Jon Excell – Editor
EDF’s final decision on its Hinkley point investment has reportedly been delayed at the last minute. Is there a final twist in the UK’s unedifying atomic energy saga?
In an alternative version of the present, the construction of Britain’s first new nuclear power station in decades is nearing completion on time and on budget, ushering the UK towards a new era of energy security.
The reality, as most readers will be aware, is somewhat different.
Escalating costs, slipped deadlines, and an ever shifting cast of players have seen Hinkley point C – which is expected to one-day provide 7 per cent of the UK’s electricity – mutate from a £16bn plant due to open in 2017 to an £18bn facility due to begin operating in 2025.
Late last year, we reported on the deal which might finally enable us to move on from what has surely been one of the UK energy sector’s most unedifying spectacles.
And though this was not with out its negatives – not least a ridiculously generous strike price twice of £92.50/MWh (double that of the current UK wholesale electricity price) and the questionable wisdom of handing a 33% controlling stake to a company owned by the Chinese state – it did at least seem like a line had been drawn under the uncertainty that has dogged the project over the last few years.
But fast forward just a few months, and the clouds of doubt are once again gathering over the project, with a report in French paper Les Echos, claiming that the final decision by EDF to invest in the plant, originally due to be made today (Wednesday 28th Jan), has been postponed.
As recently as last week EDF’s Chief Executive Jean-Bernard Levy told reporters that then final investment decision was expected to made this week, but according to reports the firm, which is 85 per cent owned by the French state – is now struggling to find the cash for it’ 66 per cent stake in the project.
It seems unthinkable that EDF will pull out of Hinkley Point C – particularly as it has already ploughed £2bn into the facility. And with the company yet to publicly comment on today’s reports it’s conceivable that these last minute jitters will be quickly laid to rest.
However, some are convinced that some dark days lie ahead. Indeed, in a report on the BBC website, Greenpeace director John Sauven claims that the delay could “signal curtains” for the project.
If the reports are true, it seems we’ll have to wait until February 16th at the earliest – when EDF publishes its annual results – to see exactly what the future holds. And whilst another delay wouldn’t be disastrous, it would take a brave gambler to bet against that far off target of 2025 slipping once again.
I will wager it never gets constructed that way we become irrevocably tied to the Continent via the inter-connector and mercilessly milked to subsidise their ever rising costs.
The French interconnect is 2G watts and the Netherlands interconnect adds another 1GW giving 3GW out of a typical winter demand of 45GW. I don’t see how we are ‘tied to’ such a small supplier, and by the way its bi-directional so we supply Europe if we have excess capacity.
As for their ‘ever rising costs’ the French generate 85 – 90% of their electricity from nuclear stations so if their costs are rising so too would a nuclear Britain’s.
I hope it does fall through. It is a terrible deal.
Our poor country must have had some of the most short sighted decision makers over a very long period for us to end up with this mess. Private enterprise can do great things on big projects as is evident with Spacex, Blue Origin and others in the USA Space industry. However you would be hard pushed to dream up this debacle. Given our illustrious past in the development of nuclear who is responsible for us being at the mercy of foreign governments and for offering them incentives that future generation will have to suffer. I’m sure it’s all too late for any change now but will we ever learn?
Agree with the above. It should not happen. The way forward is small modular reactors, British designed and built, located adjacent to existing coal and nuclear sites for connectivity. I’d rather have a Rolls Royce-derived SMR on the doorstep than a waste to energy plant, and I used to work on W2E technology.
Is it possible that the project decision is “delayed” because of the current (no pun) renegotiations on UK membership of the EU – prior to Brexit referendum?
JIm, although a potential Brexit must be a consideration, I don’t think it is the driving reason for the delay. EDF simply doesn’t have the financial strength at this point to carry 66% of the project on their books. They must get other investors involved to share the burden and in this time of austerity the French and UK governments are not really in any position to help. Also, the Chinese economic slowdown and stock market decline will likely prevent them increasing their share beyond the current 33%. Given the halving of EDF’s share price and the resulting expulsion from the French CAC40 index, the collapse in wholesale electricity prices and the 50% increase in the estimated price of the CIGEO underground storage facility and related EDF provisions, it is beginning to look like a perfect storm. EDF’s very survival is at stake so no wonder the Board of Directors wants to take more time to mull over such a momentous decision.
This was an awful deal and I’m glad it is being postponed.
I am all for private enterprise but on such large scales, both in terms of money and time, only states have the gravity to manage the risk and thereby keep a lid on associated costs.
I would not be surprised if EdF’s failure to get an EPWR online and to budget elsewhere is behind this. I’m guessing they’re not confident of the risks involved and if this goes wrong it would pose an existential crisis to the company: I’m not sure EdF’s investors would be keen on this!
