News editor
The deal to build the Hinkley C nuclear power station has finally been announced, as the construction sector begins to emerge from its worst recession in 35 years
By 2023 the UK will have a new electricity generating plant capable of providing seven per cent of the nation’s energy needs when running at full capacity.
This is one of many claims being made today by DECC, which has formally announced an agreement between government and EDF on the commercial terms of the proposed investment contract that will see a new nuclear plant built at Hinkley Point in Somerset, a move that puts the west country plant at the vanguard of new nuclear in Britain.
This is, of course, good news when taken from the perspective of a national requirement for a reliable, low-carbon form of generating electricity.
Furthermore, DECC anticipates UK companies being able to take a 57 per cent share of the work to build the plant with around 25,000 jobs created during construction; 5,600 employed on site at peak of construction, and 900 permanent jobs created over 60 years of expected operation. Terms of the contracts for the four most important suppliers to the project – Bouygues TP/Laing O’Rourke (civil work contract), Costain (marine work), Alstom (turbines), and Areva – have now been finalised subject to a final investment decision.
Reassurances have been given that EDF and fellow investors (Areva, China General Nuclear Corporation (CGN), and China National Nuclear Corporation (CNNC)) will fund the £16bn project and that the station operator will take on responsibility for decommissioning and waste management costs.
UK consumers will start picking up costs from 2023 based on the strike price agreed between the parties that guarantees EDF Group £92.50/MWh, or £89.50/MWh if a new plant is built at Sizewell C. If wholesale prices rise above the agreed strike price, consumers will not pay extra. If they fall below this price the generator will receive a top-up payment.
These guarantees are widely acknowledged as being twice the market price and, in the words of today’s City AM, consumers are going to get hammered.
On the plus side, Scot Parkhurst, UK energy sector director at consultancy WSP believes today’s decision will help safeguard ‘specialist skills across the construction sector that have been sitting dormant for too long.’
A similarly upbeat tone came from Dr Tim Fox, head of energy and environment at the Institution of Mechanical Engineers, who said, ‘This announcement is a welcome step towards giving the UK nuclear engineering and research community confidence that the nation has a future in this sector and should act as a catalyst for encouraging the other consortia, Horizon Nuclear Power and NuGen, to continue with the plans for new plant at Wylfa, Oldbury and Moorside among others.’
Gareth Stace, EEF’s head of climate & environment policy, added, ‘The focus in the coming weeks must now be on the competitiveness of electricity prices and the need to avoid cost increases that are out of line with our competitors.
‘The UK also needs to be able to show that the transition to a low carbon economy can be beneficial for both the economy and the environment. Government must now build on this by ensuring that UK companies in the nuclear supply chain get the amount of work to which EDF has committed.
The commercial agreement reached today is not legally binding, and is dependent on a positive decision from the European Commission in relation to State Aid.
Nuclear new build will certainly be a boon for the nation’s construction industry, which appears to be on an upward trajectory.
Analysis from the Construction Products Association suggests that the industry is emerging from its worst recession in over 35 years with growth predicted for the next four years.
The industry, worth £111bn, is expected to grow by 19 per cent by 2017, an upward revision from the summer based on an increase in activity that is predicated to boost UK GDP by an additional £20bn.
This upbeat assessment is driven by private housing and infrastructure, which Noble Francis, economics director of the Construction Products Association says is showing a ‘more gradual return to positive territory.’
In a statement Francis said, ‘The infrastructure sector is recovering from a very difficult 2012, when output fell 12.7 per cent despite numerous government announcements of ‘boosts’ to the sector. Government now appears, however, to be refocusing capital investment towards repairs and renewals. In addition, work on Europe’s largest construction project, Crossrail, is expected to peak over the next 18 months. As a result, growth of 7.4 per cent is forecast in 2014
‘In the longer-term, the prospects for infrastructure will be reliant upon investment in the replacement of energy capacity across nuclear, offshore wind, gas and shale, all of which remain uncertain. Driven by this investment, we predict the sector will enjoy further growth of 27.9 per cent between 2015 and 2017.’
Key points in the Forecasts include:
• Construction output growth of 2.7 per cent in 2014 and 4.6 per cent in 2015
• Private housing starts to rise 19 per cent in 2013 and 15 per cent in 2014
• Public education to fall 14 per cent this year
• Rail infrastructure to rise 34 per cent by 2017
• Energy infrastructure to rise 99 per cent by 2017
• Public sector education and health projects to fall 11 per cent in 2013 and 2.4 per cent in 2014
The TUC concurs that the recovery is taking hold but maintains a caveat that it has to follow a low carbon path, and this is a subject of conference taking place in London today.
