4 ms·

Great, let's build tonnes of it in the UK. To be competitive with offshore wind let's call it a £50 MWh strike price. Should be fine right? I'll even excuse th

Great, let's build tonnes of it in the UK. To be competitive with offshore wind let's call it a £50 MWh strike price. Should be fine right? I'll even excuse the lack of clarity of decommissioning the site and long term storage of nuclear waste if you can manage that.

shapefrog 4y ago
We really should give them the 37.35/MWh that offshore wind gets, afterall it is cheaper than wind. Hinkley Point C: In 2012, the “strike price” – was set at £92.50 per megawatt hour (MWh) + inflation. Even with comedy level increases in household bills this still looks expensive.
- VBprogrammer 4y ago
  I went a bit higher because there is some debate that the low strike price of one of the offshore wind farms was artificially low due to being able to use existing infrastructure from an earlier project. Anywhere in that ballpark though and I think we can talk.
- credit_guy 4y ago
  A quick google [1] shows me the average price for electricity in the UK was 18.9 p/kWh in 2021. This is the same as £189/MWh. The same article states that the estimate for 2022 is £340/MWh (maybe because of the Russia's invasion of Ukraine?). The inflation adjusted strike £92.5 of became £106 in 2021 per wikipedia [2]. Not sure how this strike price arrangement works, but does it follow that the UK government did not need to subsidize Hinkley Point C in 2021, and will not have to subsidize it in 2022? Edit: I did not realize Hinkley Point C is not yet operational. Still, if it were, would it follow that it would make a profit by itself, and would not collect the Government guarantee? [1] https://www.nimblefins.co.uk/average-cost-electricity-kwh-uk https://www.nimblefins.co.uk/average-cost-electricity-kwh-uk [2] https://en.wikipedia.org/wiki/Hinkley_Point_C_nuclear_power_station#Cost_to_consumers https://en.wikipedia.org/wiki/Hinkley_Point_C_nuclear_power_...
  - ZeroGravitas 4y ago
    If it was operational, Hinckly would be subsidized if the market price was below the strike price, but they'd need to return anything above that. It works as an insurance, if you think you can generate electricity for X while making a profit then the government guarantees that you get that amount, taking on the risk that prices might drop or some new tech might undercut your price and guaranteeing a steady cash flow if you deliver electricity. In return for accepting that risk, they also accept the upside, by taking any extra when the price rises above the strike rate. Currently there's a few offshore wind farms that are hitting this and returning roughly a billion euros per year.
    - credit_guy 4y ago
      Wait, so you are saying the Government would actually make quite a nice profit out of Hinkley Point C? That this strike price is the strike of a forward contract rather than a put option contract? But then this does not look like a bad outcome for the UK Government (and by extension the UK consumer) at all, it looks like a really profitable arrangement. Am I missing something?
      - ZeroGravitas 4y ago
        Generally it's a really good system, which is being adopted around the world. For Hinckly, it's the French taxpayer that will be on the hook if there are cost overruns building the plant, because we already know exactly how much they can make from energy for the next decade. (That's why their CFO resigned when they decided to go ahead: https://www.reuters.com/article/uk-edf-britain-nuclear-idUKKCN0W80ZI https://www.reuters.com/article/uk-edf-britain-nuclear-idUKK...) For the UK taxpayer, they'll probably be paying too much for power they could have got cheaper, but at least the price is somewhat limited, unless there's any kind of accident or issues with storage. The key missing element with nuclear is that you don't have a vibrant market of competitive bidders, which is what drives the price down in wind and solar.
  - VBprogrammer 4y ago
    The way it works is actually slightly more favourable, if the actual price is above the strike price then there is a mechanism to return the excess back to the government. A cost of a wholesale cost of 34p per kWh would be very bad. It's the current retail cap for electricity.
ZeroGravitas 4y ago
The screenshot of the table has new nuclear as the same price range as onshore wind, so we should be able to offer about half-that.
technicalbard 4y ago
Wind would need to guarantee dispatchability on demand to fix a price. Offering low prices when it can is not the same as reliable on-demand sources.

shapefrog 4y ago

We really should give them the 37.35/MWh that offshore wind gets, afterall it is cheaper than wind. Hinkley Point C: In 2012, the “strike price” – was set at £92.50 per megawatt hour (MWh) + inflation. Even with comedy level increases in household bills this still looks expensive.

VBprogrammer 4y ago
I went a bit higher because there is some debate that the low strike price of one of the offshore wind farms was artificially low due to being able to use existing infrastructure from an earlier project. Anywhere in that ballpark though and I think we can talk.
credit_guy 4y ago
A quick google [1] shows me the average price for electricity in the UK was 18.9 p/kWh in 2021. This is the same as £189/MWh. The same article states that the estimate for 2022 is £340/MWh (maybe because of the Russia's invasion of Ukraine?). The inflation adjusted strike £92.5 of became £106 in 2021 per wikipedia [2]. Not sure how this strike price arrangement works, but does it follow that the UK government did not need to subsidize Hinkley Point C in 2021, and will not have to subsidize it in 2022? Edit: I did not realize Hinkley Point C is not yet operational. Still, if it were, would it follow that it would make a profit by itself, and would not collect the Government guarantee? [1] https://www.nimblefins.co.uk/average-cost-electricity-kwh-uk https://www.nimblefins.co.uk/average-cost-electricity-kwh-uk [2] https://en.wikipedia.org/wiki/Hinkley_Point_C_nuclear_power_station#Cost_to_consumers https://en.wikipedia.org/wiki/Hinkley_Point_C_nuclear_power_...
- ZeroGravitas 4y ago
  If it was operational, Hinckly would be subsidized if the market price was below the strike price, but they'd need to return anything above that. It works as an insurance, if you think you can generate electricity for X while making a profit then the government guarantees that you get that amount, taking on the risk that prices might drop or some new tech might undercut your price and guaranteeing a steady cash flow if you deliver electricity. In return for accepting that risk, they also accept the upside, by taking any extra when the price rises above the strike rate. Currently there's a few offshore wind farms that are hitting this and returning roughly a billion euros per year.
  - credit_guy 4y ago
    Wait, so you are saying the Government would actually make quite a nice profit out of Hinkley Point C? That this strike price is the strike of a forward contract rather than a put option contract? But then this does not look like a bad outcome for the UK Government (and by extension the UK consumer) at all, it looks like a really profitable arrangement. Am I missing something?
    - ZeroGravitas 4y ago
      Generally it's a really good system, which is being adopted around the world. For Hinckly, it's the French taxpayer that will be on the hook if there are cost overruns building the plant, because we already know exactly how much they can make from energy for the next decade. (That's why their CFO resigned when they decided to go ahead: https://www.reuters.com/article/uk-edf-britain-nuclear-idUKKCN0W80ZI https://www.reuters.com/article/uk-edf-britain-nuclear-idUKK...) For the UK taxpayer, they'll probably be paying too much for power they could have got cheaper, but at least the price is somewhat limited, unless there's any kind of accident or issues with storage. The key missing element with nuclear is that you don't have a vibrant market of competitive bidders, which is what drives the price down in wind and solar.
- VBprogrammer 4y ago
  The way it works is actually slightly more favourable, if the actual price is above the strike price then there is a mechanism to return the excess back to the government. A cost of a wholesale cost of 34p per kWh would be very bad. It's the current retail cap for electricity.

ZeroGravitas 4y ago

The screenshot of the table has new nuclear as the same price range as onshore wind, so we should be able to offer about half-that.

technicalbard 4y ago

Wind would need to guarantee dispatchability on demand to fix a price. Offering low prices when it can is not the same as reliable on-demand sources.