09. 03. 2015

Hinkley Point: the Beginning of the End

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I’ve always said that the two proposed new reactors at Hinkley Point would never get built. Now I’m not just saying it: I’m absolutely convinced that they’ll never get built.

A couple of weeks ago, EdF formally confirmed that no decision would be taken on Hinkley Point before the General Election, and probably not before the end of the year. The reason it gave was that: “We are in the final phase of negotiations, but that phase can take a considerable amount of time, depending on the number of problems left to resolve.”

And that list of problems is daunting. First, it needs to be able to sign final deals with co-investors, including the Chinese, who are beginning to cut up rough; then it needs final confirmation from the European Commission and the UK Government for a whole load of issues regarding the waste transfer contract; it needs to finalise a £10bn loan guarantee from the Treasury; and, despite months of discussions, it needs to conclude negotiations with the UK Government regarding the subsidy contract.

You’ll notice that this list does not include any delays that may be caused by the Austrian Government challenging the EU’s decision to approve as ‘legal’ (within the EU’s state aid rules) the billions of pounds of subsidy that the UK Government will pump into the project. EdF doesn’t talk about that, as it still hopes that the Austrians will be ‘persuaded’ by the UK Government to withdraw its challenge.

And the UK Government is certainly intent on doing exactly that. Over the last few months, details have been trickling out about the retaliatory measures UK Ministers are now threatening in a demonstration of state bullying that beggars belief. A leaked memo showed UK ministers asserting that “the UK will take every opportunity to sue or damage Austria in the future.”

Which shows just how desperate the Coalition Government has become, having put all its notionally ‘low carbon’ eggs in the nuclear basket – a decision that has forced ministers to go to extraordinary lengths to get the Hinkley Point project over the line. Influential commentator Dr Philip Johnstone, Research Fellow at the Science Policy Research Unit, put it as follows:

“Every wish of the nuclear industry has been granted by the UK Government. The British planning system has been ‘streamlined’, with nuclear a key inspiration of the need to speed things up. The Government has created one of the best institutional contexts in the world for developing nuclear, with a new Office for Nuclear Regulation and the Office for Nuclear Development, and has ensured that nuclear regulators are equipped to pre-license designs for new build. As well as this, a strategic siting assessment and environmental assessment were carried out, further ‘streamlining’ the process of new nuclear construction. Electricity Market Reform has been brought in, where, despite being a mature technology, nuclear was granted Contracts for Difference at double the current market rate for the next 35 years.”

But none of that cuts much ice with the Austrians, and if their challenge proceeds, nobody quite knows how long a delay that might entail. It will certainly be years, not months.

And it just got worse for the Coalition Government. We heard last week that EdF is now going to have to deal with another legal challenge – this one from a German energy Co-operative (a very successful enterprise, founded by Greenpeace 15 years ago) on the grounds that the EU’s decision self-evidently distorts competition. Greenpeace Energy is also calling on the German Government to join Austria in its formal complaint, but that’s still unlikely.

But you know what – regardless of what happens with those legal challenges, it looks like the beginning of the end for Hinkley anyway. And here’s why:

- The cost of the Hinkley Point project has gone up and up over the last two years, and shows little indication of stabilising where it now is;
- The calamitous failure of EdF (and its partner Areva) to deliver the first two EPR projects at Olkiluoto in Finland and Flamanville in France has dragged on and on;
- The two Chinese co-investors (the China National Nuclear Corporation and China General Nuclear Power) have got more and more leery about the EPR reactor design;
- The French Government has become more and more outspoken about its reluctance to go on bailing out either EdF or Areva, as their balance sheets go from bad to worse;
- Areva is now in such a bad state (with a €4.8bn loss in 2014) that it looks as if it might have to withdraw as a co-investor in the Hinkley project – a state of affairs pretty much confirmed by EdF’s CEO last week;
- Worse yet, Areva has announced that it wants to suspend indefinitely any further work on the approval process for its EPR (the same reactor design as Hinkley) in the USA, which sends a pretty strong signal that the EPR in the USA is as good as dead and buried;
- To cap it all, the UK Government has itself further muddied the waters by seeking approval from the EU to hold a ‘golden share’ in the Hinkley project. This would give them special voting rights, and could theoretically allow Ministers to block the transfer of ownership of Hinkley if EdF decided that it wanted to get out. (Worried about the Chinese taking total control, perhaps?!) Experts believe this may completely undo the case that the UK Government made to the Commission last year for approval of those huge subsidies.

