A fake price for the faltering proposed Wylfa nuclear plant will obscure the fact that the project, backed by Hitachi, will be even more expensive than Hinkley C. Negotiators for the Wylfa project are clamouring for the Government to use taxpayers money and a commitment to pay at least some of the risks of construction cost overruns to massage the price of the deal down compared to Hinkley Point C. If this is done, then the combined support for Hinkley C and Wylfa projects through loan guarantees, equity support and risk underwriting could rival the size of bill the UK has to pay the EU for Brexit. But a carefully contrived fake price produced by giving a massive taxpayer funded handout to the project will obscure this terrible consequence.
Hinkley Point C (HPC), scheduled to be built by EDF, is now said to cost around £20 billion, almost exactly the same as the cost of the Hitachi-led Wylfa project. In fact both of these figures do not appear to include interest charges, and so will be underestimates of the total mount of money needed to be paid out before the plant is even built. But the interesting thing is that whilst the Hinkley C project is 3.2GW, the Wylfa project is smaller, at around 2.9 GW, which actually makes the Hitachi project even more expensive!
The costs have jumped upwards for the Wylfa project because the developers have to meet UK safety standards. Indeed this fact undermines a lot of wishful thinking and confusion among nuclear supporters who look at the costs of constructing projects in places like South Korea and the UAE and suppose that they can be transposed to the UK. They cannot, because the British public expect higher safety standards, and these are required by the Office for Nuclear Regulation.
Hinkley C is routinely quoted as having been given a 'contract for difference' (CfD) worth £92.50 per MWh payable over 35 years, underpinned by what seems likely to be a loan guarantee of maybe £15bn or more. Note that the £92.50 per MWh price is in 2012 prices, and that today this is worth just over £100 per MWh given that the contract is uprated using the Consumer Price Index (CPI). This price will be paid by electricity consumers (over 35 years) once the project starts operating. But the thing to watch over even more is the massive sums that may flow from the Treasury in taxpayers money before the project generates a single KWh. The scale of potential losses is likely to be made much worse (by comparison) under the terms of the deal that its supporters are advocating for the Hitachi project at Wylfa.
Of course the Government do not want to be seen to give a similar price for the Hitachi project as the HPC project; hence the attempt to massage down such a figure by the ruse of the Government handing over taxpayers money to the consortium long before the project is generating any electricity.
Figures of around £70 per MWh have been suggested for Wylfa, based on what is euphemistically described as the 'Government taking an equity share'. This is still a lot more than renewable energy projects such as onshore wind and solar farms (effectively banned by the Government) or even offshore wind, whose costs have been tumbling to well below £70 per MWh in recent contracts awarded in the UK, The Netherlands, Germany and Denmark. Of course all of these projects run onmuch shorter contracts than HPC and they certainly don't get any loan guarantees or 'equity' support from the governments. But expect a lot of bloated estimates of dealing with 'intermittency' to excuse such differences. But a major problem in any cost comparison is that the nuclear price of any Wylfa deal will have been faked
Of course you can reduce the contract paid for ANY power project if the Government pays for part of it! We could (supposedly) have wind and solar power for free on this basis! So this process will be just a giant exercise in fakery, but one that has large and potentially catastrophic impact on the nation's finances.
Contrary to what the Government claims, if the they do offer loan guarantees to EDF for building Hinkley C, then the Government will have to start paying out in the (extremely likely) instance that the project suffers cost overruns and is not completed on time. So the UK could be liable for up to around £15 billion on this deal alone - even before electricity consumer start paying out on the very high price that has been agreed to pay for HPC's electricity.
But it gets much worse with the proposed Hitachi deal. There the Government's liability could, in theory, be open-ended. Not only will the Government be giving an initial handout to Hitachi of several billion pounds for what is called an 'equity' share in the project, but the Government will also at least share part of the risk of paying for (again almost inevitable) cost overruns on the project. This will be on top of the loans guarantees, similar in nature to those to be offered to HPC.
To top is all of course, the reactor earmarked for Wylfa, the 'Advanced' Boiling Water Reactor, has a rather chequered operating record in Japan.
So if up to, say, £15 bn of taxpayers money is at risk through HPC's loan guarantee scheme, the same will be the case for Wylfa and top of this will be billions handed out in the public 'equity' share PLUS a share of any of the cost overruns. The cost of leaving the EU through payments to the EU Commission has been variously estimated as being £30-£40 billion, so the cost of our nuclear programme will rival, perhaps even exceed that. And that is before we include the high costs that electricity consumers will have to pay over 35 years!