No new UK nuclear electricity build before 2022, DECC figures imply
The UK government does not expect any nuclear reactors to be built before 2022, according to projections for new capacity made by the Department of Energy and Climate Change (DECC).
The government's cumulative new capacity figures cast doubt on the government's stated expectation that the first 1.6GW reactor at Hinkley Point C - the most advanced nuclear project in the pipeline - will be completed by 2019.
Anonymous sources close to DECC told ICIS that cumulative new capacity figures published by DECC each October did not include the first 1.6GW reactor at Hinkley Point C until 2022.
Meanwhile, network manager National Grid has earmarked a grid connection for Hinkley Point in 2017, five years before any new nuclear capacity shows up in the DECC projections.
New plants are always connected to the grid some time before they are put into use, but a time lag of five years between connection and commissioning is unusual, according to industry sources.
The figures are available on the statistics page of DECC's website, although the ministry had not responded to calls seeking explanation as ICIS went to press.
Nuclear in the balance
Hinkley Point owners EDF Energy and Centrica have promised to make a final investment decision on the 3.2GW project by the end of the year. EDF has stated that it will not comment further on the viability of the project until then.
But Fitch Ratings utilities analyst Oliver Schuh said he does not expect a decision until 2013, because the plant's viability will hinge on the strike price that the government sets in its contracts for difference subsidy scheme. Strike prices are not due to for release until spring.
The 2019 completion date for Hinkley Point was labelled as optimistic in a National Audit Office study earlier this year (see EDEM 1 May 2012).
EDF finance director Thomas Piquemal said on Tuesday that the company is open to bringing in other investors to help fund its nuclear new build program. EDF is aiming to build two of the UK's three planned nuclear power stations with partner Centrica, which has an option over a 20% stake (see EDEM 28 October 2011).
Quesitons over the Hinkley Point timetable add to mounting evidence that utilities will struggle to fund new nuclear build without some form of government backing.
However, the UK government will need to tread carefully offering assistance to projects if it is to remain within EU rules preventing explicit state funding of nuclear projects, analysts have warned (see EDEM 16 May 2012).
A consultant that advises on energy projects told ICIS that the sheer size of nuclear plants and a track record of cost blowouts are making banks nervous to lend on new build.
Utilities analysts are putting a £3bn-4bn (€3.8bn-5.1bn) price tag for EDF's latest new-generation reactor Flamanville in France. Completion has been pushed back to 2016, making the project four years behind schedule.
The opening of Finland's 1.6GW Olkiluto 3, originally slated for 2014, has been pushed back three times (See EDEM 17 July 2012).
"The problem with nuclear is that it is just too big - elsewhere in the world, it is difficult to get any form of project financing unless there is some kind of government guarantee," the industry consultant said.
There are also fears that the UK market will be oversupplied after 2020, as lenders worry that electricity demand will not have recovered enough to justify more baseload generation. KB
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