On Wednesday Oct 21, the British Prime Minister Cameron will sign a complex financing deal with the Chinese President Xi for the new Hinkley Point C nuclear reactor complex. This will be one of the most expensive contracts of any type ever signed anywhere. Bloomberg claims this is the most expensive nuclear project ever. It will cost more than the British Olympic Games, the new second terminal at London Heathrow airport and Crossrail (the 40 station expansion to the London light rail system) combined.
How expensive is it? Well, the construction costs (including financing) alone are 24.5 billion British Pounds (US$37.8 billion). The total capital costs for these two reactors will be at least 34 billion BPS (US$52.5 billion). But the price tag is only the beginning of this deal’s problems.
To understand how terrible an investment this is, review the other attempts to build reactors of the same design. Most recently engineered commercial reactors are typically about 1000 MWe, this French designed system bucks this trend and theoretically produces over 1,600 MWe. But bigger is not always better. This design is called European Pressurized Reactor or EPR for short. There are two reactors of the same French design under construction elsewhere in Europe, one at Olkiluoto, Finland and the other at Flamanville, France.
The Finnish reactor was started first and is now 9 years late in completion and has almost tripled in cost. Originally, this project was a joint venture between EdF/Areva and the Germans company Siemens. The project has gone so poorly that Siemens, the largest nuclear engineering company in the world at the time, dropped out of the project and was promptly sued by the Finns for 2.5 billion Euros (US$2.8 billion). In May of this year, the very pro-nuclear Finns also decided to cancel the second reactor of this type after so many problems with the one under construction. There are also several lawsuits between the French nuclear construction firm, EdF and the Finnish utility.
The French state owned nuclear construction company, Areva, took over 4.5 billion Euros (US$5.1 billion) in losses for the Finnish reactor. Areva’s stock has lost 85% of its value since 2007. This combined with other losses on EPR construction were large enough to force Areva to cut thousands of jobs and ultimately be merged into the French state owned EdF to avoid bankruptcy.
The experience in France at the Flamanville with this same reactor design is even worse. As we have come to expect, this reactor is also years late and over triple its original budget. The Italian utility ENEL was forced out of this project when the Italians voted overwhelmingly in 2011, after Fukushima, to not be involved in nuclear power projects.
Recent revelations of fabrication flaws in the pressure vessel have put completion of the Flamanville EPR project in question (delays and overruns, no matter how severe, almost never stop reactor projects). This 425 ton pressure vessel literally holds the nuclear reaction and the French nuclear inspectorate (the equivalent of the US NRC, but it actually checks for safety) found a “very serious fault“. The pressure vessel has a metallurgical flaw owing to large areas of excess carbon in the steel causing structural weaknesses. If further tests by the French nuclear inspectorate do not come up with different results, the French nuclear construction firm, EdF, will have two choices: replace the already installed pressure vessel or scrap the entire project.
Originally, despite there being no signed contact, the pressure vessel for the first of the two Hinkley Point C reactors had been fabricated by the same company that forged the failed Flamanville pressure vessel (which is a subsidiary of Areva). Upon finding high carbon concentrations, EdF pulled back the Hinkley pressure vessel to conduct destructive tests on it which are required by the French nuclear inspectorate. At a cost of hundreds of millions of dollars to EdF. But it gets worse.
EdF and Areva installed the pressure vessel at Flamanville in October of 2013, without testing it and then spent a year building the plant around the pressure vessel. In October of 2014 they performed tests and found these problems and then informed ASN (the French nuclear Inspectorate) about them in Dec 2014. EdF/Areva put the pressure vessel inside the Framanville reactor knowing that it might not pass tests, assuming they could convince the French inspectorate that it was okay. They were basically gambling the functionality of the plant and the safety of the local inhabitants on their political power to push this project through. Is that the type of company you want to be working with? It gets worse.
If the Flamanville reactor is not complete by 2020, the finance guarantees for Hinkley Point C will collapse. When negotiations for Hinkley Point C financing started, they were contingent on the Flamanville EPR being completed to prove the concept works. The Ecologist Magazine writes:
The finance guarantees [for Hinkley Point C] have been approved by the European Commission – but subject to a number of important conditions. These include a so-called ‘Base Case Condition’ (BCC) relating to the Flamanville EPR. Namely, that if the Flamanville reactor is not complete and operational by the end of 2020, the guarantees become invalid and bond holders must be repaid out of shareholder equity.
The most recent EdF estimate for the completion of the Flamanville EPR is the 4th quarter of 2018. This estimate assumes there will be no delays for testing the defective pressure vessel and no need for replacement or any corrective action. This seems a fanciful assumption.
There are also two EPR reactors under construction in China at Taishan which are further along than Flamanville. Their pressure vessels were forged at the same Areva subsidiary that messed up Flamanvilles. The Chinese safety authority has done tests, but is not releasing the results.
