You may have seen in the news recently much debate about the new nuclear reactor planned for Hinkley Point in Somerset. EDF had been wondering whether to finance it, Theresa May is delaying the decision, but what is really going on? This post aims to clear up the situation.
The government gave the go ahead for new nuclear power stations back in 2006, stating they would make a “significant contribution” to energy generation, considering we are phasing out coal fired power stations. Before Hinkley C the last new nuclear station was Sizewell B which opened in 1995.
The new power plant at Hinkley C will purportedly provide just 7% of our electricity. For some silly reason we have also agreed to pay double the current market price for it over 35 years. To even a passing reader this seems rather expensive to fulfill not much of our energy needs. In comparison, gas power stations are £27.50 per MWh less expensive at generating energy. The executive director of Greenpeace, John Sauven, says it is “terrible value for money”.
Amber Rudd, the former Secretary of State for Energy and Climate Change, emphasised “we have to secure baseload electricity”. However, more and more research is suggesting the idea of needing power stations to maintain baseload is a fallacy. Practical experience shows that renewable energy can easily cope alone. As an example, the states of Mecklenburg-Vorpommern and Schleswig-Holstein in Germany already use 100% renewable energy. This is a net figure because they trade with each other and between other states to achieve this, but does show with a bit of effort it is possible.
As for construction, at least that will provide 25,000 jobs, although it remains to be seen how many of them come from the local area. Once construction has finished 900 people will be employed to operate the station itself. What will it cost taxpayers? The government has insisted consumers will only have to pay about £10 per year for Hinkley C’s construction, but has provided no figures or evidence to back this up.
EDF, the French power giant, has been tasked with building the power station. They have yet to complete building any reactors like those which will be used at Hinkley. The construction of their nuclear power plant at Flamanville in France has had many problems and is now years behind schedule and way over budget. I wonder if this is what we have to look forward to in the construction of Hinkley C? It certainly hints that the £10 per year cost to UK taxpayers is like rise and not just by a bit.
As EDF is 85% owned by the French government, any decision on this scale also effects them. They have been under strain to approve this project, even leading to EDF’s finance director, Thomas Piquemal, resigning reportedly amid fears the investment could damage EDF. In July the French Financial Markets Authority raided EDF’s offices, investigating claims they had misrepresented the cost of Hinkley. Some staff believe the project could sink the company, with the company warned its credit rating may be downgraded if it goes ahead. The French government have even offered to help bailout EDF to cover construction costs. Things are certainly not looking good for EDF as a company in its own right, and many are already calling Hinkley C a ‘white elephant’.
Assuming the plant gets built, what would happen should a future UK government decide to close it prior to 2060? Documents seen by The Guardian show that UK taxpayers could be left with a £22b bill if that were to happen. This gives EDF zero risk, but there could be numerous reasons why the UK may not want to continue for instance costs, loss of public confidence and a change in energy infrastructure (IS THIS THE RIGHT WORD?). Do we really want to be tied into such a contract?
Chinese Investment in Hinkley
Now EDF have finally made the decision to proceed with construction the Conservative PM Theresa May has decided to delay the start. May, as former home secretary, had apparently voiced concern about the attitude to Chinese investment in Hinkley, according to Vince Cable. The Chinese General Nuclear Power Corporation (CGNCP) are providing a third of the £18b cost. It has recently been alleged that the CGNCP had conspired to produce nuclear material without the USA’s permission and were involved in nuclear espionage. Hardly an ideal start to a relationship that will have to last the duration of construction. Wisely, May and her ministers now want to read through the contract and make a final decision this autumn. However at this rate it is projected Hinkley C might not be up and working until 2030 due to delay after delay! Barry Gardiner, the shadow energy secretary, has called the handling of the situation “absolute chaos” and I am inclined to agree.
I understand the need to look at the fine print, but China has now said the delay is putting strain on UK – China relations and warn we are at a “crucial historical juncture”. It isn’t good to rely on any country too much, but the Chinese ambassador Liu Xiaoming, says China have already “invested more in the UK than in Germany, France and Italy combined over the past five years”. China is such a super power and their decisions effect us on a day to day basis. Annoying them post-Brexit would not be a smart move and the UK would be wise to consider the current position they have put themselves in.
Hinkley C has been dogged by investment and costs issues from the start and its construction has barely started which is hardly a good omen. Why haven’t the UK decided to look into renewable energy instead of nuclear? Is the government determined to deny climate change is happening and avoid the fact renewables are the way forward? Or have they decided to proceed because it would be far to complicated to stop what is in motion already? These are questions which will be addressed in our next post.
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