Unfortunately due to Labour’s procrastination over the 90s and 2000s we are now facing an energy crisis and need something soon. Surely the EPWR is the closest of the next generation of plants to design completion, I fear we’re stuck with it and the ridiculous strike price.
EdF are in serious financial straits due to project problems (on other jobs), and French Government policy changes against nuclear.
Such a large fundamental infra-structure project must surely be saved, especially as coal is being prematurely closed down and we are becoming dependent upon wind and gas (true political style). Except that the gas powered stations cannot be built as they cannot sell electricity profitably against highly subsidised renewables. Load shedding and diesel generators are the current big hope to prevent the lights going out: what a shambles!
Build the plant in France & cable in-to Fawley. Cuts out all hassel of building in UK & gives us 2GW stright away. Simple !!
Are we surprised by this? No of course not, I was just leaving school as the whole AGR thing at Dungeness began to unravel and I wondered then whether our nuclear industry would survive. Over the years I’ve watched us squander yet another lead in an essential technology. The debacle over the waste reprocessing plant at Windscale/Sellafield only increased concerns. The UK Government works on a maximum of 5 year cycles, their main interest is in getting re-elected. But like most infrastructure projects it needs long term planning and Commitment.
As the moment where we get caught between the rock of the lights going out and the hard place of our carbon reduction commitments approaches it’s beginning to feel like musical chairs, no one wants to be the party in power when this moment arrives. Small modular reactors seem to offer the only surefire solution given the ever shrinking timescale for solving our self imposed energy crisis.
Finally a plea, yet again for more, much more money to spent on fusion research, not just here but world wide.
Fantastic news. Lets hope the delay becomes permanent. There are better ways to generate power than this immoral form of energy supply.
Lets just become the experts at decommissioning plants which is costing us 72bn£. That might be a skill we can export when Germany’s plants come to an end.
The fundamental problem here is that the biggest driver for the wholesale price of electricity is the system margin. As the margin gets tighter prices go up. So, if I were running a private generating company, would I send lots of capital to build a plant to drive up the system margin and drive down the price I get for my product? Remember the aim of these privatised generators is to deliver “shareholder value” (define that how you like) not to keep the lights on in Britain. That’s why we had to agree a ridiculously high strike price to even get EDF interested. The whole business model of a privatised electricity supply industry is fundamentally flawed and we (the businesses and individuals of this country) are paying the price.
Is Britain’s first new nuclear plant in decades about to fall at the final hurdle?
I certainly hope so, can you imagine what chance British industry would have in competing on the global market if the energy price was controlled by the French and the Chinese. What a stupid idea! British design, British build and British run or not at all!. We do not need new nuclear anyway. If the huge subsidies paid to nuclear were given to alternatives, we could close them all. At the very best they provide 25% of baseload, but the average is about 16% when you bring in refuelling and maintenance downtime. Nuclear is the most expensive way to boil water on the planet!
The UK needs a flexible and economic power system, which we had until we stopped coal mining, then applied arbitrary tariffs to energy sources, then imposed expensive electricity on the nation.
Nuclear power seems to me to be an essential element of a flexible power generation system, especially if we close our coal fired stations as planned (and now accelerating). Weather based generation will always suffer from …. weather, apart from needing massive subsidies.
As a politically-incorrect note: the Russians now seem to lead the world in FBR technology and are operating 800 MWe stations using this technology. If we imported this technology it would seem to kill two birds with one stone, getting rid of weapons grade plutonium and forging long term trading ties with Russia – the USA would certainly stop this, but it looks the right way forward other wise!
It is interesting to see that nearly all the opinions cast here see Hinkley C as a terrible idea, unfortunately, we Engineers don’t make policy, we just have to deal with it.
I work in renewables, specifically onshore wind. We are being decimated by the Conservative Government’s decision to halt further development – this is ironic,as we are just reaching the point at which the industry could survive, subsidy free.
We would certainly make healthy profit at a strike price of £92.50/MWh (Hinkley C, index linked price by the way, likely to be £125/MWh by the time it exports it’s first energy!) but, as ever the playing field is tilted toward foreign investment that is being ‘bought’ with the promise of a ridiculously high strike price. Of course the MP’s don’t care, they will be collecting their gold-plated pension by the time Hinkley comes on stream, if it ever does, whomever is in government in 2025 will have to answer the questions from voters about soaring energy bills.
Whilst in the background, we are prevented from replacing ageing and comparatively inefficient wind turbines with state of the art technology, fuelling the nay-sayers that are still telling us how inefficient and expensive wind power is.
Wait until they see their bills in 2025…