Assuming that the final investment decision is positive from all sides and Hinkley Point C goes ahead, it will inevitably become a possible model for new nuclear plants elsewhere. Indeed, it is clear that other European countries interested in new nuclear (for example the Czech Republic and Poland) are watching closely.
[Photo: Hinkley Point C (Source: EDF Energy)
It is generally agreed that a model whereby the nuclear plant vendor takes on nearly all of the risk (as the Russians are now promoting, and effectively what AREVA did at Olkiluoto) has rather limited applicability as most vendors, for example Westinghouse and GE, cannot easily go down that road. The country receiving the benefit of the additional power, whether it is the local utility or the government, must ultimately bear the majority of the risk. HPC may eventually prove to be a good model of risk-sharing between the two, but it requires a brave utility (backed by partner investors) and a government willing to guarantee a future power price double the current wholesale price (which is the position today in the UK). So this is a picture of a top-notch utility and a government which wants more nuclear power very much (as the UK government clearly does).
Too pricey to build
As things stand, new nuclear projects such as HPC look like being very much the exception rather than the rule for the next 10-15 years, at least in Europe and North America. The level of construction costs for nuclear is basically too high. The hope is that these will eventually come down sharply, if series construction of more standardised reactors can be achieved, rather than building singleton first-of-a-kind units. Working closely with the Chinese and Koreans, taking advantage of their (probably) superior project management skills, may also assist. But new nuclear stations are both big and expensive - could there be another and better way?
The current renewed interest in small modular reactors (SMRs) is an obvious answer to this, but deeper reflection is prompted by a recent report from the Breakthrough Institute, How to Make Nuclear Cheap. The argument is that today's large light water reactors are not 'fit for purpose' in an economic sense. Going back to when the PWR became established as the mainstay of the world's fleet in the 1950s and 1960s, there were arguably much better alternatives. This critique isn't new, and there are lots of nuclear reactor designers who will say that their technology is the best (the survival of serious discussion about thorium as a fuel is a testimony to this). But the critique needs to be taken seriously: nuclear clearly has a big cost problem.
The cost of nuclear safety
While plants already operating produce affordable energy, new-build has become progressively more expensive largely because of strict building standards, environmental and safety regulations and labour costs.
Safety features necessary for current generation reactors, especially massive containment domes and multiple redundant cooling and backup systems, make up a significant portion of such costs. With the PWR, the need to keep water pressurized necessitates costly systems for both the cooling system and the reactor vessel, and also requires expensive and complicated backup systems to inject additional coolant in the event that the primary cooling system fails. As plants were scaled up, new safety systems had to be engineered to contain potentially larger accidents. Large reactors generate more electricity but also require larger and stronger containment domes that use costly concrete and steel.
Although some of this cost inflation could no doubt have been curtailed with a higher degree of standardisation, something has clearly gone wrong when the price of a mature technology tends to increase, rather than decrease. That diseconomies of scale have intruded is the argument in favour of SMRs, but they may not be the right solution.
The Breakthrough Institute report is sensible in pointing the finger at where costs can and cannot be cut. It suggests four areas for attention in new nuclear reactor design:
- On the safety side, the design must have inherent safety characteristics eliminating the need for expensive and redundant safety systems.
- Designs must utilise existing supply chains and not require the development or commercialization of new or unproven materials and fuels.
- Modularity must allow whole reactors or their components to be mass-produced and assembled uniformly.
- High thermal efficiency is necessary to enable reactors to generate more electricity from a smaller physical plant.
The suggestion is that economics has to be the overwhelming criterion as we go forwards. Safety is an essential, but as we build more of the Generation III plants, those doing so must look ahead and work towards something better.
Steve Kidd is an independent nuclear consultant and economist with 17 years of work in senior positions at the World Nuclear Association and its predecessor organisation, the Uranium Institute.
