Analysis suggests Hinkley nuclear could bring £100bn in revenues

The Financial Times has commissioned a study on the Hinkley Point C nuclear power plant, which has found that EDF and China General Nuclear stand to make as much as £100bn in revenues from the project over 35 years.

One analyst at AlphaValue who compiled the research likened the plant to a cash machine for the Sino-French partnership.

The total revenue could even be as high as £160bn, said three analysts, depending on assumptions about inflation, plant output and idle time for maintenance.
Hinkley Point C
The new British cabinet, headed by Theresa May recently opted to delay a final decision on the project amid unease at what is perceived in some quarters as an overly expensive deal guaranteeing that the EDF-led consortium will be paid £92.50 per megawatt hour for electricity, uprated annually for inflation., over the course of three decades.

The FT reports that customers will be forced to pay a significant share of the expected revenue through special charges on their energy bills if wholesale electricity prices fall below £92.50 per MWh in the contract period. The rate is currently £41.95, according to ICIS Power Index. A recent projection by the UK’s National Audit Office put the customer subsidy at £30bn — almost five times the original estimate.

Juan Rodriguez, analyst at AlphaValue, estimated Hinkley Point C’s total revenue in cash terms at £102bn, assuming that the plant ran at 90 per cent capacity for 90 per cent of the time over the duration of the contract. It also assumes an inflation rate of 1 per cent.

“That is why [EDF] want to build the Hinkley Point project so badly,” said Mr Rodriguez. “If they manage to build it on time, it will be a cash machine.”

Former energy secretary at the time of the deal, Ed Davey, recently told Power Engineering International that the Chancellor of the Exchequer George Osborne 'agreed to a higher price than I managed to secure.'

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