Nuclear power: Hunt ignores critics' sinking feeling

 In his financial statement yesterday, shortly after boasting that his energy plans increased the UK's independence from foreign powers, Chancellor Jeremy Hunt announced that he was on the point of signing final contracts for Sizewell C. This is a project of the French EDF (80%) and the Chinese (20%).

In a previous post I criticised the experimental nature of the EPR (Evolutionary Power Reactor) and implied that there was no practical experience of running one. In fact Taishan 1 in China became the first EPR to start power generation on 29 June 2018, and the second one (Taishan 2) came online in 2019. By the time of that posting, the first European EPR had already reached its operating capacity. Olkiluoto Unit 3 in Finland should go live next month, albeit thirteen years late and still with some worrying flaws. Wikipedia says:

[It} has been under construction since 2005. The start of commercial operation was originally planned for May 2009 but was postponed repeatedly. The reactor eventually started up on 21 December 2021, and electricity production started on 12 March 2022. In May 2022, foreign material was found in the turbine steam reheater, and the plant was shut down for about three months of repair work. On 30 September 2022, the reactor reached its maximum output power for the first time. Regular production is expected to begin in December 2022.

Taishan has had its troubles. This Reuter article hints at a design flaw. EDF's own reactors in France, even before their own EPR becomes operational, seem plagued. But the EPR design may never be put to the test at Sizewell. Given the long timescale for construction (nine years if everything goes according to plan) the low-lying site in Suffolk may well be under water before then, thanks to global warming. For more detailed criticism, see this Wikipedia article.

Finally, there is the moral hazard of the Regulated Asset Base (RAB) financing model. The legal services firm Slaughter & May explains:

The key element elements of a basic RAB model include:

• A Government support package to protect investors and consumers against specific, potentially high value but low-probability events (essentially, where they are not commercially insurable).
• An economic regulatory regime (ERR) which will detail the sharing of costs and risks in an ex-ante manner between investors and consumers via an allowed revenue (set by the ERR).
• A regulator who operates the ERR.
• A revenue stream from suppliers to the project company to fund the project.

- and they also set out its drawbacks:

A major criticism is that, under the RAB model, risk is passed onto the end consumer during the construction phase and in a manner that may not best incentivise developers to minimise the risk of cost overruns. Costs will be passed through to end consumer bills long before the nuclear power plant begins generating electricity,

I suggest that, because of the greater number and decree of uncertainties involved in advanced nuclear plant construction, these factors loom larger than in more conventional construction projects where the RAB model has been used.