Britain to go Nuclear

Britain will have a Nuclear Energy Plant operation within the next 20 years . Whereas in the old days we led the World, now we are reliant on Chinese Investment and French knowhow. It will be built in Hinkley Point in Somerset.

As an active Nuclear protester in the 60's I feel betrayed. No matter that there have been Nuclear disasters like Chernobyl and Fukashima , we face the indignity on relying on other Countries to do the job for us. EDF have guaranteed that two thirds of the income will be returned to Britain for taking the risk?

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THE TAXPAYER LOSES


If British taxpayers really are in a "global race", they've got some new international talent on their team. The Government has struck a deal with EDF, the French energy giant, to build the first new nuclear power plant in a generation at Hinkley Point C in Somerset. EDF will hold between 45-50 per cent of the equity in the project, reports the FT. The French nuclear developer Areva will hold another 10 per cent - and two state-owned Chinese companies will hold between 30-35 per cent. It's a thoroughly globalised deal and proof, the Chancellor will trumpet, that Britain is truly open for business.

The timing is politically useful for George Osborne. He can claim some credit for sealing the deal, having just returned from a week-long visit to China where he told Benedict Brogan that "we've really got to up our game as a country". The nuclear energy boost also arrives as Ed Miliband keeps the heat on the Government and the energy companies over energy price rises (Npower announced a 10.4 per cent increase today). As Ed Davey, the Energy Secretary, told the BBC this morning, a touch simplistically, "if people at home want to be able to keep watching the television, be able to turn the kettle on and benefit from electricity, we've got to make these investments. It's essential to keep the lights on and to power British business".

There are just a few teensy-weensy problems. Mr Davey admits that he "can't guarantee" his claim that nuclear power stations could reduce household bills. Indeed, the government's guaranteed "strike price" of £92.50 per megawatt hour for electricity produced at Hinkley Point C is roughly double the current wholesale price of power (and far above the £80 the Government proposed at the start of the negotiations). Consider also China's opaque record on nuclear safety. And the basic cost of the building the plant itself, which has gone up a further two billion this year to £16 billion.

As our Business Editor Alistair Osborne argues: no matter what language it uses, the Government will be heavily subsiding Hinkley Point C, possibly for decades. And you can't pretend that taxpayers and consumers are separate species

Germany and France are trying to reduce their reliance on nuclear power, the UK has announced a deal to build its first new nuclear power plant in almost 20 years. A risky choice, but one for which the economic rationale is clear, writes the European press.

The controversial deal with French energy firms EDF and Areva and their Chinese partners CGN and CNNC to build a new nuclear power plant at Hinkley Point C in Somerset (south-west England) will create 25,000 much needed jobs, but comes at a high price: an electricity price guarantee that is twice the current wholesale price, concerns at the large scale Chinese investment in the project (30-40 per cent of the total amount), not to mention the environmental risks inherent with nuclear power.

“We may be paying over the odds for new nuclear power, but at least it provides the certainty that has been lacking for so long,” writes The Daily Telegraph, bemoaning the fact that “in order to attract state-owned French and Chinese firms, we have had to stuff their mouths with gold”. It continues –

The Daily Telegraph, London How has a nation that once led the world in nuclear technology, one graced with bountiful resources in terms of coal, oil and gas, become dependent on France and China to keep its lights on? We are in this position because energy policy has, for decades, been a shambles. Even as our stock of power plants began to run down – a demise hastened by various British and European directives and targets – government made scandalously little provision for their replacement.
Meanwhile, an editorial in the Financial Times argues that the country is being forced to pursue the nuclear path because the 2008 Climate Change Act set overly optimistic emissions reduction targets. The daily writes –

Financial Times, London Yet if new nuclear plants are needed to keep the lights on, that is because the UK has ruled out other options by adopting targets for emissions reduction that are among the toughest in the world. If policy makers believe these commitments are defensible even now that their cost has been laid bare, they should make their case. If not, they should reverse course. That this would be embarrassing is no excuse for saddling Britain with costs it cannot afford. [...] The country should now ask whether it can afford to race ahead with emissions reduction while others drag their feet.
For The Times, the agreement comes down to simple facts: “Britain needs nuclear power. The deal [...] is belated and welcome.” However, the newspaper’s editorial argues the government should have haggled harder, given EDF’s financial position. It writes –

The Times, London The Government ought to have fought harder for better terms from EDF. Britain needs new nuclear capacity but the deal is likewise critical for the company after its overrun at a plant in [Flamanville] Normandy. Britain is obliged under the 2008 Climate Change Act to meet certain targets for reducing greenhouse gas emissions. Despite its considerable expense, nuclear power is the cheapest way of doing this. The price of renewables such as offshore wind is substantially greater.
In France, Mediapart notes that it is "the first time since the Fukushima disaster in the spring of 2011 that a European state has placed an order for a new nuclear plant." The website warns –

