the supply chain and we want to negotiate down the construction costs as much as possible. We expect the cost of money to establish competition, and we want these to be reduced as much as possible.
|Energy source||current generation||Target – Date|
|Solar energy||14GW||70GW – 2035|
|Offshore wind||11GW||50GW – 2030|
|Nuclear||7GW||24GW – 2050|
|Hydrogen||5GW||10GW – 2030|
Downing Street has previously admitted the risks of cost overruns and delays – which have only increased amid supply chain disruptions and inflationary pressures in the wake of the Covid-19 pandemic.
A study by the University of Greenwich Business School, first reported in The Observer, warns that the costs of the project could reach £35billion, well above the government’s initial estimate of £20billion.
This follows Hinkley’s construction costs rising from £18billion to £26billion – and being delayed for two years from its original completion date.
Although Pyke did not reveal a specific figure for Sizewell, she calculated one and “did not recognize the upper limit” of recent forecasts.
Plans to boost nuclear power generation have been criticized by senior MPs, such as former Treasury finance secretary Jesse Norman.
He cited the government’s plans to approve eight reactors in a decade as the reason for handing in a letter of censure – saying there was ‘no chance’ of that happening.
Meanwhile, Andy Mayer, energy analyst for the Institute of Economic Affairs, said AM City current nuclear plans were both too expensive and more eye-catching than substantial.
He said: “Ministers are far too close to the energy industry and give the impression that they have forgotten their fundamental duty to manage trade-offs and protect consumers, in a zeal to signal their virtue in tackling climate change with ‘big bets’.”
Mayer also referenced the government’s impact assessment, putting the cost of replacing the current fleet at a whopping £68-120 billion.
Future Benefits Will Boost Nuclear Ambitions
With six plants slated for closure by 2035 – and current energy production down to 16% – the chances of bringing production levels down to 25% look difficult, even if the government relies on small cheaper modular reactors such as those proposed. by Rolls-Royce.
After all, Hinkley is the first factory to be built in the UK since 1995.
However, Pyke argued that long-term dividends such as security of supply meant disruption cost issues, which it attributed primarily to Covid-19, would outweigh any concerns.
She said: “For me it’s kind of like: Was the 1858 sewer system behind schedule and over budget? Yes it was. Do you wish London had no sewage system? No, you don’t. Was the Victorian London Underground built late and over budget? Yes it was. Wish you didn’t have the Circle Line? No, you don’t. So there is a lack of proportionality in how people perceive the cost of these megaprojects.
Tom Greatrex, chief executive of the Nuclear Industry Association, said AM City. that nuclear power plants could be built collectively in phases to control rising costs and ensure that expertise is passed on to each project.
He said: ‘That’s the opportunity there is right now if we keep going, to get to that 25% and 24 gigawatts by 2050. That’s inherently what the government has been saying lately . This won’t happen if what you’re doing is one at a time and you wait for the first to generate power before making a decision on the second.
This perspective was shared by Pyke, who insisted that EDF is “extremely focused on lessons learnt”.
She concluded, “We really care about what we do that benefits the whole industry. The ESG case that we presented to the rating agencies and to the City benefits everyone. We are very happy to share all that we have done because our goal is to have a prosperous sector.