The energy company behind the Hinkley Point nuclear project has still not signed off a contract with its Chinese partner that is needed for the £18bn plant to go ahead. EDF Energy and China General Nuclear Power Corporation (CGNPC) reached an outline deal that was unveiled last October by David Cameron during a state visit by the Chinese president, Xi Jinping. But five months on the companies have not finalised the agreement, amid growing doubts over EDF’s commitment to the project. When the outline deal was announced, the French state-owned power company said construction work could begin within weeks. However, it has now emerged that the delay in EDF taking the final investment decision on Hinkley is not just because of well-publicised financing concerns in France, but also because there is no legally binding contract with Beijing.
Guardian 9th March 2016 read more »
You cannot afford to build Hinkley Point, EDF is told. EDF has been warned that going ahead with its vastly expensive Hinkley Point project will tip it towards a downgrading of its credit rating. This would raise the cost of financing the £18 billion that the company needs to build the world’s most expensive nuclear reactor. Moody’s, the credit rating agency that put EDF on notice of a potential downgrade last month, said that the project would have to be “mitigated” by the French company raising capital and cutting its debt. It is almost impossible that EDF would find an additional partner to help to share the financial burden with CGN, its existing Chinese backer. Paul Marty, an analyst at Moody’s, said: “There’s quite a lot of uncertainty around the ability to build this plant – everyone is waiting to see what happens with Flamanville and Olkiluoto in Finland. That’s not going to happen in the near term.” He described Hinkley Point as “a very significant and risky project”, adding: “It would be a positive step for EDF [to find a new partner]. The difficulty, however, is that given the uncertainty around the technology it is highly unlikely that EDF would be able to find another partner before one of the other EPRs is commissioned somewhere else in the world. The com panies investing in this project would want to have certainty that it can be built.” Paul Massara, an industry executive who was formerly in charge of Npower, said that going ahead with Hinkley Point would be an expensive mistake given the decline of energy prices and improvements in battery technology that would reduce pressure on the national grid. “The original decision was made at a time when people hadn’t been looking at current gas and electricity prices and the technology that’s going to disrupt the market and provide a major step change in how energy is stored and produced,” he said. “That’s going to make this all look incredibly expensive and we’re going to be paying for it and our children’s children are going to be paying for it.”
Times 10th March 2016 read more »
How worried should investors be that EDF’s finance director has resigned? Mr Piquemal may have been the only board member to go public, but he is known to not be the only one who is unhappy about the project. The plan for Hinkley involves using unproven technology which has already run into trouble elsewhere. This it could ill-afford, since the numbers make painful reading. Cash flow in 2015 was negative to the tune of 2bn euros. EDF has borrowed to cover dividends for years – and says operating cash flow will not cover payouts until 2018. Net debt has quadrupled since 2007 and rose again last year. Its annual results presentation last month trumpeted the fact that it had managed to reduce operating costs by a whole 1 per cent – the first time they had gone down in the past five years. On top of this, the company must upgrade a fleet of ageing reactors in France and faces increased competition there now that the government has started to open up the energy market. All this explains the financial question marks hanging over EDF and the Hinkley deal. The Hinkley Point deal may make political sense, for both the French and the British. But for EDF in its present state it is a risk too far. The test of whether it is run like a company or like an offshoot of the French state now depends on what decision is taken over the project.
FT 9th March 2016 read more »
Letter: Cllr Ernie GalsworthyChair, UK and Ireland Nuclear Free Local Authorities: Your editorial on the Hinkley Point debacle is spot on – yes, it is time to move on from it and to find an alternative energy strategy. EDF finance director Thomas Piquemal is no anti-nuclear hothead. It is his job to warn about projects that could damage not just EDF’s economic credibility, but also the entire future of the company, which is clearly at risk from moving ahead with a final investment decision. EDF should look at RWE to see what could go wrong. The German company did not see the changing energy market in Germany quickly enough, and as a result it is saddled with a debt burden it is struggling to cope with, while making strategically bad decisions in its UK market. One of the sensible decisions it did make was to get out of building a new nuclear reactor at Wylfa. And today, 2,400 people from the company have lost their jobs as a part of its previous mistakes. EDF can’t possibly make a sensible financial decision on Hinkley given the need to merge with Areva, its 37bn debt burden and a technology that has clearly not been proven. However, ramping up Wylfa or Sellafield Moorside is not the answer, as the companies behind them have similar financial problems to EDF. Small modular nuclear reactors are also years, if not decades, away from being a proven technology. The answer is to ramp up decentralised energy, develop a wide renewable energy mix, energy storage and energy efficiency solutions. Let’s move on, indeed – to a renewable energy revolution.
FT 9th March 2016 read more »
The Government’s proposed rescue plan for Hinkley C nuclear power station may be in breach of European state aid rules, says the South West’s Green MEP Molly Scott Cato. Dr Scott Cato, the Green Party’s economic speaker, has written to the Commission asking it to investigate the planned rescue of the EDF project. The written question asks the Commission to investigate whether recapitalisation is taking place and whether this constitutes State aid, something which could be illegal under EU rules. In a formal written question, the MEPs have said that if evidence does suggest a breach of the rules, the Commission should re-open a state aid case on the building of new nuclear reactors at Hinkley Point. Dr Scott Cato said: “We cannot stand by and allow a disastrous economic decision to plough ahead in order to save political face on both sides of the Channel. “There is a Plan B based on renewable energy, energy efficiency and innovative smart grid and energy storage solutions. This is a plan I have been advocating for the last year and could be delivered in time to prevent blackouts and create 122,000 quality jobs in the process; many more than nuclear could ever hope to deliver.”
