Hinkley Gets Go Ahead – But Has The Govt Got Cold Feet?

By Paul Homewood 

 

  

http://www.bbc.co.uk/news/business-36903904

 

I was just about to post on the Hinkley go-ahead, when this appeared!  

  

From the Beeb:

 

Plans to build the first new UK nuclear plant in 20 years have suffered an unexpected delay after the government postponed a final decision until the early autumn.

French firm EDF, which is financing most of the £18bn Hinkley Point project in Somerset, approved the funding at a board meeting.

Contracts were to be signed on Friday.

But Business Secretary Greg Clark has said the government will "consider carefully" before backing it.

According to reports, EDF’s chief executive Vincent de Rivaz has cancelled a trip to the UK on Friday following Mr Clark’s comments.

Critics of the plan have warned of environmental damage and potential escalating costs.

They are also concerned that the plant is being built by foreign governments. One third of the £18bn cost is being provided by Chinese investors.

EDF still hopes to have more than 2,500 workers on site by next year.

Announcing the approval of investment earlier, EDF described the plant as "a unique asset for French and British industries", saying it would benefit the nuclear sectors in both countries and would give a boost to employment.

The announcement was immediately welcomed by employers’ group the CBI, the Nuclear Industry Association and engineering workers’ union GMB.

Ahead of the vote on whether to approve the Hinkley project, an EDF board member, Gerard Magnin, resigned, saying the project was "very risky" financially.

Earlier this year, EDF’s finance director, Thomas Piquemal, had resigned amid reports he thought Hinkley could damage EDF itself.

Cost warning

Hinkley Point C is expected to provide 7% of the UK’s total electricity requirement.

The project has been hit in recent months by concerns about EDF’s financial capacity.

Despite the Chinese investment, Hinkley Point would remain an enormous undertaking for the stressed French company, which has had to raise money from its owners.

Earlier this week, EDF shareholders approved plans to issue new shares to raise 4bn euros (£3.4bn) to help pay for the project.

The French state, which owns 85% of EDF, will buy €3bn worth of new shares in the fundraising.

But Mycle Schneider, who used to advise the French government on nuclear and environmental issues, told the BBC that neither the state nor the company were fully on board.

"There is now a large front inside EDF, inside the nuclear establishment in France, advising against the construction because the sheer size of it could put not only the company EDF at risk, but this could actually put the whole state finances at risk."

The project has many critics in Britain too.

"The price of every other form of energy is falling. That includes gas, which is plentiful and wind and solar are both coming right down in price," Nick Butler, visiting professor and chair of King’s Policy Institute at King’s College London, told the BBC.

"We should step back and review it. The danger of what we are getting into is that are now locked into a very high price for a very long time."

Ahead of Thursday’s vote, EDF had said Hinkley Point was a "unique asset for French industry as it would benefit the whole of the nuclear industry and support employment in major companies and smaller enterprises in the sector".

‘Too big to fail’

Although French unions are urging the company to push back the decision until the company is in a better financial position, UK unions – including Unite and GMB – have welcomed the project.

Environmentalists are concerned about the plan. After the announcement about the go-ahead, Greenpeace executive director John Sauven said: "Countless experts have warned that for British families this power station will be terrible value for money."

He added: "Today’s decision doesn’t prove the UK is open for business post-Brexit – it just shows the Hinkley deal became too big to fail in the eyes of British and French politicians."

The campaign group added that more investment was needed for renewable energy like offshore wind.

http://www.bbc.co.uk/news/business-36903904 

 

I’ll take a closer look tomorrow, after a date with Mary (my dentist!).

But a few initial thoughts:

 

1) Hinkley is scheduled to provide about 24 TWh pa. The guaranteed price is £92.50/MWh. This, however, is at 2012 prices, so is probably about £100/MWh at current prices. This means that we will be paying Hinkley about £2.4 billion a year, over the contract period of 35 years. In other words, a total of £84 billion at today’s prices, of which approximately a half is subsidy.

2) Reuters report that the EDF Board voted for Hinkley by a very small margin of 10 to 7. Hardly a vote of confidence, particularly since one board member resigned before the vote.

3) Given Greg Clark’s statement, one wonders whether the French might be tempted to pack the whole thing in!

4) Finally, why do the BBC insist on including comments from the likes of Greenpeace, whenever energy issues are raised. They are not qualified to comment on such matters any more than my dog is.

If you doubt this, simply weigh up the logic of this statement:

“Countless experts have warned that for British families this power station will be terrible value for money.

More investment was needed for renewable energy like offshore wind” 

So paying £100/MWh for nuclear power that is available on demand is terrible value, yet paying the Dudgeon wind farm £159/MWH for offshore wind power, the contract price agreed at the latest CfD auction, for power that is not even available much of the time, is eminently sensible!

Unfortunately, our supposedly totally unbiased state broadcaster never seems to think to question such “logic”.