Hinkley Point C nuclear plant to run £2.9bn over budget

https://www.bbc.co.uk/news/business-49823305

by kieranmaine • 7 years ago

34 89 7 years ago

bbc.co.uk

garagemc2• 7 years ago

I wonder why large projects are never fully costed? Is it because the real cost would remove any initial appetite for the project?

7952• 7 years ago

There is a really good podcast on why large projects fail....

https://omegataupodcast.net/181-why-megaprojects-fail-and-wh...

It talks about sources of bias in estimates, and why that bias is so prevelant.

toinetoine• 7 years ago

The larger the project the more possible variables there are that can affect it. It's impossible to predict all of them.

bakuninsbart• 7 years ago

For public projects, there are usually rules forcing agencies to contract the lowest bidder. So companies will bid unrealistically low, then after a while make new claims. Theoretically they are in breach of contract, and the agency could get out of the contract - but at that point finding another contractor would add even more cost and much more time to the project.

growlist• 7 years ago

I can't help thinking we'd be better off with lots of smaller projects. At least then the possibility for mega-overruns is limited. And I'm not sure the economies of scale argument holds water when the supposed savings almost always seem to miraculously evaporate to be replaced by cost overruns and extra profits for the contractors.

petee• 7 years ago

Arguably, lots of smaller projects means lots more contractors, duplicated work and parts -- every location needs a buffer zone, fencing, security, printer cartridges, and coffee, to name a few mundane costs

I also wonder how that would affect the chances of an accident - instead of inspecting one cooling system, you're checking 20, and with 19 more parts to potentially fail

hobofan• 7 years ago

I also wonder how that would affect the chances of an accident - instead of inspecting one cooling system, you're checking 20, and with 19 more parts to potentially fail

But each of those failures would be pretty unspectacular with little to no impact on the environment or the stability of the power grid. Which in turn allows you to use lower cost (automated) failure detection systems.

etaty• 7 years ago

Small modular reactor are already researched https://en.m.wikipedia.org/wiki/Small_modular_reactor

Brakenshire5• 7 years ago

Last week, prices for new wind power delivered by 2025 were set at prices as low as £40 per megawatt hour. By comparison, power from Hinkley Point C is expected to cost £92.50 per megawatt hour

And I don’t think that £92.50 price includes these cost overruns. £92.50/MWh is the price the government was willing to guarantee, but which left the developer responsible for cost overruns. But for the next generation plants the developers want the government to take on the risk.

The £40/MWh offshore wind bids are less than the cost just to run existing gas plants, mainly the fuel cost, which means you’re actually saving money by adding wind alongside a gas generator. Such a system will make it difficult to get above a certain percentage of renewables because of the need for gas backup, but maybe we should be spending money on developing new storage technology to facilitate wind and solar with predictable falling costs, rather than on deploying nuclear where the costs seem to be consistently high.

LiamMcCalloway4• 7 years ago

92.50 GBP in 2012 pounds -- it's higher now.

wjnc• 7 years ago

Any investor / economist will tell you that making bets that fail is not the main point, knowing then to quit is. If these numbers are correct, any rational party to the deal should just walk away from these sunk cost. Any further incurred cost is a loss. Negotiate what you want to change the burden of the incurred cost, but walk away.

notideallla• 7 years ago

Think about what the papers would print: "Nuclear plant construction abandoned after 10 billion spent on it. With this money we could have built 20 hospitals.". It would be a PR disaster way bigger than sending them a few billions more.

NeedMoreTea3• 7 years ago

It is supposed to include decommissioning and waste management costs in that £92.50. I'd bet high that there'll be significant taxpayer funded overrun on that. In 2012 that price was comparing against offshore wind strike price of roughly £150/MWh. It was predicted to reach parity mid or late 2020s. Oh dear.