According to publicity material the TUC’s climate change conference – Green Growth: No Turning Back – is predicated on the belief that ‘the need to secure a green economic future has never been greater… it is more important than ever that the new economy we seek to create follows a low carbon path, where we maximise opportunities for green growth while addressing the urgent challenge of climate change.’
Speakers include Edward Davey, secretary of state for energy and climate change, Ian Wright, shadow minister for competitiveness and enterprise, and Prof Julia Slingo, chief scientist at the Met Office.
Four sessions take place in the afternoon, with one asking if the UK is falling behind in the ‘green technologies’ arena, what difference could new green technologies make – and – pertinently – why do we need them? Another will look at expert opinions on what low carbon policy should look like.
Leeds University’s Prof John Barrett will warn this week that around a quarter of all global greenhouse gas emissions are being exported through trade and are not being captured within global climate policy.
Prof Barrett will present the findings of his latest research – funded by the UK Energy Research Centre (UKERC) – alongside Tim Yeo MP at the All Party Parliamentary Climate Change Group tomorrow.
In a statement, Prof Barrett said, ‘Emissions embodied in trade are rapidly increasing and there is a growing gap between production emissions and those associated with consumption.’
The rise of ‘consumption-based’ emissions is a growing concern due to the absence of a global cap, as well as fragmented polices and significant variation in country-level mitigation ambitions.
Prof Barrett, however, believes that ‘robust measurements of consumption-based emissions are possible and could provide new insights into policy options for reducing greenhouse gas emissions.’
The development of shale gas in the UK is on the agenda tomorrow when the House of Lords Economic Affairs Committee hears evidence from senior representatives of Friends of the Earth, Greenpeace UK, and WWF-UK.
The committee will ask Craig Bennett, director of policy and campaigns, Friends of the Earth; Dr Doug Parr, chief scientist and policy director, Greenpeace UK; and Nick Molho, head of policy (Climate & Energy), WWF-UK, about the possible physical and environmental risks presented by shale gas and oil extraction in the UK and what impact increased use of shale gas and oil might have on UK emissions targets.
The committee is scheduled also to take evidence from Prof Richard Muller, Professor of Physics at the University of California, who will present his views on the prospects for shale gas and oil extraction in Britain.
Great news on Hinkley Point, and only a week after the deal in exact detail was published in Private Eye, along with a full analysis of the subsidy levels across the various renewable sectors. If you want facts – go to the Eye.
Is the annoucement above really good news? what about the fact that Germany has decided to discontinue investment in Nuclear in favour of “green” energy solutions? The German announcement was made after the tsunanmi swamped the Japanese nuclear power station and is still causing nuclear pollution.
A sensible, pragmatic decision has been made. If CO2 is the “global bogie man” then nuclear is the only technology we have that is remotely capable of delivering in both quantity and in terms of timescale. However, we are witnessing the inevitable consequences of the privatisation of the electricity supply industry. For the investors this is not about security of supply or keeping the country’s lights on. It is simply an economic decision about return on investment. No investor with any sense would put up such a large sum without a guarantee of returns. All of which means that, in order to deliver a sensible outcome in terms of the UK’s future energy supply, we have to bribe the investors with enough of a premium so that they can deliver for their shareholders. I can’t see how this is a sensible way to run an energy policy but, unfortunately we are stuck with it.
Well, one could say that Merkel failed the “post-Fukushima nuclear stress tests”.
The reality is, if you want to cut down on CO2 emissions, you either need nuclear, or renewables (backed up with fossil fuel), or a combination of both.
The combination of both (the UK solution) is a lot cheaper than the German solution, as German consumers are already finding out. The sad thing is that electricty prices in Germany are the highest in Europe, and emssions have barely moved, as very expensive renewables are replacing fairly expensive nuclear.
At last we are progressing towards more secure electricity supplies but – not until 2023. This is 10 years away and, in the meantime, electricity use will increase dramatically.
Also, when did we solve the problem of waste nuclear material? This subject has gone very quiet or possibly drowned out by the “Lights will go off” brigade. Nuclear is “Green” from an emissions point of view but where do we put the spent bits?
Today’s news on Hinckley C, was essential.
As is the need, for other nuclear schemes to be announced and built, on a sooner, rather than later, basis.
But what cost, as another private sector deal, negotiated by a government who waste our taxes quicker than they lie.
If we could afford HS2, at the more or less 50 billion, then why not 2 or 3 essential nuclear stations, where the “security of supply” is unquestionable.
New Nuclear stations built by UK Engineers, using superior UK technology and the inevitable, UK tax payer’s money.
The UK tax payer’s will always have to foot it’s energy bill, so the only issue is, how much value are we going to get for our money ?
The Hinckley C deal is another Government give away, biased towards private providers. Not a bill today but a huge bill for our children’s and grandchildren.
