Brief 4 - Message Delivery: Research

To gain a better understanding of the new nuclear plant being build at Hinkley Point it is best to look at other sources of information so that the final view is rounded and covers all aspects. 

Hinkley Point A on the left, next to Point B on the right.

Brief History of Hinkley Point

At Hinkley Point there are already two nuclear power stations. The first one named, Hinkley point A, was build in 1957. Both reactors at point A were shut down in April 1999 for a safety review and then returned to service in September 1999, However new faults were identified so just three months later the plant was shut again. The costs of fixing the plant would have been too high so it was announced as closed in May 2000. The second plant, Hinkley point B, started construction in 1967 and was completed in 1971 after a short delay  involving the pressure vessels. This is currently the only nuclear plant in the area that is working, until point C has been built. The closing date of this station coincides with the opening of point C in 2023.

The Strike Price

The Strike Price simply refers to the guaranteed price between the government and EDF. A strike price is not really needed as a government could draw money from public taxes, however because the current government has made it part of its policy to not use the peoples money on nuclear power they can not now be an independent invester. If they were to they would need to gain permission from the EU and would also cause uproar and even make themselves more unpopular.

The strike price stays fixed at £92.50 throughout the lifetime of the power plant, however it will decrease to £89.50 if EDF decide to invest in another plant is Sizewell, Suffork. This is because it is cheaper for them to invest in two plants. 

The strike price is needed to give EDF a motivator. If EDF were to invest by just relying on the market price of electricity then a lot can change within the next ten years so if the price of electricity magically drops in 10 years when the reactor starts up then EDF would loose out. 

The strike price has been set at around double the current market price. This will play well to EDF if the market price doesn't move because the government has to make sure EDF gets the strike price. For example, if the market price remains at £45mwh then EDF would receive an extra £47.50 from the government. However this works both ways. If the market price becomes higher that the strike price then EDF have to give money back to the taxpayers. Electricity bills become reliant on the movement of the market price. If the market price is under strike price then bills will go up because we will have to fork out the difference, but if the market price is higher than the strike price then our bills will go down. 

Unlike the governments promises about lower energy bills in the future, it is actually impossible to know now whether this will be the case. At first prices will rise because the plant is just getting started and needs that initial boost but where prices go after that is anyones guess.

Why is the Nuclear Plant being built?

The government is trying to find new energy sources which are emitting less carbon dioxide. This would allow our energy to be independent to us rather than relying on countries such as our reliance on Russia for gas, or electricity from France. This should, in the long run, drop our energy bills as we are not having to pay a fee set by a different country. Although we will be relying on EDF for support the strike price means that fees are set and the nuclear plant is run by England.