New analysis suggests that EdF will have to pay £50 billion to build four new nuclear reactors prompting speculation that the Government will have to subsidise
Analysis by Left Foot Forward suggests that EdF will have to pay £50 billion to build four new nuclear reactors prompting speculation that the Government will have to back down on its refusal to subsidise the industry.
- A conservative estimate for the cost of one “EPR” European Pressurised Reaction (the frontrunner nuclear reactor design favoured by the UK government) = £5 billion
- Annual increase in construction costs = 15 per cent
Estimating the start of construction as 2013 (optimistic given licensing problems with the EPR and the regulations that will need to be in place), this means three years of added costs between now and then. The net present value for one EPR in today’s money is therefore £7.6 billion.
Now consider this:
- EdF wants four EPRs at £7.6 billion = £30.4 billion
- EdF effectively paid £10 billion for British Energy (£12.5bn minus £2.5bn for a 20 per stake sold to Centrica)
- EdF have already paid around £1bn for land access to sites, scoping work etc
- Factor in decommissioning waste costs of about £500 million per reactor times four = £2 billion (this figure is very sketchy though – it could quite easily be almost anything from between 5 per cent – 50 per cent of capital costs.)So £30.4bn + £10bn + £1bn + £2bn = £43.4 billion
Effectively, this means EdF will have to pay around £45 billion for four new EPRs plus the few British Energy creaking reactors they bought recently. If they are forced to pay more for waste disposal and decommissioning the final sum could therefore be around £50 billion. And that is before you consider that EdF has a corporate debt of around £22.5 billion.
No wonder that EdF has started asking the government to intervene and support a preferable carbon price or an exemption from the Climate Change Levy to try and make the economics easier for them. But Ed Miliband recently told Parliament:
“We are not going to provide public subsidy for the construction, operation and decommissioning of nuclear power stations.”
Unless the government performs an enormous volte face on the question of subsidies for the French state nuclear operator, the prospects of new nuclear appear bleak indeed. This is something that Tom Burke, the professor of energy at Imperial College, has been saying for sometime.