I'm more struck by the link in the middle of the piece to "£100m fund aims to boost UK wind power". Wonder what they could have achieved with Hinkley's £22.5bn.

tempguy99994• 7 years ago

It was clear when HPC was given the go-ahead that it would be expensive, and that renewabales would rapidly overtake (ok, undertake) it in energy cost very soon. So I'd like to know what Ms. May was thinking when she approved it. She must have been given some plausible reason(s) to proceed based on long term estimations of something, what were they? Reliable base supply maybe? But what else?

cm2187• 7 years ago

Does the price for wind power include the cost of storing that power for when it is actually required including the losses in the process?

brazzy2• 7 years ago

That's what the gas plants are for.

Brakenshire5• 7 years ago

No, the cost of a combined gas-wind system would be something like £60/MWh, so that’s what you should be comparing to the nuclear cost, not the £40/MWh directly.

You need to think of wind as a combined wind and gas system, you use wind when it's available because it has a very low marginal cost, and then use gas when it isn't. Luckily capital costs for building gas plants are low, and marginal costs for buying the fuel are high. That means it isn't expensive to build plants as backup, which are only going to be used part of the time. You can use the fuel savings to pay for the capital cost of building the wind farms, and end up without significant extra expenditure, or even saving money. The same can also apply to solar.

It's more difficult if the backup is coal, though, there the balance is more towards capital cost, not marginal cost, so there is a much less leeway to defray fuel costs using renewables.

gridlockd5• 7 years ago

These numbers are misleading, because wind energy is highly volatile and often goes to waste if unbuffered, which is often the case, because buffering is expensive.

Case in point, wind energy makes up 17% of production in Germany, whereas nuclear makes up only 11%. However, wind energy only accounts for 3% of consumption, whereas nuclear accounts for 6%.

https://www.cleanenergywire.org/factsheets/germanys-energy-c...

ZeroGravitas2• 7 years ago

I think you've misread that.

Nuclear is 6% of primary power consumption, not electricity consumption.

The reduction in both nuclear and renewables is presumably because the other sources are burnt, losing a great deal of energy as heat during conversion to electricity. (Nuclear also loses heat but I don't think anyone keeps track of the initial heat output as it's not a very useful number).

ourlordcaffeine• 7 years ago

Such a system will make it difficult to get above a certain percentage of renewables because of the need for gas backup

What a lot of people miss is that wind can be overprovisioned thus reducing the instances where it undergenerates.

Brakenshire5• 7 years ago

To a certain extent, the problem is low wind conditions can occur over very large areas, so the overprovisioning has to include plants built far away from one another with long distance interconnectors. Overprovisioning is more relevant for seasonal variations in solar in my opinion.

not_a_cop75• 7 years ago

Generally a hybrid of energy solutions gives the best possibility of sustained development, though you're right to point to the difference in average cost. Possible though that you're conflating an average wind price with a specific nuclear price? That's apples and oranges. Compare the London offshore array (https://en.wikipedia.org/wiki/London_Array) cost per MWh directly to the Hinkley Point C nuclear plant (https://en.wikipedia.org/wiki/Hinkley_Point_C_nuclear_power_...).

Lastly, note the borrowing rate for the nuclear plant was extremely high. That would certainly have been part of the problem in financial expenditures.

" According to December 2017 estimates, Hinkley is being built for £20.3bn by 2025, to be paid over a 35 year period.[10] According to Dieter Helm, professor of Energy Policy at the University of Oxford, "Hinkley Point C would have been roughly half the cost if the government had been borrowing the money to build it at 2%, rather than EDF's cost of capital, which was 9%." "

tonyedgecombe2• 7 years ago

Why is EDF paying 9%, is that a recognition of the risk of failure?

Accujack• 7 years ago

The costs of old model reactors are high because the designs are the result of layering modern safety technology and practices on top of 1950s and 1960s era technology.

No one should be building any more of the older designs at this point, period.

The US also needs to revise the regulations governing reactor construction, because they're also centered around the old technology. The construction and operation of reactors was a very easy target for expanded regulation for many years from any politician who wanted to exploit the public's fear of nuclear, so reactors are very over regulated.

With newer/safer reactor designs and revised regulations to govern them, construction will be considerably cheaper.

However, there's no comparison between Solar/Wind and nuclear anyway, because they serve different needs, base load vs. peak load.

