Aletho News

ΑΛΗΘΩΣ

UK $26bn nuclear plant contingent on gas price rise by 127% in decade

RT | October 31, 2013

Britain’s first nuclear plant in 20 years is a bet energy prices will rise. Experts say the new Hinkley Point facility will be “the most expensive power station in the world” and if the bet fails, the deal will prove “economically insane”.

“The Government is taking a massive bet that fossil fuel prices will be extremely high in the future,” the Telegraph quotes Peter Atherton and Mulu Sun, who analysed the finances of British energy companies for stockbroker Liberum Capital.

The deal to construct two nuclear reactors at Hinkley Point in southwest England – the world’s first nuclear deal since Fukushima disaster – was agreed by the UK, Electrcite de France SA (EDF) and China. To have a guaranteed return on the estimated $26 billion investment, the plant owners need the cost of fossil fuel such as oil and gas to rise dramatically.

The Liberum analysts estimate the minimum energy price would need to stand above £121 per megawatt hour within ten years, which means the wholesale price of gas would have to go up by about 127 percent over that period. Wholesale prices were about £60 last year, according to the energy watchdog Ofgem.

This is the equivalent to an oil price of well above $200 a barrel, compared with about $110 this week, the Telegraph reports.

“We are frankly staggered that the Government thinks it is appropriate to take such a bet and underwrite the economics of this power station. We are flabbergasted that it has committed future generations of consumers to the costs that will flow from this deal,” the Liberum Capital analysts say.

The $26 billion (£16 billion) price tag of the two reactors would be enough to build gas-fired power stations with output eight times higher, Liberum calculated.

“For the cost of £16bn for the 3,200MW to be built at Hinkley, the UK could build 27,000MW of new gas-fired power stations, solving the ‘energy crunch’ for a generation.”

Related articles

October 31, 2013 Posted by | Economics, Malthusian Ideology, Phony Scarcity, Nuclear Power, Timeless or most popular | , , , , , , | Leave a comment

Germany: Environment minister voices doubts about energy reforms

DW | July 16, 2012

Germany’s environment minister has admitted that the government faces an uphill climb if it is to achieve the targets it has set out for reducing carbon emissions while simultaneously stopping nuclear energy production.

Germany’s environment minister raised eyebrows on Sunday by conceding that some of the targets that are part of the government’s policy of phasing out the use of nuclear energy, while at the same time cutting emissions of greenhouse gases, may not be achievable.

“It has to be questioned whether we’ll really succeed in reducing electricity use by 10 per cent by 2020,” Peter Altmaier said in an interview with the Bild am Sonntag newspaper.

“If we are going to somehow achieve this, it will take tremendous effort, ” he said.

Altmaier also admitted that the government had a long way to go in efforts to convince a large number of Germans to switch from vehicles powered by internal combustion engines to electric cars.

There may be “significantly fewer” electric cars on the road by 2020 than the government had previously assumed, the minister said.

Chancellor Angela Merkel’s center-right coalition had previously said that it was on track to put a million electric cars on the road by 2020. Official figures put that number at just over 4,500 at the start of 2012.

Rising consumer costs a possibility

Altmaier also warned of the danger of rising energy costs for consumers.

“If we aren’t careful, the energy reforms could develop into a social problem,” he said, admitting that in efforts to replace nuclear energy with renewables, “the question of energy affordability had been overlooked.”

He also said that turning off a number of nuclear plants meant that power shortages could not be ruled out in the coming winter.

“Last winter there were a few critical moments, which we have learned from,” he said, adding that preparations were underway to ensure this doesn’t happened again. … Full article

Related articles

July 16, 2012 Posted by | Economics, Nuclear Power | , , , , , | Leave a comment

    Next Entries »