So a few notes on this in no particular order:
1) LCOE notwithstanding is new nuclear good value / likely to be a low regrets investment?
2) Why have previous EPRs been delayed and over budget?
3) Why is HPC so expensive?
4) Is there evidence that HPC, the predecessor is likely to be on-time / on-budget?
5) Therefore is this likely to be a good decision?
The first one depends on whole-system modelling of energy systems cost. LCOE is fine for understanding the cost of a single point asset or of a low penetration technology, it doesn't incorporate balancing costs. The way you model this is you build a model that:
-Includes heat as well since the electrification of heat adds a substantial load of non temporally diversified, difficult to defer load. Basically when its cold, everyone wants to run their heat pumps and they will run them for weeks at a time)
-Includes transport (including V2G)
-Includes demand side response
-Includes storage (not including storage and DSR is not realistic and substantially escalates system costs)
-Operates at the long time resolution where investment decisions are made and at the short time resolution (stochastic unit commitment to dispatch available resources in an optimal way)
-Includes system stability constraints
-Includes transmission and distribution costs
-Generates physically plausible load/generation combinations, in other words if you're in Los Angeles you don't need to simulate what happens if it's blazingly hot on a February evening after a day where the sun hasn't shone because that doesn't happen.
You then impose a carbon constraint on your model and let it come up with an optimum generation mix and associated system cost for that constraint. If you want to know the system value of a particular technology, you manually increase or decrease it from the optimum level and determine the change in system cost (excluding the marginal cost of the manually changed technology). This gives you a set of marginal system values which you can compare with your LCOE to determine a curve for each technology, conditioned on all the other technologies and their costs in the system.
Some highlights from this research: (For reference, on an electricity only basis (IOW heat not included) France is 90g/kWh, UK is 220 down from 400 a few years ago, Germany is 400, Poland is 600, Denmark and Sweden are 50 or so.
-For shallow decarbonisation, down to about 100g/kWh, you don't need nuclear or CCS. Optimum systems are Wind/Solar/Battery/DSR/gas.
-Down to 50g/kWh you just run your gas less frequently and need more battery technology. (Or if you have massive hydro you can down to this level with fewer batteries). The cost of batteries has a big impact on total system costs and there are plausible battery cost forecasts where this system is less expensive than most current power systems even without accounting for the costs to the climate.
-For deep decarbonisation, going down from 50 to 0, the system cost without nuclear or CCS goes up very rapidly. That's because above this point you're keeping your existing gas capacity around, just using it less. That requires a tariff mechanism to pay for capacity as well as energy but that's easily solved and in many places exist already. Below this point, even running your gas for a few weeks during winter peaks blows your budget. You therefore need to either:
--Build a lot more batteries, except now they're not being diurnally cycled but used for longer term storage which makes them way more expensive per kWh
--Overbuild renewables so that even when there is very little power produced from them it gets you through an overcast and windless period. This leaves you dumping excess power the rest of the year. There are groups who argue that if we did this, our economy would adapt to find a use for the excess power, which I'm sympathetic to. You need about 4x current peak in nameplate renewables capacity and a lot of batteries to do it in a heat-not-included scenario. This overbuild scenario is the one the models select and the cost is high because the model assumes excess power is wasted.
--Build nuclear or CCS, not necessarily a lot, but some. This is a little-goes-a-long-way type deal.
The system value of Hinckley Point C comes out as being between £80 and £150 / MWh, depending on when you assume the rest of the UK's AGRs will come offline. Remember that these are curves rather than points so its not a matter of this justifying infinite more nuclear at that point but determining the system difference between having a small amount of nuclear and none.
On that basis, the agreed strike price of £93 / MWh is high and difficult to justify on purely commercial basis but remember that long-term government decision making should be based on keeping pathways open and minimising regret. I think it was just about justifiable but I accept that with different assumptions about technology cost curves it might be suboptimal.
This report is a good read and was generated using my favourite model (my second favourite is the MIT GenX model but last time I checked that one doesn't do system operational constraints like reserve and frequency stability): https://www.ofgem.gov.uk/system/files/docs/2018/12/value_of_...