DrScientist4• 7 years ago

Hinkley has long interesting history [1] - only 3 years ago the company building it (EDF) weren't sure about whether they should go ahead.

While it seems odd that over 50 years ago we could build them quickly, I suspect one of the main drivers of cost is the need to make them bomb proof sic from a safety point of view.

With the sums involved, you'd have to say wouldn't the money be better spent in research on alternatives? Either renewable/energy storage systems, or more money for nuclear fusion rather than 20 million here and there[2]

[1] https://en.wikipedia.org/wiki/Hinkley_Point_C_nuclear_power_... [2] https://www.power-technology.com/news/uk-pledges-20m-nuclear...

LiamMcCalloway4• 7 years ago

EDF's latest non-EPR design in France took over 10 years to build, in the 1990's. The safety requirements to protect against nuclear releases and the inherent complexity are the key factors.

redwood2• 7 years ago

Fair but the UK has a lot of dirty baseload power to replace too. https://www.bbc.com/news/business-24823641 Coal is being replaced by natural gas as with everywhere but a ways to go.

DrScientist4• 7 years ago

What's the point of a stop-gap that's too late?

Yes the UK has a supply/demand issue - and nuclear is great for base load from a grid point of view - however given the delays will Hinkley actually be relevant by the time it's operational?

Perhaps better to spend money on reduction of demand, other generation mechanisms and modernizing the grid to support more distributed generation and storage?

One of the under discussed points about fission is the fuel is not renewable - it's dug out of the ground from potentially politically unstable sources.

bbernoulli• 7 years ago

There are still countries which build them fairly quickly compared to the global average

https://www.scmp.com/news/asia/article/2027347/south-korea-s...

epistasis2• 7 years ago

Hey, not too bad, at least for nuclear.

If you look back at the history of nuclear construction, at least in the US, late and massively over budget is the norm. Late and over budget are closely tied together, of course, as it's all about project management and that's not trivial at this scale. This sort of typical overrun is why US utilities stopped building more nuclear in the 80s.

LiamMcCalloway4• 7 years ago

In the 70s.

kryogen1c2• 7 years ago

This sort of typical overrun is why US utilities stopped building more nuclear in the 80s.

Thats some revisionist history to fit the current zeitgeist, right there.

What stopped nuclear construction in the United States was the complete overreaction to Three Mile Island and the disaster at Chernobyl

LiamMcCalloway4• 7 years ago

No new decisions to build nuclear 10 years prior to three mile island.

thrillgore• 7 years ago

False. In 2007 construction on Watts Bar unit 2 resumed after years of waiting. Similar work began on Vogtle around the same time.

Stop blaming Chernobyl when the truth is clear: the costs of retrofitting most reactor designs to absolve fault tolerance make them inherent unprofitable compared to wind, geothermal, and solar.

pfdietz10• 7 years ago

Nuclear had started running off the rails as early as 1968. TMI was just the cherry on top of the financial crap sundae.

http://ansnuclearcafe.org/2016/02/16/nuclear-plant-cost-esca...

The major regulatory hit that that first wave of US nuclear plants took wasn't specific to nuclear: the Calvert Cliffs decision held that the National Environmental Policy Act applied broadly, including to the regulatory process of the AEC.

https://en.wikipedia.org/wiki/Calvert_Cliffs_Coordinating_Co...

epistasis2• 7 years ago

Absolutely not, the history and timelines do not support the narrative of TMI and Chernobyl stopping construction. They certainly didn't help, but go back and read this pre-Chernobyl analysis that lays the blame squarely on mismanagement:

https://blowhardwindbag.blogspot.com/2011/04/forbes-article-...

Or look at when new projects were started, and you see nuclear starts dramatically fall even before we had TMI and Chernobyl.

The revisionist history is to say that we stopped building nuclear because we are scared of it. The reality is that economics and bad management make it extremely unattractive to build, then and now.

vermontdevil• 7 years ago

There’s one being built right now in Georgia. Vogtle Power Station. Yup you guessed it. Over budget and late. Though to be fair - I think the timeline was too aggressive when it was first proposed.

https://en.wikipedia.org/wiki/Vogtle_Electric_Generating_Pla...

