Nuclear sector pledges lessons from Hinkley will drive costs down

A double whammy of testbed expenses fuelled the high cost of EDF’s Hinkley Point C nuclear plant, which could be reduced in a longer-term rollout of the programme, a new study has claimed.

A cost reduction group set up by the joint industry-government Nuclear Sector Deal has concluded that new atomic plants can be delivered 30 per cent cheaper than the £92.50/MWh strike price awarded to EDF in the 2013 Contracts for Difference (CfD) for the 3.2GW plant, which is currently being built.

The pressure for lower costs in the nuclear industry has intensified subsequently as the price of offshore wind power has plunged in subsequent CfD auctions.

The House of Commons Public Accounts Committee estimated in 2017 that Hinkley alone would add up to £15 to the average consumer’s electricity bill.

The new report, published today (2 September), says the Hinkley Point project has borne the costs involved in being the first EPR design plant to be built in the UK.

In addition, drawing on work by the Said Business School at Oxford University, it says the plant incurred additional costs as the “first of a generation” nuclear plant in the UK. These included res-establishing a nuclear supply chain and building up skills.

The group’s report says that there is now a “renewed understanding” of the standards, processes and capabilities required to participate in nuclear construction projects. Future nuclear projects would also draw “great benefit” from the testing of contractual models, it adds.

It says international experience shows that it is possible to deliver a low-cost programme of new nuclear power stations and a “deep pool” of UK expertise exists in the delivery of complex infrastructure projects.

“A first of a kind project requires significant investment to achieve a strong starting point for construction”, the report says, recapping previous arguments by EDF that replica designs can be delivered at a lower cost in the future.

By contrast, establishing a pipeline of new projects will ensure that the nuclear programme is cost competitive. The UK could benefit from multiple reactor designs but only if they are each deployed as part of a bigger fleet.

To embed this framework for cost reduction, the industry is developing a risk assessment tool which will monitor 14 key factors for project delivery and efficiency in nuclear new build.

Humphrey Cadoux-Hudson CBE, chair of the cost reduction working group and managing director of nuclear development for EDF in the UK, said: “Our report clearly shows it’s possible to deliver a cost-effective programme of new nuclear power stations in the UK.

“But promises of cost reduction are not enough – in making this case, the developers of new nuclear plants are showing that we recognise the delivery risks we face, and how to manage them.”

Responding to the group’s report, junior energy minister Nadhim Zahawi said that new nuclear has an “important role” to play in reaching the UK’s net-zero target.