Logo – Mediapart, Paris The agreement between London and EDF must still pass the scrutiny of the European Commission, which must determine whether or not state aid is involved. The British government is expected to file its application with Brussels this week.
For its part, La Croix considers London's decision "spectacular, [even if it is a ] decision that has gained sufficient consensus in the United Kingdom; [in France and Europe], though, it has amazed many." The daily noted that "nuclear power has became a major axis of cooperation" between London and Paris, “much like questions of defence and the big diplomatic issues". It also perceives a political choice on the part of the British government –

La Croix, Paris Great Britain is the ardent promoter of a European market without barriers. Having largely opened its doors to the French electricity champion, it can argue the cause of free trade even more vigorously.
In Germany, where the Fukushima disaster has lent speed to the country’s exit from nuclear power, Die Welt understands the decision of the British. The new plant "will be part of the new generation, producing energy in a safe manner by using less uranium than the earlier ones". In addition, the newspaper explains,

Die Welt, Berlin The British have fewer options [than the Germans]. Almost half of Britain’s energy production is based on natural gas, but British North Sea gas is running out quickly. A return to coal is excluded because of the lofty ambitions to protect the climate. And an energy shift that relies on the charity of subsidies according to the German model is no longer an example for the British to copy [...] Building new power plants could [even] be profitable.
In contrast, Die Tageszeitung takes a very critical view –

Die Tageszeitung, Berlin The British decision is no victory for the nuclear business but a definitive admission of its failure, because the argument that nuclear power is not costly has been swept away by this deal once and for all: not only does the British government vouch for a large chunk of the investment into the new Hinkley Point reactor, but it also guarantees a fixed price of almost 11 [euro] cents per kWh to operators who provide the electricity – which is more than German consumers today pay for energy from large solar plants and wind farms.

By Alistair Osborne

5:58PM BST 21 Oct 2013

CommentsComments





Let's not be radioactive about this. At least the Government has actually done something. After years of horizontal inaction – not least under Labour – ministers have at last found the courage to press the nuclear button.


Hinkley Point C will bring 25,000 jobs during construction and 900 permanent posts when the turbines spin in 2023 – assuming no construction delays (a dangerous assumption). It will power nearly 6m homes, generate 7pc of UK electricity and do its bit for diversified energy supply.


But it’s hard not to have misgivings over the costs and strategic logic of this deal, whatever David Cameron’s Ready Brek glow. On Monday the PM banged on about “our determination to embrace new technologies and back new... energy sources”, conveniently forgetting there is zip new about nuclear.


It only seems new because we are building our first station in a generation – since Sizewell B in 1995. The corollary is that we’ve also lost a generation that knew how to do it. So, we are now going cap in hand to France and China.


For the nation that, in 1956, gave the world its first large-scale nuclear plant - the Magnox reactor at Calder Hall – it’s hard to find a more literal symbol of lost power.


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Now we are partly reliant on a communist state, whose record on nuclear safety is opaque at best, not just to build the thing but finance it. And, here we’re bending over backwards. The costs are already up another £2bn to £16bn in the year the Government has been negotiating with France’s state-backed EDF Energy.

But so obtuse was the Government on Monday about its guarantee scheme and the mechanics over the “strike price” – what the consumer is obliged to pay for 35 years – that it’s anyone’s guess who precisely is on the hook for a Flamanville or Olkiuoto cost explosion. They are the French and Finnish plants using the same relatively untried European Pressurised Reactor technology as Hinkley.

As for the strike price of £92.50 per megawatt hour, it’s clearly no bargain. It’s not only almost twice the wholesale price of electricity but a big jump on the National Audit Office’s working assumption of £74/MWh – used in a 2011 briefing note for the energy department. Moreover, the Government is effectively locking in the consumer for 45 years, as Hinkley won’t be built for 10.

Davey declared that “building a new fleet of nuclear power stations could reduce bills by more than £75 a year in 2030” – a claim for which he provided no evidence whatsoever.

On the evidence that does exist, experts reckon that by 2023, consumers will be paying £720m a year above the market price, or £7 per household. Accumulated revenues over the contract amount to a £83bn – not bad for an asset meant to cost £16bn and with very low operating costs once built.

That adds up to a subsidy in any language, whatever Davey may pretend with his claim that Hinkley will be Britain’s first nuclear power station to be “built without money from the British taxpayer”. As if taxpayers and consumers are separate species.

The biggest concern, though, is that the Government looks like going nap on nuclear when it has no idea whether technical innovation or the plunging costs, say, of solar power, will make the technology redundant. Building the 3,260MW Hinkley is justifiable on energy security grounds but the Government is planning 16,000MW of nuclear plants. That is quite a punt on future energy technology and prices.

If that’s what it really wants, Hinkley is a lousy template, too. Rather than mess around with strike prices and guarantees, it would have been far better for the Government to finance the stations itself, using QE or the £1 trillion in pension funds, say, and regulate the returns an operator made on a five or 10 year basis. That way there would be no guessing out to 2060.

One other thing: if nuclear really is the way forward, why is the Government selling its one-third stake in Urenco, the enriched-uranium supplier with 31pc of the market, for what may prove a knockdown £3bn?

That hardly seems like joined-up thinking if the Government really is serious about rebuilding Britain's nuclear expertise. Not only that, it looks the very thing to risk another Royal Mail meltdown over selling out at the wrong price.