The Hinkley delay has certainly ruffled diplomatic feathers, given China’s significant stake in the project. And it will create yet more uncertainty in an energy industry in which certainty is critical to fostering long-term investment. But it was the right decision, in light of serious concerns about whether the project represents value for money and the security risks of depending on Chinese investment for a project so critical to long-term national security. Yet the decisions that lie ahead will be even more difficult. Will the government kick the Hinkley decision into the long grass, as it has done with other difficult infrastructure decisions, such as additional airport capacity? Or will it use the coming months to reconsider how nuclear power fits into a long-term energy strategy? It is clear that Hinkley, as currently conceived, represents a terrible deal for taxpayers. Because nuclear power has such significant upfront costs, it will always require some form of state subsidy. By far the most efficient way is for the government to issue nuclear bonds, taking advantage of cheap borrowing costs.
Observer 31st July 2016 read more »
Jeremy Corbyn is facing a backlash from trade unions, party members and his shadow business minister after opposing the construction of a new nuclear power plant at Hinkley Point. A local chair of Momentum has abandoned her support for the Labour leader, warning that his stance on the £18bn project proved he was an “anarchist” and “not socialist”. Rachel Garrick quit the leftwing grassroots movement and switched to supporting Owen Smith after Corbyn declared his opposition to the new plant at Hinkley Point C in Somerset. “Tories have just put up the cost of your electricity by giving a blank cheque to EDF for a power station that doesn’t work,” he Tweeted.
Huffington Post 30th July 2016 read more »
The party’s shadow energy secretary Barry Gardiner said though his party supported nuclear power in principle, delays and cost overruns meant that the projected needed to be urgently reviewed. “We gave the go-ahead for new nuclear, that was the right decision in 2006. This deal, which is a bad deal, was signed only four years ago,” Mr Gardenier told BBC Radio 4’s Today programme. “The Government then came in and said they would pay £92.5 per megawatt hour. You know that onshore wind is that £70 per megawatt hour. “Offshore wind, the latest deal off the coast of Holland, is down to £80 per megawatt hour. And yet we will be paying £92.5 per megawatt hour for 35 years in 2025, index-linked, so it goes up every year. That is a bad deal.” The shadow minister said that as well as cost, the ability to deliver enough energy was a factor and that was why prompt delivery was so crucial.
Independent 29th July 2016 read more »
British Prime Minister Theresa May was concerned about the security implications of a planned Chinese investment in the new Hinkley Point nuclear plant and intervened personally to delay the project, a former colleague and a source said on Saturday. The plan by France’s EDF to build two reactors with financial backing from a Chinese state-owned company was championed by May’s predecessor David Cameron as a sign of Britain’s openness to foreign investment. But just hours before a signing ceremony was due to take place on Friday, May’s new government said it would review the project again, raising concerns that Britain’s approach to infrastructure deals, energy supply and foreign investment may be changing. The decision could prove a test for May, with any attempt to renegotiate the terms of the project potentially straining relations with Paris and Beijing at a time when Britain is seeking to build trade deals following the country’s vote to leave the European Union. “When we were in government Theresa May was quite clear she was unhappy about the rather gung-ho approach to Chinese investment that we had,” Vince Cable, Britain’s former business secretary, told BBC Radio. He later told Sky News her concerns over China’s involvement were linked to national security. “This was an issue that was raised in general but it was also raised specifically in relation to Hinkley,” he said.
Reuters 30th July 2016 read more »
Prime Minister Theresa May raised objections to the Hinkley Point nuclear power deal during the coalition government, Lib Dem ex-business secretary Sir Vince Cable has claimed. Sir Vince said the then home secretary was unhappy about the “gung-ho” attitude to Chinese investment displayed by former chancellor George Osborne.
Herald 30th July 2016 read more »
BBC 30th July 2016 read more »
Daily Mail 30th July 2016 read more »
One former cabinet minister said he believed it was “100%” down to Timothy’s intervention that the project had been stalled. “Nick is in an incredibly powerful position,” the source said. “Theresa listens to his every utterance, reads out his speeches and the reshuffle, I’m pretty sure, leads back to him. This is nothing to do with ministers. It will put [the chancellor] Philip Hammond’s nose out of joint and we shall have to see how that plays out.”
