> By the way, do you know what cost the most money on the HPC project? Loan interests, by a very large margin. Because of the risk of project failure given the lack of government guarantees, they had to borrow at a baffling 9% interest rate in a world if zero interest rate. This is the insanity that drove the cost to the sky, not the engineering side of things.
This is the first time I've heard of this, so I did a little digging.
> Lazard assumes investors want a return of 12% and bond holders will accept an interest payment of 8%. These are kept standard across all types of generation as the intention is not to assess the risk of the project but instead the competitiveness of the technology.
> If Hinkley was to pay these commercial rates, the project construction with interest would balloon out to close to $70b. But they didn’t and digging into EDF’s financial statements shows interest costs related to construction was only 1% of capitalised costs in 2017 and 4% in 2021.
https://illuminem.com/illuminemvoices/nuclear-economics-less...
The Finacial Times article from 2023 puts the cost increase elsewhere:
> The increase, caused by surges in material prices several billion above the most recent estimates, is nearly 80 per cent more than the cost of £18bn in 2016, when EDF first started work on the project.
https://www.ft.com/content/ae5fb399-08ce-4045-bb70-45a6531ac...
And directly from the horse's mouth, in the EDF's status update from 2024:
> The costs of completing the project are now estimated at between £31 billion and £34 billion in 2015 values. The cost of civil engineering and the longer duration of the electromechanical phase (and its impact on other work) are the two main reasons for this cost revision. If the risk of an additional delay of 12 months mentioned above in the final scenario does materialise it would result in an estimated additional cost of around £1 billion in 2015 values.
https://www.edf.fr/en/the-edf-group/dedicated-sections/journ...
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The only reference to the 9% figure you mentioned comes from a BBC article from 2018
> However, Dieter Helm, professor of Energy Policy at the University of Oxford, told the BBC that the government shift made sense.
> "The sheer cost of building new nuclear power stations means it makes sense for the government to help finance projects like this," he said.
> "Governments can borrow much more cheaply that private companies and that lower cost of borrowing can drastically reduce the ultimate cost. Hinkley Point C would have been roughly half the cost if the government had been borrowing the money to build it at 2%, rather than EDF's cost of capital, which was 9%."
https://www.bbc.com/news/business-44363366
I couldn't verify it anywhere else though. Can you point to a source from the EDF that confirms the loan interests cost the most money on the Hinkley Point C project?