Making Britain Great Again Nuclear Making Britain Great Again Dr Tim Stone CBE
Why does it matter? Friends of the Earth
Why does it matter? Low Cost
Are we there yet…?
Are we there yet…?
Are we there yet…?
Are we there yet…?
But it’s SO expensive…
… or at least it doesn’t have to be… But it’s SO expensive… … no it isn’t … or at least it doesn’t have to be…
But it’s SO expensive…
But it’s SO expensive…
But it’s SO expensive… Finding Cost Driver Category Complete plant design prior to starting construction Vendor Plant Design Follow contracting best practice Project Development and Governance Project owner should develop multiple units at a single site Innovate new methods for developing alignment with labour around nuclear projects Labour Government support should be contingent on systematic application of best practices and cost reduction measures Political and Regulatory Context Design a UK programme to maximise and incentivise learning, potentially led by a newly-created entity Government must play a role in supporting financing process Transform regulatory interaction to focus on cost-effective safety
How much will it really cost? ±£1bn capex ±1%-point WACC ±£8/MWh strike price ±£13/MWh strike price
So what needs to be done now? Given sensitivities, need lowest cost of capital both for construction AND refi gain avoidance Different financing mechanism for SMR FOAK and GW-scale NOAK State-capital is always cheapest UNLESS you consider the risks properly – avoid PFI conversation! RAB is one possible solution, but major problems
Low-carbon generation is (almost) all near-zero marginal cost RAB - could it work? Need to solve three horrors: Actual construction cost vs. RAB – what happens to disallowed costs? Does anyone actually trust that the results will be “fair”? How’s the WACC set in future – Ofwat has set WACC for PR19 at 2.6% – why would anyone trust any of the economic regulators? Volume risk, esp in an era of ‘must run’ projects with no control over volume of them on the system Big issue is System Design – pace & scale of change, complexity and limits to markets Need EMR 2.0 Low-carbon generation is (almost) all near-zero marginal cost
… one more thing … EPR and AP1000 have gone critical at Taishan & Sanmen 1 (with Haiyang 1 having loaded fuel) Plan for the whole fuel cycle – just as the UK used to have! China is leading the way Expect some serious investment in SMRs late 2018/early 2019 – can’t promise or say more But – HPC and Horizon (esp the latter) now show promise & HMG trust Trust and confidence is now on an real uptick