Guardian 30th July 2016 read more »
EDF’s Board met in Paris on Thursday and gave the green-light for financing of the £18bn Hinkley Point C (HPC) power station in Somerset. A couple of hours later the UK government made the surprise announcement that it would conduct a review of the project before signing the final agreement. The government stated that the review would last until the Autumn. if the review is restricted to just HPC then that might be an opportunity wasted. In my view, HPC is not the most problematic element of the UK’s new nuclear build programme. The government’s decarbonisation strategy requires somewhere between 12,000MW to 18,000MW of new nuclear capacity to be built by 2035. HPC would provide 3,200MW of this. The government has already agreed headline terms for EDF to build a clone of HPC at Sizewell and has inked a deal for EDF’s Chinese partners to build a new reactor design at Bradwell. In addition, three further projects using Japanese and US technology are in development. If all of these projects were to go ahead a total of 18,000MW would be built using four different reactor designs from five different manufacturers. It is expected that the commercial terms for these projects will be closely modelled on the HPC contract. Unfortunately the government has chosen to ignore past lessons about how to do new nuclear programmes. The UK’s disastrous nuclear programme of the 1970s provides ample warning. In that case, the Wilson government decided to buy the unproven British designed Advanced Gas Cooled (AGR) reactor rather than the American Pressurised Water Reactor (PWR) that was by then becoming the world standard. They then compounded that mistake by parceling the work out amongst a number of construction consortia all of whom amended the basic design. The result was perhaps the biggest industrial fiasco of the 1970s (a crowded field). The supply chain couldn’t cope with so many variants of the reactor design, lessons from one project couldn’t be applied to the others and economies of scale were lost. The result was that the AGR stations took up to 20 years to complete and all cost many times the original estimates. Even when the stations were finally completed they suffered decades of poor operational performance because each one was effectively a prototype.
Cornwall Energy 30th July 2016 read more »
Whatever motivated May’s actions, her predecessor didn’t leave her many alternatives to Hinkley, and the challenge for Britain is clear. Its fleet of 15 nuclear power plants is approaching retirement age, and its dirty coal-fired power plants have to be phased out by 2025, under the country’s own stringent climate policies. Cameron’s administration was so dead-set on filling the energy shortfall with new nuclear plants, starting with Hinkley, that it failed to come up with a Plan B. Climate advocates have argued that the gap could be filled with solar, wind and other types of renewable energy, combined with new smart technology to better assess when customers actually need electricity and, eventually, with batteries. The oil and gas industry argues lower-emitting gas could step in when the sun sets or wind dies down. Instead, Cameron opted to pull subsidies for renewable energy sources soon after he won re-election last year, saying they were getting too costly for bill payers. The problem is that Hinkley has been delayed for so long that it’s now unlikely to be completed until the late 2020s at the earliest, assuming May’s government approves it soon.
Politico 30th July 2016 read more »
While others may be professing astonishment over the British government decision to delay this deal on the eve of signing, the Chinese stakeholders are too polite – for now. Despite putting up a third of the funding and sending a delegation to the UK to celebrate what they along with everyone else expected to be the final launch ceremony for the project, a statement from China General Nuclear Power Corporation or CGN expressed understanding. A source close to China General Nuclear Corporation (CGN) has told me the Hinkley Point delay came as a surprise and a pain, and added, everyone in the company is bemused by the way it’s been choreographed. CGN has been given no real insight into the reason for the delay other than being told it was something the prime minister wanted. And unless and until the new British government tells us that national security questions are not one of the component parts that need considering, the question is out there because at least one senior official close to the Prime Minister seems to have a very different view on national security from that of the previous government. Nick Timothy is Theresa May’s chief of staff and a long time adviser. As recently as last October, just as the former Prime Minister David Cameron and his Chancellor George Osborne were preparing to unveil the Hinkley deal during a state visit by the Chinese President Xi Jinping, Mr Timothy expressed strong criticisms of the deal on the Conservativehome website.
BBC 29th July 2016 read more »
Even if China were not involved, there would still be plenty of reasons for worrying about whether the Hinkley Point project was worth the risk.
Independent 30th July 2016 read more »
Taxpayers could be saddled with a £2.5bn bill for Hinkley Point even if the government walks away from the huge Somerset nuclear power station, experts warn. The French state-owned energy giant EDF, which last week finally committed to building the £18bn plant, has already spent £2.5bn developing the 430-acre site. About 900 staff are working on the project, which will house Britain’s first new reactor since the 1990s. The National Audit Office (NAO), the government’s spending watchdog, is believed to have written a scathing report on the Hinkley contract, branding it “the world’s largest and least appropriate private finance initiative deal”. Industry sources said the report would criticise the way its funding has been structured. The contract heaps construction risk on EDF, meaning French taxpayers must pick up the bill if costs spiral. But the NAO report — due to be published when the contract is signed — is expected to say that a smarter transfer of risk could have delivered a better deal for British consumers.