Another utility canceled a project that was underway in South Carolina.

barry-cotter• 7 years ago

Over budget and late is the norm for projects that complicated. If you’re spending enormous sums of money on something that isn’t very, very close to something you know how to do, again you’ve actually done something very similar, and recently, massive cost overruns are the norm[1].

If the average software project is over budget, late and doesn’t do all the things it was supposed to do on design stage, just think how much more complex these things are.

[1]https://arxiv.org/pdf/1409.0003.pdf

segfaultbuserr3• 7 years ago

I was pro-nuclear because I believe these systems are technically safe and sound, we need nuclear to reduce the dependence of fossil fuels, we need nuclear to balance the unstable power output from solar and wind, also that the Generation III+ reactors are promising, we need to widely deploy them and continue to advance the technology.

Today, I still believe the technology, but I doubt about its practicality, both financially and politically.

1. If we do a cost-benefit analysis, we must realize that the political resistance of the nuclear power plant is parts of its cost, it doesn't matter whether the anti-nuclear politicians or activists are correct or not, in either way, it simply adds to the cost of the project. Sometimes the cost is serious - the complete halt of the project is not out of the possibilities, and it means billions of tax dollars are wasted on useless projects.

2. Also, the strong pressure and paranoia on its safety, both from the public, and from the engineers, is sometimes responsible for the escalating costs of the projects, as more and more safety upgrades are implemented over time. I'm not saying that safety is not important, but it means there are hidden costs. And because safety is paramount, you can't just ignore them,

e.g. a safety risk is discovered in incident X, to avoid similar problems, all the XYZ reactors must be upgraded!

e.g. the nuclear reactor Y has an minor anomaly Z, it's believed that the issue is not a big deal, but for safety, the reactors are switched off until the reason is determined! (6 months later) Engineers have determined the issue is a completely normal phenomenon within the design! (3 months later) The executive/legislative body finally allowed the reactors to be restarted...

Just think about how much economic damage is done in this process... Worse, any such problems, even it was the direct result of being safety-minded, will be attacked by the anti-nuclear activists and politicians, further contributing to problem No.1, make the cost even greater.

3. In addition, a nuclear power plant requires highly competent personnels, companies and regulatory agencies to run and monitor. Mismanagement due to incompetency can make its safety risks much higher than the projected risks. It's not a big problem if it's operated with a good record of safety in some countries with a government that has a relatively good public image, but in other countries it's a big problem. I've once asked a networking engineer from Taiwan about the nuclear protests over the Lungmen Nuclear Power Plant, he said he was against the project, not because he doesn't believe the technology (which is the most common reason in the anti-nuclear movement), but that he has no confidence that the miserable government is competent enough to operate it.

4. Furthermore, the political resistance of deep underground nuclear waste disposal repository is even higher. One should realize that currently there are already thousands buckets of nuclear waste waiting for proper disposal, and without a deep underground repository, by doing nothing, the risks for the environment is much more higher. Unfortunately, as long as the political resistance exists, it adds a huge cost to everything nuclear. Not to mention the environmental risks of continue producing more nuclear waste without a repository.

5. Finally, even in China - one of the biggest supporters of nuclear power - the ambitious construction projects are slowing down due to reason No.1 and No.2, despite that the political resistance is not a big problem in its authoritarian political system. Competition of cheap solar and wind is another reason.

China’s losing its taste for nuclear power. That’s bad news.
https://www.technologyreview.com/s/612564/chinas-losing-its-...

I'm really uncertain about everything now. What is your opinion regarding my observations?

brazzy2• 7 years ago

Mismanagement due to incompetency can make its safety risks much higher than the projected risks. I've once asked a networking engineer from Taiwan about the nuclear protests over the Lungmen Nuclear Power Plant, he said he was against the project, not because he doesn't believe the technology, but that he has no confidence that the government is competent enough to operate it.

