Taxpayers may still have to guarantee up to £2 billion in cheap loans for the Hinkley Point nuclear plant despite ministerial promises to the contrary, it has been claimed. The original plan for the exchequer to underwrite loans to build the power station in Somerset was announced by George Osborne when he was chancellor in 2015. EDF had sought the government guarantee to help to ensure that the project had access to finance. Last September ministers suggested that it was no longer needed after Theresa May’s “pause” of the nuclear deal. At the time Greg Clark, the business secretary, told the Commons: “EDF has confirmed to me that it will not be taking up that £2 billion guarantee, so the taxpayer is fully insulated from the costs of construction.” A letter from EDF in September said that it did not “anticipate” using the guarantee. However, subsequent government statements suggest the possibility that it will remain on the books. In a written answer to MPs and peers in October, ministers said: “The government is confirming that it has approved the provision of a guarantee for up to £2 billion to the project for the construction of its new EPR nuclear plant in Somerset, backed by commitments from the shareholders.” In their answer in October ministers continued: “The guarantee will be available from 2018 to 2020 if necessary conditions are met and is at government’s discretion. Even if made available, and EDF have indicated to the secretary of state for the Department for Business, Energy and Industrial Strategy that it is not their current intention to take up the guarantee, I judge the likelihood of any call under the guarantee to be very low.” Labour cr iticised the development yesterday. Barry Gardiner, the shadow international trade minister, said: “The assurance that Greg Clark gave me was categoric: EDF were not taking up the guarantee. Whilst I took him at his word, it appears that the Treasury were aware the secretary of state was suffering from baroque speech. That is why the guarantee is still marked as a liability on their books.”
Times 5th Jan 2017 read more »
EDF buys its reactors from Areva and was browbeaten into taking a majority stake in the reactor-making subsidiary last year. Areva’s problems affect how soon EDF can complete one of its two delayed nuclear units, Flamanville in France. Investigating alleged false documentation, described by one Areva executive as “more of a cultural” than a technical problem, could push Flamanville’s start up beyond 2020. That in turn would be more bad news for Hinkley Point C in the UK. EDF’s plans for this partly depend on £2bn of financing from the UK government. To take this funding and get any more there is a condition: Flamanville must be operational by end 2020 at the latest, according to an agreement with the European Commission over state aid. This last point raises questions as to whether EDF could complete Hinkley without the aid; and if not whether the UK can do without Hinkley Point’s generation capacity. The answer to the latter depends on other nuclear projects elsewhere in Britain. There are two. One in Cumbria has plenty of its own complications and involves Japan’s Toshiba, itself in financial turmoil. Another, in Wales, involves Japanese industrial Hitachi for which the UK government h as decided it will provide funding. All this comes as offshore wind progressively looks cheaper to run, even with all the subsidies, than Hinkley ever will.
FT 4th Jan 2017 read more »