Costing the earth

Whether any of these new technologies get off the ground, let alone make a meaningful contribution towards limiting global emissions, remains to be seen. Even where public concerns over safety can be overcome, worries over cost remain.

For example, as of September 2019, it was estimated the UK’s Hinkley Point C reactors would cost £22.9 billion to build. By way of comparison, the Channel Tunnel linking Britain and France cost £4.65 billion, around £15 billion in today’s money.

NuScale claims that since its reactors are prefabricated before being shipped to their final destination, there is a significant cost saving. It expects to be able to generate electricity at a cost of about six cents per kilowatt hour, enabling the reactor to compete with cheap gas-fired power plants.

However, Michael Shellenberger, American author and pro-nuclear environmental activist, has doubts new technologies are the answer if cost is the overriding concern, and he is not alone.

The only thing that works to make nuclear cheaper is to build the same reactor over and over again, using the same people

“The only thing that works to make nuclear cheaper is to build the same reactor over and over again, using the same people, the same construction managers – like the Koreans did, like the French have done mostly, and like the Russians are doing,” he says.

France’s EDF says its Sizewell C plant will be a replica of Hinkley Point C and claims this will significantly reduce construction cost and risk.26

“Its delivery will be dovetailed with Hinkley construction, starting five years after Hinkley so that management can transfer from Hinkley to Sizewell and bring all the skills, knowhow and expertise gained on Hinkley. Likewise, the Hinkley supply chain will ‘lift-and-shift’ to Sizewell with efficiency and productivity gains from delivering the same design, works packages, and scheduling,” it says.

University of Oxford professor Dieter Helm reckons Hinkley C would actually have cost half as much if the government had been borrowing the money at two per cent rather than the nine per cent cost of capital applied by EDF. Nonetheless, and even though the cost of operating nuclear plants is low once they have been built, cash-strapped governments will have to rely heavily on private finance if they are to be constructed in sufficient number quickly enough.

According to Darryl Murphy, managing director of infrastructure at Aviva Investors, this will not be straightforward as investors will firstly need to satisfy themselves of nuclear power’s environmental, social and governance credentials.

Historically nobody has been able to build these plants to time and budget

“Even if they do that, they then face the problem that historically nobody has been able to build these plants to time and budget.”

Murphy says if governments want to attract private investment during the construction period, they have to find a way of sharing the risk. That will ultimately expose consumers to the risk of costs overrunning, which will need to be justified.

Nonetheless, he does not see these problems as insurmountable. “After all you’re talking about a very long-term, indexed-linked cash flow, which a lot of investors would love, so the investment case on financials alone is strong,” he says.

As for Shellenberger, he says part of the answer is to build nuclear reactors on existing sites as it makes it far easier to get planning approval.

“This is partly why I’m so fanatical about defending the nuclear plants we have. If you look at the US, Britain, France and elsewhere in Europe, we already have enough places that nuclear could easily produce double or triple the amount of energy it presently does without developing any new sites. A lot of these plants have plenty of room for more reactors. This is what is great about nuclear, it’s so energy-dense. What might be a two-gigawatt plant right now, in the future could be five, ten or 15 gigawatts,” he says.