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

July 28, 2016

By Paul Homewood 

 

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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”.

23 Comments leave one →
  1. July 28, 2016 10:03 pm

    I am heartily sick of the MSM, who seem to unquestionably accept statements from unaccountable pressure groups time and time again.

  2. roger permalink
    July 28, 2016 10:11 pm

    I am sure that I caught a comment on Sky that this project would not be producing until 2033.
    If that is the case then quite rightly the Gov’t should be reviewing the supply situation post 2025 with a view to speedily building CCGT capacity in it’s stead in order to keep the lights on.

  3. martinbrumby permalink
    July 29, 2016 2:43 am

    A bit harsh on your dog, surely?
    I’m sure he/she would at least have good intentions.
    It is long overdue for the mendacious and incompetent greenie NGOs AND the BBC to be held to account.

  4. July 29, 2016 3:52 am

    The BBC made a lot of the EDF director who resigned today, but of course he was just a renewables zealot, I wonder how many of the others who voted no have a similar affliction. The BBC also played the “OMG its expensive” card, without once mentioning the much higher strike price for offshore wind.

  5. July 29, 2016 4:00 am

    Social agendas: wind/solar bring local jobs and rent payments. Nuclear gives money to the French and Chinese.

    High prices are seen as irrelevant if the money revolves internally. This is the tragic flaw of pure socialist/communist thinking. Money is a motivator of social activity, without any physical basis. As long as people accept your script, your script doesn’t need a real world basis in material, energy or effort. The USSR and China have shown this to be false, but the ideology has survived. The application was flawed, not the concept.

    Clearly the eco-green have always been state employees or those of academic tjink tanks.

  6. Malcolm Bell permalink
    July 29, 2016 7:02 am

    I am a huge fan of nuclear power. I have several times written to my MP and a few years ago had a letter in the Telegraph to that effect.

    But, to think of building the most expensive power plant in the world, under French control with whom we are not currently good friends, with Chinese support whose consistent support cannot be relied on all to a design which has never even been tested is “obviously” just wrong. That to do so involves exporting about £18 billion pounds (it adds to the deficit) at this time takes it beyond wrong.

    Given Brexit this is a very peculiar moment for the French to suddenly decide to take on such a risky project. There is something very complex, political and murky which we need to be sure we understand. I congratulate the government for reacting with great caution. Clearly they will say “Non”.

    As you say Paul, “it is too big to fail” but it will fail. They will never make it work. If we commit to Hinkley we commit to cutting almost all other new power sources (we don’t have the money) and so effectively we commit to darkness.

    We need lots of nice little power units based on well proven submarine technology and supplied by R-R et al. We need them soon, very soon.

    • Rowland Pantling permalink
      July 29, 2016 7:45 am

      Here! Here! Small Modular Reactors dispersed around the country BUILT IN BRITAIN close to places with high demand must surely now be considered urgently so that we won’t have to rely on diesel generators for supply when the wind isn’t blowing!

  7. Alan permalink
    July 29, 2016 7:26 am

    I wonder whether Thersa May has the balls to stand up and say “to hell with this expensive electricity (nuclear, wind, solar etc) , we’re going to build more Gas fired power stations”. Somehow, I doubt it, but if she did she would get my vote next time around.

    • CheshireRed permalink
      July 29, 2016 7:58 am

      Absolutely. She needs to cancel this daft project and either order a smaller one or two – at Hinkley or Sellafield, plus add multiple cheap gas into the mix. Why do we always have to have the most absurd / complex / expensive options? Answer; we don’t.

  8. CheshireRed permalink
    July 29, 2016 7:54 am

    Let’s cut to the chase; regardless of the time already spent procrastinating over this deal (struck by the absurd eco-buffoon Ed Davey) it’s an absolute stinker on just about every level imaginable.
    * Build cost
    * Insane ongoing electricity strike price – for a minimum of 35 years
    * Likely cost / construction over-runs
    * It’s not even the best / most reliable system available
    * National security issues (China involved with UK nuclear? Really?!!)
    * Cheaper, quicker and better alternatives available
    * Too much capacity (7%) at one site, so grid supply / demand is vulnerable

    Theresa May probably suspects all of the above and more. Good on her for having the courage to buy herself time. It’s now HER decision not Cameron & Osborne’s (and hence will be on her political epitaph) whether this monstrosity is built or not. Have the courage to put it out of its misery, Mrs May.