The Chinese nuclear safety authority might be the worst in the world. After some months after the Fukushima triple meltdown, the Chinese nuclear regulator made a passing comment that there were “problems in 14 areas which needed to be resolved” and that some would take 3 years to resolve. He did not mention which reactors had problems. No reporters present asked any questions, it would be disrespectful. There has been no subsequent public follow up. This was in 2012, years before these pressure vessel problems were discovered by the French. Subsequent to this, I have only found one news report mentioning the Chinese nuclear regulators. This was the French nuclear inspectorate complaining that the Chinese regulator was both overwhelmed and non-responsive. The city of Taishan has 1 million people and is less than 100 miles from Hong Kong. But wait, it gets worse.
Finding financing for Hinkley Point C has been challenging. Centrica, owner of British Gas, was an initial investor. In 2013, it decided it could no longer throw good money after bad and took a £200m write-off rather than commit to a 20% stake. History may well show they got off cheap.
The negotiating team of British and Chinese bureaucrats are wrestling over how much of the project China will pay for. The British want China to pay for at least 40% of the entire project. The Chinese were thinking numbers more like 30%. But the Chinese want more than interest for their loan. They also want a guarantee that they will be able to build a 1000 MWe Chinese designed reactor in the UK, to boot strap their reactor export business. This is in clear violation of the EU subsidy rules, but everyone is looking the other way.
Senior UK military officials are quite concerned that deeply involving China in the British nuclear infrastructure represents a national security risk. The Prime Minister’s office dismisses such concerns.
But wait, it gets even worse. Because of the inevitable delays with Hinkley Point C (including the Austrian lawsuit challenging the entire project) the UK will miss its clean energy target by years. And PM Osborne has already made clear there is no money for a “Both/And” solution of increased nuclear and renewables. From a recent Guardian article:
Osborne has trashed the prospects for renewables here in the UK, has consigned to history our zero-carbon agenda for the built environment, has ridiculed the importance of energy efficiency, and, in the process, has guaranteed that we have literally no chance whatsoever of achieving our statutory targets under the Climate Change Act.
It is worth pointing out that there is not a single functioning EPR reactor operating anywhere in the world. All four that are under construction (Flamanville unit 3, Olkiluoto unit 3 and Taishan units 1 & 2) are both years delayed in completion and billions over budget.
But perhaps the worst aspect of this entire fiasco is that this terrible deal locks the UK into paying a guaranteed price for electricity (14 US cents/kwh) which is over twice the current wholesale price of electricity in England (just under 7 US cents/kwh) at a time when the price for renewables in that country have been steadily decreasing for years. The UK Solar Trade Association says they can match this output at half the cost. Independent energy experts estimate 6 times the capacity could be supplied by wind for the same price.
It is no exaggeration to say, this might just be the worst deal ever.
Update Oct 23rd 2015: Now that it is possible to read some portions of the agreement, we find, unsurprisingly, that the long standing promise the governments have made that there will be “No public subsidies” for the Hinkley Point C reactors, is a lie. Buried in fine print of the new paper for this deal is the sentence “The government confirms that it is not continuing the ‘no public subsidy policy’ of the previous administration.” We can expect more lying and more public costs for this terrible deal in the future.
It is extremely difficult to link radiation from a nuclear accident to cancer. Part of the problem is that there is no way to determine what level of radiation exposure an accident survivor received. Typically it takes 4 to 6 years for their to be any detectable symptoms, excluding people who had very high doses. Further complications include for childhood thyroid cancer (the most common type of nuclear fallout cancer) are not screened for in the population in general at the same rate as it is for accident survivors, so we find more cancers because we are looking harder.
All this said, the latest news from testing done on 370,000 children from the Fukushima area looks quite distressing. Ultrasound tests have found 137 of these children have developed thyroid cancer. This is 20 to 50 times higher than the national rate in Japan. Some medical experts are saying that it is too soon to tell. Others claim the increase is due to increased testing. Still others are claiming it is not the same type of thyroid cancer we saw at Chernobyl and thus it is not likely from Fukushima’s triple meltdown.
What we know from Chernobyl is that there is a huge range of estimated premature deaths. The WHO/IAEA study estimates 4,000. The NY Academy of Science published report estimates nearly 1 million. And the protection of children, both in terms of evacuation and screening of food in Japan has been much better than in the Ukraine.
What we do know is that renewable energy is cheaper than nuclear and we sill continue to build reactors because a certain group of powerful people make a lot of money from it. And perhaps this (and the associated health toll) is the greatest crime of all.
Despite Japanese polling 2:1 against restarting the reactor fleet which has been completely shuttered for the last two years, the Abe government forced through the first restart of a reactor at Sendai complex. Sendai was chosen for a number of reasons. Comically, one of the reasons was that it was far from possible natural disaster. Perhaps the most important (not listed in the excellent BAS article) is that it is the farthest from Tokyo (over 1000 km), where anti-nuclear protests continue.