This is IMO a factor that is talked about far too little. It doesn't matter how safe the technology is in theory, in practice it will be run by people who are fallible, and often incompetent and/or greedy.

IMO the latter is an even bigger concern. If you can make a buck by cutting corners and flouting security protocols, someone somewhere will do it.

tempguy99994• 7 years ago

It's talked about too little because the nuke industry won't, and the guy on the street just wants power as cheap as possible and screw the implications; they don't want to think about it so they won't.

To me this political/managerial drawback is the only drawback to nuclear power; the sole and single downside. But it's a killer because of human nature.

redwood2• 7 years ago

The costs of nuclear power have never appropriately included the costs of disposal and handling of wastes which will become a permanent long-running tax on all of society for thousands of years.

It's similar to how the fossil fuels based externalities are also never included in the true cost.

fuzz4lyfe• 7 years ago

Does the cost of wind and solar include the disposal of the panels? What about the cost of the rare mineral mining needed for the batteries that make solar and wind viable?

NeedMoreTea3• 7 years ago

Hinkley Point C is supposed to. Which is a significant part of why the price per MWh is so high. Though I bet there'll be significant overrun come decommissioning.

xavieralexandre• 7 years ago

The costs of nuclear power have never appropriately included the costs of disposal and handling of wastes

Of course, they do:

- Hinkley Point: http://www.world-nuclear-news.org/NP-Hinkley-Point-C-contrac...

- France [French]: http://www.sfen.org/sites/default/files/public/atoms/files/n...

- Switzerland [French]: http://www.swissnuclear.ch/fr/couts-_content---1--1050.html

segfaultbuserr3• 7 years ago

One big problem is the political resistance of deep underground nuclear waste disposal repository. One should realize that currently there are already thousands buckets of nuclear waste waiting for proper disposal, and without a deep underground repository, by doing nothing and leaving them in temporary storage, the risks for the environment is much more higher.

Unfortunately, I think it's stupid, but as long as the political resistance exists, it adds a huge cost to everything nuclear. Not to mention the environmental risks of continue producing more nuclear waste without a repository. As long as there's no solution, it only makes the existing problem even greater.

There is almost no "real" deep underground disposal repository currently in operation at large scale anywhere in the world (!!!), the Waste Isolation Pilot Plant in the U.S. is the most active one, but it's still more of an experimental site and cannot replace a real one. The ones in Finland and Sweden are small.

See:

https://en.wikipedia.org/wiki/Deep_geological_repository

https://en.wikipedia.org/wiki/Waste_Isolation_Pilot_Plant

https://en.wikipedia.org/wiki/Yucca_Mountain_nuclear_waste_r...

Merrill2• 7 years ago

There appear to be 48 nuclear plants under construction. Most are in Eastern Europe and Asia. In North America and Western Europe the main activity is life extension and uprate projects. https://www.world-nuclear.org/information-library/current-an...

ekingr• 7 years ago

Just to put it in perspective, the same model of EPR (European Pressurized Reactor) being build at Flamanville in France is 10 years late (x3 vs 5 years initial estimate) and €8bn over budget (x3.5 vs €3bn initial budget). The Finnish one is also massively struggling.

Fortunately the Chinese ones in Taishan were delivered quite on time & budget this year.

It's sad to see all these issues with execution, doing a bad press for nuclear - while we really need more of it to decarbonize our electricity (at least in the mid-term).

gridlockd5• 7 years ago

My theory is that companies in the west don't have much of an incentive to actually build plants to completion, so they don't.

In this political climate, it is unlikely that another reactor will ever be commissioned, operating a plant is an ongoing risk that can be avoided by never even going online.

Might as well keep the paychecks for everyone coming for a while, then sail smoothly into inevitable bankruptcy.

Brakenshire5• 7 years ago

“In this political climate, it is unlikely that another reactor will ever be commissioned”

That’s nonsense, the UK is right in the middle of commissioning 5-10 new nuclear reactors, if Areva/EDF could demonstrate an ability to build these plants on budget there’s a huge market opportunity.

