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UK households face energy bills surcharge to fund nuclear plants

4 points by kieranmaine 5y ago

mytailorisrich 5y ago
Surely we'll then get a discount on the price of the electricity generated, since we'll already have paid for the plant itself?
- samizdis 5y ago
  It might not be that straightforward, given contracts agreed with EDF guaranteeing a minimum tariff for electricity supply; the article links to one from 2016 [1] that states: The UK government sought to ensure EDF pressed ahead with the project, in spite of the high expense, by in 2013 guaranteeing the company would be paid £92.50 per megawatt hour for the electricity generated by Hinkley Point C over a 35-year contract due to run between 2025 and 2060. This is more than double the current annualised rate for wholesale electricity prices. This aspect of the contract is also explained in a 2018 Guardian article [2]; here's the relevant bit: Given its commitment to building Hinkley Point C, the government had no choice but to make EDF an offer that was too good to resist. It offered to guarantee EDF a fixed price for each unit of energy produced at Hinkley for its first 35 years of operation. In 2012, the guaranteed price – known as the “strike price” – was set at £92.50 per megawatt hour (MWh), which would then rise with inflation. (One MWh is roughly equivalent to the electricity used by around 330 homes in one hour.) This means that if the wholesale price of electricity across the country falls below £92.50, EDF will receive an extra payment from the consumer as a “top-up” to fill the gap. [1] "Why EDF’s Hinkley Point deal is potentially so lucrative" https://www.ft.com/content/70baa0ea-6493-11e6-a08a-c7ac04ef00aa https://www.ft.com/content/70baa0ea-6493-11e6-a08a-c7ac04ef0... [2] "Hinkley Point: the ‘dreadful deal’ behind the world’s most expensive power plant" https://www.theguardian.com/news/2017/dec/21/hinkley-point-c-dreadful-deal-behind-worlds-most-expensive-power-plant https://www.theguardian.com/news/2017/dec/21/hinkley-point-c...
  - mytailorisrich 5y ago
    > It might not be that straightforward, This was sarcastic, as I fully expect that we'll be made to effectively pay twice, i.e. this surcharge and then full price on the electricity generated. On the other hand, I don't think this is related to Hinkley: EDF asked and obtained a good guaranteed price because they (along with China's CGN) are fully financing that power plant without using any public money. The country needs more new power plants and the question is thus how to finance them. EDF cannot, and does not want to, finance them itself (that's why CGN was involved with Hinkley in the first place) and the government no longer wants Chinese involvement. This means that the government needs to find money.
    - samizdis 5y ago
      > On the other hand, I don't think this is related to Hinkley My bad; I'm mixing up EDF projects. > The country needs more new power plants I'd agree with that sentiment. I'm disappointed, however, that a proposed (wishfully thought, perhaps?) approach to nuclear tech that I read about many years ago seems not to have been realised. Slightly off-topic, but I remember being excited by a Wired article in 2004, Let a Thousand Reactors Bloom [1]. This discussed modular, pebble-bed reactors (and even speculated on low-cost hydrogen generation as a byproduct) while being ultra-safe by virtue of the physics of its design: Physicists and engineers at Beijing’s Tsinghua University have made the first great leap forward in a quarter century, building a new nuclear power facility that promises to be a better way to harness the atom: a pebble-bed reactor. A reactor small enough to be assembled from mass-produced parts and cheap enough for customers without billion-dollar bank accounts. A reactor whose safety is a matter of physics, not operator skill or reinforced concrete. And, for a bona fide fairy-tale ending, the pot of gold at the end of the rainbow is labeled hydrogen. [1] https://www.wired.com/2004/09/china-5/ https://www.wired.com/2004/09/china-5/
      - mytailorisrich 5y ago
        China is still working on this [1]. The issue, really, is that these things need large investments over decades so realistically they need governments' backing and not many have the will and technical resources to do it these days. China's system seems well suited for this (large, long term projects) but in the current climate Western countries do not want to touch Chinese nuclear with a barge-pole. The French have also been heavily invested. Their new/current tech is the EPR [2], which is what is being built at Hinkley and in Finland, and what is already running in Taishan, China (recently in the news...) It's a shame that the UK, which opened the first civil nuclear plant decided to gave up on the technology long ago. [1] https://en.wikipedia.org/wiki/HTR-PM https://en.wikipedia.org/wiki/HTR-PM [2] https://en.wikipedia.org/wiki/EPR_(nuclear_reactor) https://en.wikipedia.org/wiki/EPR_(nuclear_reactor)