Times 31st July 2016 read more »
No sooner had EDF confirmed its decision that evening than the celebrations were thrown into turmoil. A surprise statement from Greg Clark, the new energy secretary, declared his intent to reassess the deal. The government would “now consider carefully all the component parts of this project and make its decision in early autumn”. It was a hammer blow for the project — one that leaves Britain’s entire nuclear power renaissance in turmoil. It adds Hinkley to a long list of big infrastructure projects — including the High Speed 2 rail line and another London airport runway — that have been thrown up in the air by Theresa May since Britain’s vote to leave the European Union. The UK power market is changing rapidly. The plunging cost of clean power technology, such as solar panels, coupled with advances in batteries and less power-hungry equipment, could make more homes self-sufficient for energy and less reliant on big power stations. There are some who have advocated a “dash for gas” instead of nuclear power. “It [Hinkley] is an expensive way to get electricity,” warned Iain Conn, the boss of British Gas owner Centrica, on Thursday. WHEN May swept into Downing Street earlier this month, nuclear insiders began looking for clues about the former home secretary’s views on the industry. It did not take long for them to find an article written in October by her influential adviser, Nick Timothy, on the website Conservative Home. Entitled “The government is selling our national security to China”, it swiftly did the rounds between executives’ email boxes. IF GREG CLARK’S statement caused shockwaves in China, the impact on politicians and executives in Tokyo was no less severe. He had landed in Japan on Monday to reassure them the government was committed to Hitachi and Toshiba’s new nuclear projects at Horizon in Anglesey and NuGen in Cumbria respectively. Yet here he was threatening to renege on another foreign deal that had taken years to reach. Insiders say the Japanese technology giants have been left concerned and bewildered about Britain’s commitment. “If they do a deal, what’s to say the government won’t change its mind?” said one. “The biggest risk for a multibillion-pound investment like a nuclear power station is not building the thing, but the regulatory and political uncertainty. After the damage done by Brexit, this is immensely costly.” Hitachi and Toshiba are now trying to work out how they will pay for their new nuclear power stations, next in line behind Hinkley. This delay will only make those talks more challenging. “If they think, ‘It’s OK — we’ve got Horizon and NuGen instead’, they’re so wrong it’s unreal,” said an industry insider. “This is all about investor confidence.” So what else could lie behind the delay? If May and her chancellor Philip Hammond want to use it to renegotiate the terms of the strike price, it could prove fatal. EDF has already warned that delays are trimming the returns that it hopes to make on the reactor, giving it a projected rate of return of 9% over the life of the project. With EDF and French taxpayers on the hook if the scheme’s costs spiral, the company will resist any attempt to haggle, or it could walk away. Nor can EDF’s scheme do without China’s involvement. It needs CGN’s construction expertise — amassed during the continuing construction of a power plant in Taishan, southeast China.
Times 31st July 2016 read more »
Even if it ultimately gets the green light in the autumn, choosing to reappraise the Hinkley C project is a significant act in itself. The pause has cheered and emboldened enemies of the plant, both those who are against it on the grounds that it is a vanity project that will prove ruinously expensive to the taxpayer and those who are opposed to nuclear reactors because they involve splitting uranium atoms. Colleagues report that she hates having to commit to a course before she has examined all the angles and the Hinkley project is freighted with a lot of risks. The near-horizon cost is £18bn and rising. The potential future charge on taxpayers and electricity bill payers is higher still. Britain has had a disillusioning history when it comes to nuclear power, a technology this country largely invented but has been very poor at using successfully. If Mrs May wants to do further reading on the subject, I recommend Professor Simon Taylor’s excellent recent book, The Fall and Rise of Nuclear Power in Britain. When so much money is involved, and so many people think there is such potential for this project to go very badly wrong, it is not really so astonishing that Mrs May wanted a pause.
Guardian 31st July 2016 read more »
Theresa May blocked the Hinkley Point nuclear power plant to prove she will not be a pushover as she tours the world seeking post-Brexit trade deals, it emerged last night. Well-placed sources insisted the Prime Minister’s decision to delay the £24 billion deal did not mean she was about to pull the plug on it. They said she was determined to get good value now that the UK was moving to a position where it would be free to negotiate its trade deals outside the EU.
Daily Mail 31st July 2016 read more »
Wind and solar plants are intermittent power suppliers. They often provide power when it is not needed but fail to supply it when it is required. And until a method of storing energy on an industrial scale is developed, this drawback will continue to bedevil its deployment across the country. Research into ways to store energy on a large scale is now being pursued across the globe but may take decades. Similarly, other game-changing energy projects are being worked on.
Observer 31st July 2016 read more »