1. the University of Greenwich Teaching excellence for 100 years A comparison of the Hinkley Point and Paks projects March 2015 Steve Thomas (stephen.thomas@gre.ac.uk) Professor of Energy Policy PSIRU (www.psiru.org), Business Schoolwww.psiru.org University of Greenwich

2. the University of Greenwich Teaching excellence for 100 years Outline  The projects  Commercial arrangements  Risks and uncertainties  Common factors

3. the University of Greenwich Teaching excellence for 100 years Project basics Paks 2 x AES-2006, 1200MW each, supplied by Rosatom Construction start: 2018? Online 2025-26 Cost €12.5bn (€5200/kW). Overnight or total? Hinkley Point 2 x EPR, 1600MW each, supplied by Areva Construction start: 2018? Online 2023-25 Overnight construction cost: £16bn (€7000/kW). Cost with finance £24.5bn (€34.8bn)

4. the University of Greenwich Teaching excellence for 100 years Commercial arrangements (1) Paks Competitive tender abandoned Jan 2014. Engineering, procurement & construction contract with Rosatom Owned by state-owned MVM Paks 2, reports to prime minister’s office Power purchase arrangements not known Claimed to be ‘turn-key’ contract. Fixed price or just comprehensive? Hinkley Point No competitive tender. Other 2 reactor options 3-4 years away from being ready to compete Owned by NNB Genco. EDF<50%, CNNC/CGN<40%, Areva<10%, Others <15%. Government Golden Share? Power bought £92.5/MWh (€130/MWh) by government. Indexed to inflation, reviewed at 15 & 25 years EDF claims it bears construction cost risk

5. the University of Greenwich Teaching excellence for 100 years Commercial arrangements (2) Paks 80% of cost, €10bn, to be provided by Russia via interstate loan Annual interest 3.95-4.95% starting 2014. Repayments over 21 years starting no later than March 2026, whether or not the plant is complete Is the contract signed? Hinkley Point UK Loan guarantees expected to cover all borrowing, £17bn (€24.1bn), not finalised yet. Loans not negotiated Expected rate of return 9.75-10.25% nominal Terms still provisional, either side can walk away with no penalty

6. the University of Greenwich Teaching excellence for 100 years Risks and uncertainites Paks 4 AES-2006 in Russia all late by 2-3 years. Why? Fuel supply breaks Euratom rules? State-aid investigation? Loans violate EU’s Russia sanctions? Who pays if costs over-run? Is the EPC contract fixed price? Hinkley Point 4 EPRs all late. 2 years China, 5 years France, 9 years Finland Challenge to Competition Commission State-aid verdict EDF claims it takes construction cost risk but what if NNB Genco goes bust?

7. the University of Greenwich Teaching excellence for 100 years Risks and Uncertainties Paks Strong political opposition Can Russia offer supply chain & finance to Hungary. Plans to export 40 reactors but can’t finance 4 reactors in Russia Hinkley Point 2 main parties pro-nuclear but May General Election may lead to minority parties in power Areva effectively bankrupt. Can’t take up ownership stake. Is it a credible vendor?

8. the University of Greenwich Teaching excellence for 100 years Common factors Paks All project documentation to remain secret for 30 years, increased from 15 years Technology has poor record of completion to time and cost, being superseded by VVER-TOI Bartuska: AES-2006 design ‘de facto doesn’t exist,’ ‘a brand, nothing more.’ Novovoronezh 2 & Leningrad 2 supplied by different companies, have ‘different designs for the primary circuit, supplied by different companies’, have ‘different designs for the primary circuit & the safety concept, in the amount of active & passive elements.’ If things go wrong, tax-payers and electricity consumers will pay Hinkley Point Government will not publish reports (Poyry, Redpoint, Oxera) justifying the project Areva in middle of 10 year effort to make it easier, cheaper to build, too late for Hinkley Bartuska: Olkiluoto, Flamanville & Taishan varied significantly. Only about 50 per cent of their nuclear islands are the same If things go wrong, tax-payers and electricity consumers will pay

9. the University of Greenwich Teaching excellence for 100 years Conclusions  Hinkley & Paks both seriously distort markets and preempt investment in cleaner alternatives. No scope for renewables, efficiency etc  Additional problems for Paks because of increased Russian dependence & because Paks relatively much larger investment

10. the University of Greenwich Teaching excellence for 100 years Russia’s nuclear order book  Under construction: Russia (6), Belarus (2), China (2), Ukraine (2), India (1)  Firm orders: Bangladesh (2, finance), Vietnam (2, finance), Turkey (4, equity stake), India (2), Iran (8, paid by Iran)  Advanced negotiations: Jordan (2, BOO), Egypt (4, finance), South Africa (8, finance), Hungary (2), Finland (1, equity stake)  Longer term prospects: UK, Algeria