Our squandered, taxes by parliamentarians, who will probably be dead, but have arranged this legacy, which guarantees a golden stream of UK tax payers wealth to other countries, (making our EEC contribution trivial), in this massive 60 year long, give away.
Now that our North Sea oil & gas wealth has been squandered, by incompetent bankers and soaked up by global business parasites, what we must learn from this near unaffordable announcement is that we must re-engage, the art of recycling our taxes within our own society.
The process is called the “Nationalisation of essential services and infrastructure”.
It was not the services that failed, (they were brilliant the best in the World), but the incompetent and inappropriately educated Oxbridge captains of industry, that ran them.
Such was the failure of appointing people who lacked hands on experience and who were elevated by privilege rather than ability which continues today.
Good news regarding Hinckley Point and lets hope Sizewell C and other new nuclear power stations follow soon.
With nuclear power hopefully in the ascendancy our children and grandchlidren can now look forward to the end of burning fossil fuels for electrical power generation.
They will hopefully also benefit from the recycling of the 100 tons or so of plutonium bearing waste material already stored in Cumbria along with waste fuel arising from the UK’s existing nuclear power plants and new plants like Hinckley and hopefully Sizewell C and others.
Recycling this waste material as fuel for new 4th generation Fast Breeder nuclear reactors would appear to be a win-win solution for the UK.
Firstly we avoid the need to build very expensive, very secure underground stores for this very long half life highly radioactive material that must be overseen by future generations for thousands of years before it has decayed to a safe level.
Secondly, truly copious amounts of low carbon electrical power can be produced by recycling this “waste” material as fuel to breeder reactors whilst in the process producing a far less radioactive final solid waste product that will decay to a safe level very quickly in just a few generations.
With reference the Fukushima disaster in Japan it should be remembered that the Tsunami that killed tens of thousands of people was generated by an earthquake of some 9.5 on the (logarithmic) Richter Scale which is thousands of times more intense than earthquakes typically experienced in the UK. That the 40 year old nuclear power plant was badly damaged but survived without a major melt down despite losing its auxiliiary power and cooling systems as a result of the massive Tsunami should give re-assurance knowing that the lessons learnt from Fukushima will be incorporated into all new nuclear power station designs making them safer still.
On the bright side, this is good news. We desperately need more capacity and nuclear will provide a carbon-free solution, except for the carbon used to build it of course. It’s unfortunate that this will be owned by overseas investors Do I hear the distant cry of tax evasion by offshore corporations? I wonder what back-room tax deals have already been negotiated? This need for total foreign ownership wouldn’t have happened if political ideology had not privatized this important and essential national infrastructure, the electricity supply industry. Competition hasn’t worked here, as we are all finding out to our personal cost at the moment.
We could get all the power required from solar panels on all south facing roofs in the UK. It would cost approx. 3 Billion pounds and produce in excess of 300 Giga watts of electricity. It can be done slowly over time, but the main thing is it can be started now, with no waiting. Power can be added to the grid one street at a time until the required quantity is reached. Plus there is no radioactive mess to look after for years to come!
Yesterday was Trafalgar Day; there was a time when we could teach the French a thing or two, that seems to be long gone.
Concerns? Yes, plenty, both about the commercials and the amount of tosh being talked around ‘Green’ energy. We are right to be concerned about a project that requires UK users – domestic and industry – to pay so much over the odds for so long, with the benefit going abroad.
But let’s not think that more solar panels are gong to help anyone: The German model (solar and wind) needs fossil fuelled stations as back up and overall the Germans produce more Co2 in energy production than they did 20 years ago. Renewables could be an answer but unless they are ‘turn-off and turn-onable’ (ie Hydro) or we invest in better storage solutions, they are of no real benefit.
I guess I wouldn’t win any friends suggesting shale gas as the best answer…..
Might be good news in terms of short term jobs, but terrible for taxpayers and electriciy consumers. Lots of techno breakthroughs imminent (graphine or superconductors for transmission of Saharan solar power?) but nuclear fission has had 50 years of subsidies and still unable to stand on its own two feet…
Good news in so much as starting to think of doing things. But how is UK going to develop its own design and manufacturing ability.
Will fuel be re-cycled? How will govt. start up design and manufacturing; it would be good if this was a general philosophy – then they could do start to support research for manufacturing and design of affordable solar, waves and wind.
Buying, off-the-shelf, is an expensive option – especially when only one supplier! Bring back the research labs?
Great News indeed. Uk companies opting is out a disgrace.
I hope Hinkley Point high enough not to be concerned with any future rise in sea levels
Why don’t we go down the Thorium route?
It seems to tick a lot of boxes even though more work might be needed. Can it be that far off, given that the Americans had an experimental Thorium reactor running ’70s?