Plymouth Herald 9th March 2016 read more »
The deal to provide a new nuclear power station at Hinkley Point would have cost even more if George Osborne had had his way, the former energy secretary Ed Davey has said. The Lib Dem former member of the coalition cabinet said the £18bn plan to build Hinkley Point C represented a good deal, and claimed the cost would have been higher without his involvement. Speaking on the BBC Radio 4’s Today programme, he said: “We need lots of low-carbon electricity in the future. And I negotiated a good deal. My Conservative colleagues would have shaken at a much higher price.” Davey claimed Osborne was so keen to strike a deal, particularly one involving Chinese investment that he would have agreed to pay more.
Guardian 9th March 2016 read more »
Former energy secretary Ed Davey has admitted he doesn’t know if the £18bn Hinkley Point C nuclear power plant will be built. Asked whether Britain’s first nuclear power plant to be built in 25 years will be built on BBC Radio 4’s Today programme, he said: “I don’t know, I’m not a nuclear scientist.”
City AM 9th March 2016 read more »
Letter: Hinkley Point C should be cancelled or at least put on hold and reviewed, the former chairman of Scottish Power, Donald Miller, says. Hunterston and Torness produced electricity at lower costs than the 2400MW Longannet station burning Scottish coal, even after financing costs and full provision for decommissioning and waste disposal, and without carbon taxes. Hinkley would be some three times that and would establish an unacceptable base price for other new-build nuclear. Furthermore, the UK economy can support only one or at most two designs of plant so that the proliferation of designs being toted by DECC repeats the mistakes of our early nuclear programme from which it took decades to recover. For all these reasons Hinkley should now be cancelled or at least put on hold and reviewed in the light of the performance of EDF and Areva on their existing projects.
Times 9th March 2016 read more »
Letter Chris Bakken: Your leader (“Nuclear disaster”, Mar 8) suggests that I left EDF Energy because it I did not appear to have full faith in the Hinkley Point C project. Far from it. The reason for my departure was that I was born and brought up in the US and decided to move back to the US so that my wife and I could return to our family.
Times 9th March 2016 read more »
Reactors at EDF’s proposed Hinkley Point C nuclear project should not be vulnerable to the same weak spots as found in a reactor vessel at the company’s Flammanville site in France, Britain’s Office for Nuclear Regulation (ONR) said on Wednesday. Intractable problems at two nuclear plants under construction in France and Finland have threatened more delays to EDF’s plan to build two Areva-designed European Pressurised Reactors (EPR) nuclear reactors in Britain at Hinkley Point in southwestern England. The Hinkley Point C project was first announced in 2013, but an investment decision has been put off repeatedly as EDF struggles to find partners and funding. Flamanville is also years behind schedule and in April last year French nuclear regulator ASN said “very serious anomalies” had been found in its reactor vessel. However, the ONR said it does not anticipate similar anomalies at Hinkley Point C as occurred at the EPR reactor at Flamanville. “EDF will be procuring the dome forgings manufactured from larger ingots using a different casting process designed to eliminate the carbon segregation currently being considered by the French regulator,” the ONR said in a statement. “As part of ONR’s ongoing regulation, the dome and the whole reactor will need to meet the UK’s high standard of nuclear safety to ONR’s satisfaction before permissions are given,” it added.
Reuters 9th March 2016 read more »
Sir Edward asserts in his Thunderer comment ” the price [to be paid for electricity generated by the Hinkley C nuclear plant]includes cleaning up nuclear’s pollution: the cost of managing nuclear waste and, eventually, of decommissioning.” This misleads by omission in a number of ways. The cost of final nuclear waste management is capped by the fiendishly complex set ofarrangements. If the agreed cost escalates above the ceiling, which close examination of the history of nuclear waste costs suggests is inevitable, the nuclear plant operator will have the extra costs picked up by the taxpayer. There is a minimal insurance premium the radioactive waste creator, in the Hinkley C case, EDF Energy, has to pay, but this will be dwarfed by the inflation in real costs.
David Lowry’s Blog 9th March 2016 read more »
Someone build a statue to Thomas Piquemal. The chief financial officer of Électricité de France has done us all a massive favour by resigning on a point of principle over Hinkley Point C, even if his departure does look a bit of an ironic joke: he’s off because the bribes aren’t big enough. Yet, how much more evidence does anyone now need to pull the plug on radioactive Dumbo? David Cameron and George Osborne have already thoroughly demeaned themselves, grovelling to the French and Chinese in a bid to make their nuclear white elephant fly. Despite all these alarm bells, the government ploughs on with Hinkley, playing along with EDF’s stuck-record claims that its final investment decision is coming “soon”. Mr Piquemal was advocating a three-year wait until the costs of Flamanville were clear. Switching off the Hinkley nuclear disaster before it totally blows up would be an even better idea.
Times 8th March 2016 read more »
The row about the Hinkley Point nuclear power station – reignited by the resignation of the Finance Director of EDF – has been further intensified by an Ed Davey article in today’s Times. It’s a peculiar dispute, in a way, attracting fire from opposing directions. One group of critics in the UK accuse the Government of agreeing an excessively high price for the energy produced, while another group of critics in France (evidently including the ex-Finance Director) accuse EDF of taking on a project which will not be financially viable. Davey’s contribution is to muddy the waters further, arguing the price he agreed is correct but alleging that the Chancellor “would have shaken hands with EDF at a higher price”.
Conservative Home 9th March 2016 read more »