4 points by kieranmaine 5y ago

Surely we'll then get a discount on the price of the electricity generated, since we'll already have paid for the plant itself?

samizdis 5y ago
It might not be that straightforward, given contracts agreed with EDF guaranteeing a minimum tariff for electricity supply; the article links to one from 2016 [1] that states: The UK government sought to ensure EDF pressed ahead with the project, in spite of the high expense, by in 2013 guaranteeing the company would be paid £92.50 per megawatt hour for the electricity generated by Hinkley Point C over a 35-year contract due to run between 2025 and 2060. This is more than double the current annualised rate for wholesale electricity prices. This aspect of the contract is also explained in a 2018 Guardian article [2]; here's the relevant bit: Given its commitment to building Hinkley Point C, the government had no choice but to make EDF an offer that was too good to resist. It offered to guarantee EDF a fixed price for each unit of energy produced at Hinkley for its first 35 years of operation. In 2012, the guaranteed price – known as the “strike price” – was set at £92.50 per megawatt hour (MWh), which would then rise with inflation. (One MWh is roughly equivalent to the electricity used by around 330 homes in one hour.) This means that if the wholesale price of electricity across the country falls below £92.50, EDF will receive an extra payment from the consumer as a “top-up” to fill the gap. [1] "Why EDF’s Hinkley Point deal is potentially so lucrative" https://www.ft.com/content/70baa0ea-6493-11e6-a08a-c7ac04ef00aa https://www.ft.com/content/70baa0ea-6493-11e6-a08a-c7ac04ef0... [2] "Hinkley Point: the ‘dreadful deal’ behind the world’s most expensive power plant" https://www.theguardian.com/news/2017/dec/21/hinkley-point-c-dreadful-deal-behind-worlds-most-expensive-power-plant https://www.theguardian.com/news/2017/dec/21/hinkley-point-c...
- mytailorisrich 5y ago
  > It might not be that straightforward, This was sarcastic, as I fully expect that we'll be made to effectively pay twice, i.e. this surcharge and then full price on the electricity generated. On the other hand, I don't think this is related to Hinkley: EDF asked and obtained a good guaranteed price because they (along with China's CGN) are fully financing that power plant without using any public money. The country needs more new power plants and the question is thus how to finance them. EDF cannot, and does not want to, finance them itself (that's why CGN was involved with Hinkley in the first place) and the government no longer wants Chinese involvement. This means that the government needs to find money.
  - samizdis 5y ago
    > On the other hand, I don't think this is related to Hinkley My bad; I'm mixing up EDF projects. > The country needs more new power plants I'd agree with that sentiment. I'm disappointed, however, that a proposed (wishfully thought, perhaps?) approach to nuclear tech that I read about many years ago seems not to have been realised. Slightly off-topic, but I remember being excited by a Wired article in 2004, Let a Thousand Reactors Bloom [1]. This discussed modular, pebble-bed reactors (and even speculated on low-cost hydrogen generation as a byproduct) while being ultra-safe by virtue of the physics of its design: Physicists and engineers at Beijing’s Tsinghua University have made the first great leap forward in a quarter century, building a new nuclear power facility that promises to be a better way to harness the atom: a pebble-bed reactor. A reactor small enough to be assembled from mass-produced parts and cheap enough for customers without billion-dollar bank accounts. A reactor whose safety is a matter of physics, not operator skill or reinforced concrete. And, for a bona fide fairy-tale ending, the pot of gold at the end of the rainbow is labeled hydrogen. [1] https://www.wired.com/2004/09/china-5/ https://www.wired.com/2004/09/china-5/
    - mytailorisrich 5y ago
      China is still working on this [1]. The issue, really, is that these things need large investments over decades so realistically they need governments' backing and not many have the will and technical resources to do it these days. China's system seems well suited for this (large, long term projects) but in the current climate Western countries do not want to touch Chinese nuclear with a barge-pole. The French have also been heavily invested. Their new/current tech is the EPR [2], which is what is being built at Hinkley and in Finland, and what is already running in Taishan, China (recently in the news...) It's a shame that the UK, which opened the first civil nuclear plant decided to gave up on the technology long ago. [1] https://en.wikipedia.org/wiki/HTR-PM https://en.wikipedia.org/wiki/HTR-PM [2] https://en.wikipedia.org/wiki/EPR_(nuclear_reactor) https://en.wikipedia.org/wiki/EPR_(nuclear_reactor)