The equivalent cost of the AP1000 Vogtle project in Georgia is already more expensive than Hinkley C!
Evidence from the USA casts a lot of doubt on hopes that Westinghouse's experimental AP1000 design - promoted by Toshiba for the planned 3.4 GW development in Cumbria - will be cheaper than Hinkley C.
Toshiba, the majority owners of the NuGen franchise, and hopeful developers of the plant say they will ask for a lower price than the £92.50 given for Hinkley C.
Well, good luck to Toshiba in finding investors, even though, no doubt they will, like Hinkley C - but unlike renewable energy schemes - be offered a very valuable amount of loan guarantees from the UK Treasury. Not to mention extra-long premium price contracts lasting 35 years.
14 months late, $900 million disputed costs
Cost overruns for the first AP1000 nuclear power plant to be started in 30 years in the USA, at Vogtle in Georgia, are already mounting. The project cost now stands some $900 million over the $14 billion budgetted for the 2.2 GWe development - and is running 14 months late.
So it hardly looks cheaper than than Hinkley C. Indeed, given that the projected costs of building Hinkley C (not including the money already spent) is around £3.9 billion per GWe you could argue that the equivalent cost of the AP1000 Vogtle project in Georgia is already more expensive than Hinkley C, GWe for GWe!
In Georgia there is a retail monopoly and state regulations allow consumers to be charged money while the plant is actually being built - a form of automatic cost recovery. The developers get paid even though no revenue is actually generated!
Another AP1000 is under construction in South Carolina, the V.C. Summers project - and it is doing little better. It is running almost $500 million over budget and 16 key milestones have been delayed for 6 months or more.
The much hyped nuclear renaissance is just not happening in the USA. Indeed, nuclear generation is actually falling in the US.
Why Georgia and South Carolina?
The reasons given for all of this is that natural gas prices have fallen, dishing plans for new nuclear reactors. However the decline in natural gas prices in the USA does not seem to have stopped the continued expansion of building of wind power and solar PV across the USA.
Georgia appears to be bucking the trend. That may have something to do with the fact that wind and solar developers in the state cannot get hold of power purchase agreements at practically any price - whilst nuclear developers get paid without producing any electricity at all!
Likewise in South Carolina: the state energy regulator has allowed South Carolina Electric & Gas to pass on the costs of the nuclear plant's construction and financing to consumers in their bills, long before completion.
With some $4.5 billion aleady spent on the project, Friends of the Earth estimates that it is already accounting for 11% of electricity bills in the State. So how does SCE&G compete against other suppliers? It doesn't have to as it is a monopoly supplier in its area.
The equivalent cost of the AP1000 Vogtle project in Georgia is already more expensive than Hinkley C!
Toshiba appear very confident about their NuGen development, but they will need investors, which may be hard to find, unless the UK Government gives a virtual 100% blank cheque through a loan guarantee as opposed to the 65% guarantee offered for Hinkley C.
Looking shaky
Investment from British electricity companies seems unlikely, although maybe, like EDF, Toshiba can fix up an agreement with Chinese companies ... hmmmm, there's some interesting politics there that may make it a long shot!
But with the experience of building AP1000s in Georgia and South Carolina, the project is aleady beginning to look seriously implausible, especially at a price lower than that of Hinkley C. The entire AP1000 proposition is on very shaky ground.
David Toke is Reader in Energy Politics at the Department of Politics and International Relations, University of Aberdeen.
This article was originally published on David Toke's Green Energy Blog.
Additional reporting by Oliver Tickell.
Further reading:
Business Wire: Toshiba and Westinghouse Take Next Steps Toward Building Three AP1000(R) Nuclear Reactors in UK with NuGen
Southeast Construction: Builders of Vogtle Nuclear Plant Face Growing Costs, Concerns
Post Gazette: Westinghouse clashes with Georgia Power over nuclear plant cost overruns
Sacramento Bee: Another Vogtle Debacle? Cost Overruns, Delays And Construction Woes Bedevil V.C. Summer Reactor Project In S.C., Says Friends Of The Earth
The State: Why solar power rarely shines in SC
New York Times: Atomic Power’s Green Light or Red Flag
Clean Technica: $1 Billion Nuclear Power Project Abandoned In Iowa
