Evaluate the likely private costs and external costs involved in such major power station construction projects

In September 2016 the government approved the building of an £18 billion nuclear power station, Hinkley Point C, which will supply 7% of UK electricity for up to 60 years. The power station is funded by Chinese and French investment.

Evaluate the likely private costs and external costs involved in such major power station construction projects. Use an appropriate externalities diagram in your answer. (June 2018)

Plan

• Paragraph 1
  • Argument: private costs include paying staff, and buying raw materials like steel
  • Diagram: increase in AC and MC
  • Evaluation: the government can still achieve allocative efficiency if the power station is nationalised
• Paragraph 2
  • Argument: external costs include pollution and environmental damage
  • Diagram: negative production externalities
  • Evaluation: positive consumption externalities can outweigh these

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