Tade0• 7 years ago

This reminds me of what my friend once said about a failed project he was in:

The worst thing that happened to this project was that it went to production. Had it not come to pass everything would be fine.

tempguy99994• 7 years ago

Fortunately the Chinese ones in Taishan were delivered quite on time & budget this year.

Or reported to have been. How much can we trust they were, and that huge corners weren't cut. I don't like to be cynical but all in china seems to be propaganda. For example from https://www.theguardian.com/world/2011/jul/25/chinese-rail-c...

But Hong Kong University's China Media Project said propaganda authorities have ordered media not to send reporters to the scene, not to report too frequently and not to link the story to high-speed rail development. "There must be no seeking after the causes [of the accident], rather, statements from authoritative departments must be followed," said one directive. Another ordered: "No calling into doubt, no development [of further issues], no speculation, and no dissemination [of such things] on personal microblogs!"

The whole story is worse. Difficult not to be cynical.

I've also heard that one of China's largest nuke stations was built dead on a seismic fault which could produce a known acceleration of n, but the station was designed to deal with n/3 acceleration. This is from memory and I can't find the original, so pinch-of-salt mode please.

Merrill2• 7 years ago

The Chinese are also able to build high-speed rail systems, while the US is not. https://en.wikipedia.org/wiki/California_High-Speed_Rail

Also consider continued spending on projects to send men to orbit/Moon/Mars etc, but which never seem to actually get anyone anywhere and are reprogrammed and rescheduled every few years.

Then there is the USS Gerald R. Ford aircraft carrier, first started in 2005, keel laid in 2009, launched in 2013, expected to be deployed in 2020 once all the bugs are worked out of things like the electric elevators. https://en.wikipedia.org/wiki/USS_Gerald_R._Ford

Knufen• 7 years ago

I Will try to formulate my argument very carefully. There is quite a lot of discussion about the price of nuclear. And tho it might be more expensive than wind and solar it also extremely environmentally clean when done right (waste is honestly not that big of a problem). So it is great option for giving relatively cheap energy but more importantly it gives us a very stable baseload which a lot of people underestimate.

sunkenvicar• 7 years ago

Hinkley and Vogtle are the first Gen 3 reactors. It would be surprising if construction was fast and easy.

When we build more reactors our processes will improve. Just like Korea, Japan, and France.

hanoz• 7 years ago

2.9 billion. Not great... not terrible.

woodandsteel• 7 years ago

It seems to me much of the problem is that the nuclear energy industry was build up in the old days of fossil fuel electric utilities, and so is modeled to fit into that. It just isn't structured right for the new world of global climate change, renewable energy, and electricity storage.

Maybe one of the new nuclear technologies that is being worked on will turn out to be a help in the new world. But I am not going to wait.

nickik2• 7 years ago

If you build nuclear power-plants as bespoke one time builds, they will never be cost competitive.

This is the problem with the approche taken in the Western world for nuclear. A few were built a long time ago, then the industry mostly went in decline and then in the modern day a few individual projects were greenlit.

Nuclear was always only cost effective when you build many of them. As in the early expention of US nuclear, or in France.

Nuclear in an effect produce to much power, a country like Switzerland (where I am from) would only need to build one every 10-20 years for all the electicity needs and that will never be cost effective.

Even worse, each country historically has its own designs that they want to push. Today you could probebly be cost competitve if you let China or South Korea bill some reactors, but that will not happen in the West. France, Britain, US, Russia, Germany all want or wanted their own reactors.

The nuclear industry will not be saved by these mega projects, but if its safed at all, it will be newer reactors that can be build smaller. The pure size, complexity and regulatory requirments, plus the interest rate absolutly kill anybody that is trying to build a Gen III reactor.

I love nuclear and had envoirmental movement focused on pushed for them we would have had a viable solution for climate change back then. We see this in France, they had green power for almost as long as the debate existed and provided a clear model that somehow nobody else adopted rather talking about wind and solar for decades.

Wind and Solar are still very questionable while nuclear was ready 30 years ago. Now it is slowly changing but we lost lots of time.

Hinkley Point C nuclear plant to run £2.9bn over budget

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