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Faculty of Economics

CWPE Cover

Newbery, D.

The cost of CO2 abatement from Britain’s only PWR: Sizewell B


Abstract: This paper calculates the cost per tonne of CO2 abated by Sizewell B (SZB, the nuclear power station commissioned in 1995). Other zero-carbon renewables received contractual support. A long-term Contract-for-Difference (CfD) is modelled with a strike price reset every 5 yrs. by the regulator under the Regulatory Asset Base model of electric utilities. The answer depends on the Weighted Average Cost of Capital (WACC), given the range of observed utility WACCs. At a low WACC the cost is £201934.1/tonne CO2 abated and £201949.2/t. CO2 at the high WACC, compared with the roughly £40/t. CO2 paid by GB generators in 2019. Had the design for SZB been replicated for the 6.4 GW new nuclear the saving might have been £9-18 billion.

Keywords: Cost of CO2, Nuclear power, RAB, WACC, Cost Benefit Analysis

JEL Codes: D61 H23 L94 C54 E43 H54 L94 Q54

Author links: David Newbery  


EPRG Paper Link: 2013