Nuclear Options – Is Hinkley Point the Best Deal for the UK?

On 21 October 2013 the British government confirmed at last that it had agreed with the French power company EDF (Electricité de France) the building of two European Pressurised Water (EPR) nuclear reactors at Hinkley Point, near Bristol. The 3,200MW reactors will contribute around 7 per cent of the UK’s power needs by 2023. The deal is controversial in a number of ways: it depends on a 35 year power price guarantee by the government to EDF; it also grants the project company a British government guarantee on the debt raised, for a fee; and there are many people who just don’t like nuclear or see it as competing against other low carbon power sources.

One theme picked up by the media, including the BBC’s prestigious Newsnight programme, was the fact that this project would be built and run by an international consortium, led by EDF but with a large minority investment from China. The Daily Telegraph described the deal as “a symbol of the UK’s lost power”. Where, the journalists asked, was the British component? The long, sorry story of the loss of British leadership in civil nuclear power after an early lead in 1956, is told in my book on the causes of the financial crisis at the privatised nuclear company, British Energy.

Other questions might also be asked, about the proposed design and whether there are alternatives.

The EPR (European Pressurised Water Reactor), the design chosen for Hinkley Point C and for two more potential stations at Sizewell, has its critics. It is large and expensive and the two other plants under construction in Europe, in Finland and France, are vastly over time and budget. Two EPRs under construction in China, with EDF’s prospective partners in the Hinkley Point project China General Nuclear Power Group (CGN) and the China National Nuclear Corporation, are said to be on time and budget, but I’ve been unable to get any firm evidence on why this is the case.

There are other nuclear technologies that some of my engineering colleagues in Cambridge believe would be cheaper, such as the GE-Hitachi Advanced Boiling Water Reactor (ABWR). That reactor, which is already operating in Japan and Taiwan and is licensed for the US, may yet make an appearance in the UK but needs a separate licence from the Office of Nuclear Regulation, which can take several years. For the moment the EPR is the only game in town in the UK.

This is an extract from Dr Simon Taylor’s fuller piece, Escaping Technological Lock-In by Swallowing Your Pride: French Versus British Nuclear Policy. We are grateful to Dr Taylor for permission to use this extract.

*Dr Simon Taylor is a University Lecturer in Finance at Cambridge Judge Business School and is Director of the University of Cambridge Master of Finance (MFin) degree. An economist and former equities analyst at JPMorgan and Citigroup, he teaches on financial markets and institutions. He has done research on the financing of nuclear power and is now working on Chinese banks. His blog can be found here.

Dr Taylor will be contributing to Politeia’s forthcoming publication Nuclear Energy – the Options and Limits for Policy

Dr Simon Taylor

Dr Simon Taylor is a Fellow of St Catharine's College, Cambridge and Faculty (Professor Level) in Management Practice at the Cambridge Judge Business School, where he was the first Director of the School’s Master of Finance programme (2006-2018) and then Deputy Director of Executive Education (2014-2016). His publications include The fall and rise of nuclear power in Britain: a history (Cambridge, 2016) and for Politeia he was co-author of Nuclear Options: Powering the Future (2014).

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