Former PM Kan spoke at the protest. He was in office when Fukushima melted down and it destroyed his political career. Now he is reminding fellow citizens that 1) Many new safety standards (like separate control rooms) have been skipped in restarting this reactor. 2) Tens of thousands of people remain unable to return to their homes because of radioactive fall out in the Fukushima area. 3) Japan does not need nuclear power to have a vibrant economy.
And as if Mother Nature had a sense of humor, five days after the restart the nearest Volcano to the Sendai complex started erupting. In all fairness, the active volcano at Sakurajima erupts quite regularly. This time however it has reached level 4, which is the second highest warning level meaning that the 4,000 local residents should be prepared to immediately evacuate. Level 5 is immediate evacuation. The last major eruption of Sakurajima was in August 2013 (see above video), when ash and debris flew 5 km from the volcano. Sendai is 50 km from the volcano.
The big announcement in the nuclear world means almost nothing. Electricity de France (EdF) is taking over Areva. EdF runs Frances fleet of nuclear reactors. Areva builds them. But since there is only one reactor under construction in all of France and no solid plans for more (in fact the country is moving rapidly away from nuclear, cutting it national nuclear fraction by 33% in the next 10 years). Areva instead tries to export them and builds them mostly in other countries.
But it does not try very successfully to complete them. The flagship Areva nuclear power plant worldwide is the troubled Gen 3 European Pressurized Reactor. There are 4 of them under construction globally. 2 in China, 1 in Finland and 1 in France. They are all late, they are all over budget, hugely so in France and Finland. Areva posting a US$5.3 billion dollar loss last year (which also resulted in S&P down grading it’s long term debt to junk bond status). The reactor vessel head failed its structural test by the highly independent French nuclear regulator, further delaying and perhaps even jeopardizing the native project.
EdF is the largest nuclear operator in the world. Areva is the largest nuclear construction company in the world. And they are both in trouble (tho Areva more than EdF). The reason it does not matter is both companies are 85% owned by the French government. Think Titanic deck chairs.
EDF said the acquisition of a 51 to 75 percent stake in the reactor business would have a neutral impact on its 2018 cash flow and it would be completely protected from any risks related to Areva’s long-delayed Olkiluoto 3 reactor in Finland, where Areva’s customer TVO is claiming billions of euros in damages.
Oh, i don’t think this is going to be that easy.
Different countries and cities select different energy solutions for myriad reasons and examining these can help us understand why different options are being selected. There is news from various capitals around the world which i want to examine briefly.
Austin, Texas: As reported in SafeEnergy.Org, the city of Austin has just locked in 600 MW of solar power for under $0.04/kwh. Utilities have not been able to buy power at these prices since the 1960s, even without correcting for inflation (which makes it an even better deal). They asked electricity suppliers for solar power specifically and got over 8000 MW of bids (this is the equivalent, after reducing for capacity factor, of 2 or 3 full size nuclear reactors).
Before you start harping on the intermittency (or as the nuclear boosters like to call it “unreliability”) of solar power, please get your facts straight. It is no longer 2005. Inexpensive utility scale battery technology, like those offered by Tesla Energy, is bringing the cost of storage in at around 2 US cents/kwh. What this means for Austin and other cities with reasonable sunshine is that “base load” solar power is going to be cheaper than almost anything else.
In a reasonable world, this would mean the end of new nuclear power construction, because it is much slower to build, far more expensive and fraught with problems from waste handling, to proliferation issues, to liability nightmares, to decommissioning costs to lack of private investors. Sadly, we live in nothing like a reasonable world.
London, England: Austria is challenging the EUs approval of 108 billion British pound (US$166 billion) in subsidies for the UK’s plan to build two new nuclear reactors at Hinkley Point. This legal challenge has been joined by a collection of German and other renewable energy providers. Austria is objecting to both the price of power from these reactors being set at twice the current wholesale price for power for 35 years and insuring profits for the constructing company even in the event that the reactor is closed early.
While it is unlikely the Austrian challenge alone will stop this ill advised project, it might be one of many factors which scuttles the deal. The other reactors of this design in France and Finland are over a decade late in construction. The French reactor had almost tripled in price, before this expensive failure was reported. The pressure vessel for Hinkley had already been forged, by the same plant which forged the pressure vessel for the French reactor which just failed its safety tests. This one will now be used for destructive tests, adding more hundreds of millions in cost presumably to the French reactor company.
Riyadh, Saudi Arabia: In the last few months Saudi Arabia has inked deals for new nuclear power plants with South Korea, France, China, Argentina and Russia. The Saudis are hoping to build 16 reactors by 2032. The French deal (which is really an agreement to investigate possibilities) has a price tag of US$12 billion on it. Saudi Arabia seems to be living in the dream world in which they think they can build reactors for US$ 2 billion each. The west is looking at prices 3 to 5 times this high.
