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The Government has vastly underestimated the cost of building a new generation of nuclear power plants, according to the head of the world's largest power company.
Wulf Bernotat, chairman and chief executive of E.ON, the German energy giant that owns Powergen, has told The Times that the cost per plant could be as high as €6 billion (£4.8 billion) - nearly double the Government's latest £2.8 billion estimate.
His figures indicate that the cost of replacing Britain's ten nuclear power stations could reach £48 billion, excluding the cost of decommissioning ageing reactors or dealing with nuclear waste. “We are talking easily about €5 billion to €6 billion [each],” Dr Bernotat said.
The news comes as EDF, of France, RWE, of Germany, and Iberdrola, of Spain, prepare to submit offers for British Energy, the nuclear generator, by Friday. Centrica, the owner of British Gas, is in talks with EDF and others about a possible joint approach.
E.ON's cost estimates provoked an angry response from anti-nuclear campaigners. Tim Jackson, of the Sustainable Development Commission, said: “Combined with the myriad concerns about the legacy of nuclear waste, it should now be clear that a new generation of nuclear plants is the wrong option.”
Dr Bernotat's estimates are based on E.ON's experience as a partner in the construction of a nuclear plant in Finland to a French design viewed as the most likely for deployment in Britain. He estimated the cost of that project at €4.5 billion.
The Department of Business, Enterprise and Regulatory Reform said the £2.8 billion figure, contained in a White Paper published in January, was an estimate and that the final costs would hinge on many factors.
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Maybe we need a different "partner". In China the cost of four 1080 MWe units is at $6.6bn, i.e. that is the cost of all four units.
Compared to "per plant could be as high as £4.8 billion" which is about $9.4bn each. Are we being ripped off??
tonyw, London,
Costs have gone up in every endevor...this should not
be any different. Nuclear opperates all 24 hours so it
is really base electricity. No reneuable comes close, and
coal has yet to get to sequestration of the CO2. I say go
right on ahead...UK.. I am with you.
Vern Cornell, San Diego, USA
With poalrised views people will always be for or against. Luckily some people when presented with the facts can make a rational business investment decision. Nuclear can be competitve, even at double the build cost. It will all depend on carbon pricing - something most people know nothing about.
Julian, Manchester,
FOAK costs are not representative. But, EON Chief is right because costs were underestimated: Raw mat. rocketing prices, post-deregulation era client behaviour, post-Chernobyl new guidelines and lack of experienced engineers explain most.
Areva bears the costs of upgrading the nuclear industry...
Henry Cress, PARIS, France
FOAK costs are not representative. But, EON Chief is right because the costs were underestimated: Raw mat. rocketing prices, post-deregulation era client behaviour, post-Chernobyl new guidelines and lack of experienced engineers explain most.
Areva pays the costs of upgrading the nuclear suppliers.
Henry Cress, PARIS, France
The cost of the Finland plant is not representative of the possible cost, this is a FOAKE plant (First of a kind engineer, I think). The actual cost should be analized in the construction of the new EPR being built in Flammamville, with the previous experience in Finland.
Javier, Madrid, Spain
There is such a thing as shopping around. About which design is E.ON talking? Now that Shell has pulled out of the London Array, the world's largest offshore windfarm, E.ON is looking for another investor, perhaps the taxpayer - so hyping the cost of nuclear is understandable.
Dwight Vandryver, Scholar Green, Cheshire, UK
The reactor design originated in France. Perhaps a French bid will be cheaper? Also, the 2.8 or 6-7 billion is only the investment cost. It is only one item of the total cost that will determine the electric rate. Has anybody estimated the electric rate?
Craggs, Flint, Michigan, USA
It's still the cheapest form of carbon free base load electrical generation, including the comparatively negligible costs of waste storage. If we're serious about going carbon neutral then we need a stable base load of electricity - wind and solar won't provide this in a remotely economical way.
Andrew, Leeds,
They could save money by building thirty reactors at once and mass producing parts. They don't all need firing up but having thirty reactors would be a significant cushion in times of energy uncertainty. This could easily knock the price back down to a reasonable level.......
kevin, Lincoln, UK
I think people need to realise that any estimate is based on factors that cant be completely understood. I can tell you that in many companies the way they get over design and build issues is by throwing money at the problem. The issue really isnt how they cost its time < time = > money always!!!
Mark Halls, Ipsiwch, UK
OK, we get the message - they will actually cost £6-7 billion each (largely going to their foreign builders).
It's like a comedy version of the old cold war 'Kremlinology' trying to separate what the government actually think from their public spin.
paul, sheffield, UK
Would not the solution to building new big and costly nuclear plants to using smaller military reactors that have been running in submarines for years. Much smaller and would be easier to decommission when they have done there job and would not take as long to build and getting up and running
GARY SCALES, london, england
PM BROWN cannot be wrong. After all he is the economic guru.He was with GOLD. Trust him he knows about the "LONG TERM". I hope he listens and goes soon.
john, CARDIFF, WALES
You can be sure that the DBERR's figure is yet another of a long string of tactical estimates, unrelated to the real number. Do we really have to be governed by people who play these games? If so, can a statistician work out some conversion tables for us, so that we can look up the real number?
Colin, shrewsbury,
Nuclear plants are economically uncompetetive if all the legacy costs of decommissioning and waste storage are factored in. Building Nuclear plants is in essence a shifting of the true cost of power generation onto the backs of future generations. It is deeply unethical and enviromentally foolish.
Callum, Jakarta, Indonesia
Nulab never was any good at sums.
Albert Hall, kettering,
Yes, except that the construction of the plant in Finland was totally screwed up by Areva, which could not even get the basic construction right. Who knows what a plant would cost if constructed competently?
And of course we know that wind power never comes in at budgeted cost either.
jon livesey, Sunnyvale, CA/USA