  9. July 29, 2016 8:11 am

    I wouldn’t start from here but we have no ready alternative. It’s another strategic decision that’s been kicked down the road so long that no one remembers what’s involved. In my opinion it’s another facet of the infantilisation of our politics and administration given their absolute reliance on to-do lists drawn up in Brussels.

    On the wonderfully balanced Today programme this morning: Barry Gardner (offshore wind at £80???) then Moonbat (seemed keen on nuclear just not this one) and Mitchell (just incoherent/mad). Seems strange when Moonbat appears to be the sensible one.

  10. Mike Higton permalink
    July 29, 2016 9:11 am

    On R5 a GP spokeswoman also said we could reduce power demand by 30% as part of our energy planning. Of course she did not explain – nor was she asked – how that could reconciled with the idea of reducing fossil fuel use by switching to electricity…..

    • Alan permalink
      July 29, 2016 12:26 pm

      Exactly. While the clamour for more electric vehicles continues it does seem rather at odds with a call to cut elctricity use.

  11. July 29, 2016 9:55 am

    I think some nuclear power in the mix (maybe around 25%) is essential, simply to avoid having all eggs in one basket, who knows what will happen to the price of gas, and the value of the pound. Keeping 15% coal would also be good.

    The project suffers of course from the must-have-the-latest-and-best syndrome that bedevils defense procurement. There is no war here, we don’t need the latest and best technology, just something that works. Why not simply build 3-4 exact copies of Hinkley B, which is still working well.

  12. AlecM permalink
    July 29, 2016 10:45 am

    In reality, UK Government has a Plan B; mini-nukes plus widely deployed micro-generation, the latter potentially giving the output of 2.5 Hinkley Point Cs with NO SUBSIDIES, whilst significantly reducing CO2 emissions compared with windmills plus diesel STOR standby.

    No subsidies means that the price of Grid Power plummets, making the economy highly efficient compared with Germany whose power arteries have become sclerotic.

    The elite greenies, our new fascists will become apoplectic once they realise their propaganda has been turned against them whilst stopping their real aim; to destroy the economy and kill off half or more of the population. Watch this space………

  13. tom0mason permalink
    July 29, 2016 1:42 pm

    Elsewhere in the world they just get on with on it — http://www.world-nuclear.org/information-library/country-profiles/countries-o-s/south-korea.aspx

    Unfortunately in the UK only high achieving classically trained luvvies, managers, administrators, and bureaucrats are revered. Merely having talent at science, even worse applied science, or lowest of all engineering it too close to trade/craft. Such talent is only useful as an export, or as mouthpieces for government policies.

  14. July 29, 2016 3:23 pm

    Paul, you need to do the arithmetic! £180 an hour for something that doesn’t work could well be better value than £100 for something that does, always provided you only pay up while they are working.
    Seriously, I have argued in a dozen places that Hinkley C makes no economic sense at all, and never did. It makes even less political sense (if that is possible) to hand potential control of your electricity supply to a foreign power even a benign one which China almost certainly isn’t!
    The only conceivable argument in favour of building this white elephant would be that Greenpeace are opposed to it.
    Have you thought of having your dog apply for membership of the Union of Concerned Scientists? If Anthony Watts’ dog Kenji qualifies I’m sure he’d appreciate having your mutt to chat to during those tedious meetings.

  15. July 29, 2016 5:28 pm

    It’s the wrong technology, takes too long to build and the strike price is way too high.
    What could possibly go wrong?

  16. tom0mason permalink
    July 30, 2016 8:48 am

    Who knows the true reason(s) for the UK government delay, there are plenty of rumors and here is one that is being appears frequently —

    The given reason is that the new UK cabinet needs more time to reconsider all the factors, but there is a rumour that its advisors have raised the spectre of security issues. They are concerned that a principal Chinese investor in the project, Chinese National Nuclear Corporation, which has been tempted in by the promise of approval to build a nuclear plant of its own, to its own design, at Bradwell on the coast of southeast England, will build in hidden software that could be used to sabotage the UK’s entire power production network. Part of the evidence for this perhaps fanciful scenario is that CNNC is a self-declared ‘builder of Chinese national defences’.

    from — http://www.modernpowersystems.com/news/newshinkley-now-you-see-it-now-you-dont-4964681

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