It should be recognized as a triumph of money over politics. And that in fact nuclear power is secondary, what Riyadh really wants is nuclear weapons, and they are unapologetic about it. Especially in the case of Russia, Saudi Arabia is making a deal with a political opponent (on support for Iran and Syria particularly) so that it can have access to weapons fabrication technology. Saudi Arabia (unlike Iran) is making no effort to hide it’s nuclear weapons ambitions, in fact it is celebrating them in what they call the “nuclear defense doctrine“. There is already talk of an accelerated Middle Eastern arms race between Saudi Arabia and Iran. What could go wrong?
And since there is no sun in Iran or Saudi Arabia, there is clearly no alternative to nuclear power.
If you talk with nuclear boosters, they are most likely to tell you about two countries: France and China. When praising France, they will talk about the ambitious coordinated effort to switch their electricity generating profile after the 1973 Arab oil embargo, when the country moved from basically no nuclear power to having over 75% of its generating capacity coming from nuclear in less than 20 years. It was something of an engineering marvel.
What you won’t hear them talking about is the new national energy policy adopted on July 22 after 150 hours of parliamentary debate. This new policy mimics French PM Hollande’s campaign promise to cut nuclear power to 50% of its generating total by the year 2025. France will replace nuclear mostly with renewables.
What does it mean for clean energy campaigners worldwide that the world’s leading builder of nuclear power plants, the country with the largest fraction of nuclear generation and the biggest nuclear construction and operating companies in the world, gets a pink slip? This new national policy also quadruples the price of carbon emissions. It means the real world of new nuclear power construction is dying and Europe, unlike the US, seeing the writing on the wall.
This is huge. Champagne corks are popping in energy campaigning offices around the world.
The US mainstream media has no interest in this story. The only coverage in the US of this story (24 hours after the vote) is Bloomberg News and the Montana Standard. Instead, just as we are foolishly debating whether human induced climate change is real in this country, we are still focusing on the bright future of nuclear power.
Shouldn’t we do more research? Well, the Navy has for 60 years and can’t get small (non-modular) reactor costs down to anything reasonable in either aircraft carriers or submarines. They do them anyway, because these are cost plus rather than market driven projects, but don’t look for cities or utilities, which have to watch bottom lines, to follow the military in energy investment strategy.
If over half a century of well funded research and significant motivation on the part of the military does not convince you that economical SMRs are not imminent, then let me up the ante. Westinghouse Nuclear, the largest nuclear construction company in the US, has dropped SMRs. This means the second best nuclear marketing team in the world thinks they can’t sell these.
All five reactors under construction in the US currently are Westinghouse designs. Westinghouse’s reason for ditching SMRs, “There are no customers”
First the good news (for fighting TP6&7, not for the citizens of FL or the environment):
These reactors are early in their licensing stage, so there is plenty of time to slow down/bog down the approval process and or kill the proposal outright. Specifically, we have until July 17 to get comments into the NRC.
The reactors use a tremendous amount of water in an area which likely can’t handle it, even if local sewage treatment water is heavily used. The existing reactors are not able to stay cool despite huge quantities of water being used.
The site is located both near parks and at a very low water level that will flood in the event of hurricanes and otherwise rising waters.
All of the 5 reactors under construction in the US are both late and over-budget. As has been every other reactor built in the US of the last 70 reactors in a row. FLP will almost certainly blow its proposed budget for this pair of new reactors.
Now the bad news:
Florida has Construction Work in Process (CWIP) which allow utilities to charge rate payers for expensive project failures. This was central to the new reactor in SC and Georgia being approved, when they can not get similar projects thru in states without CWIP.
The nuclear utility has tremendous political power and are generally able to get both the FL Public Utility Commission and the FL State Legislature to give them everything they want. This said, it is still worth talking with state activists to see if there had ever been a successful campaign to lobby the PUC. Certainly, loud enough campaigning can influence the legislature, though they are screamed at with some regularity and bought off far more often. The nuclear utilities in Florida have made a most fascinating argument against solar power: it helps rich people get richer. Because of the high up front costs of roof top solar PV, only rich people can afford it, so, since we want a grid funded by everyone, the rich should be prohibited from profiting from their capital and everyone should pay for the grid. To be clear, the reason utilities build nuclear power plants is that they have a bunch of money (or credit) now and want to buy this incredibly expensive thing, that only they can buy and then make lots of money off (by not paying for waste, insurance, terrorist risks, etc). So the incredibly rich FL utilities have convinced the sunshine state that solar power is bad here, because it will give the rich more money.
The Solutions Project has 50 plans, one for each state, on how to get to 100% renewable energy in the US by 2050. Not one plan uses nuclear reactors.