And in the meantime, it has to be said that the world looks very different from the point of view of renewable energy. The costs of solar and wind continue to fall, year on year, with every indication that there’s a further 40% reduction to come over the next few years.

So perhaps it’s not so surprising that the Coalition Government has been a lot quieter on its Hinkley hopes and dreams than it was last year. Not a peep, for instance, from the disgracefully compromised Liberal Democrat Secretary of State for Energy, Ed Davey. And not a peep from George Osborne, who must be looking at the finances of Hinkley Point with increasing hostility.

Interestingly, we also haven’t heard anything like as much from today’s pro-nuclear greenies as we did before – including George Monbiot, Stephen Tindale, Mark Lynas and even Jim Lovelock. From what I’ve heard (by way of reliable gossip, it has to be said, rather than hard-and-fast evidence!), they’ve all realised that their ability to enthuse people with their pro-nuclear illusions is being severely (if not entirely) undermined by the Hinkley Point fiasco.

The combination of EdF and Areva (both realistically bankrupt, were it not for funding from the French Government), Chinese investors (demanding copper-bottomed guarantees that they will be bailed out when Hinkley Point turns into another Olkiluoto or Flamanville), a reactor design (the EPR) that even the keenest of nuclear engineers have started to describe as ‘unbuildable’, and the threat of further, even more costly delays (there’s now no chance at all that any reactor at Hinkley Point will be generating any electricity before 2025), is quite simply TOXIC.

My best bet is that these pro-nuclear greenies now desperately need Hinkley Point to fail, so that their reputations will be sort-of salvaged – even as they start hyping the next instalment of their nuclear nonsense.

We got a very strong sense of that through the speech of another pro-nuclear, former greenie, Baroness Worthington, Shadow Spokesperson for Energy and Climate Change in the House of Lords. In her words, the Hinkley Point deal has caused “a crisis of confidence” in the future of energy policy in the UK: “policies which Conservatives brought in have resulted in a massive destabilisation of the energy market. Intervention in the market has dented confidence for a contract which has yet to be signed. We have become over-obsessed with the delivery of one project.”

And this from one of the keenest advocates of nuclear power in the Labour Party! No doubt her voice has been influential in the current Labour Party position on Hinkley, which is to argue that it needs a completely new financial appraisal, effectively giving the Labour Party a ‘get-out-of-Hinkley Point’ post-Election option.

Which is by no means the same thing, sadly, as Labour developing a ‘get-out-of-nuclear-altogether’ option. The Labour Party’s deeply unimpressive Energy Spokesman, Tom Greatrex, recently told voters in Scotland that a future Labour Government would force Scotland to be part of a new UK-wide nuclear programme – regardless of the SNP’s very clear anti-nuclear stance. (Go for it, Tom: what better way of winning back Labour voters in Scotland!)

All this chaos and confusion must surely mean that, post Election, we might at last be able to get back to a serious debate about energy policy here in the UK, without Hinkley Point distorting every single aspect of today’s Electricity Market Reform, shadowing out every single policy alternative, and holding back the mindset and behavioural revolutions amongst both business and the general public on which our energy future really depends.

We’ve already paid a very significant price for Labour’s sad surrender to the seductive lies of the nuclear industry, and for this Coalition Government’s near-incomprehensible decision to pursue the EPR reactor design for Hinkley Point. Between them, they’ve dug a hole already so deep that they have no idea what to do other than to keep on digging.

So let’s just hope that those Austrians stick to their guns with their legal challenge, for this is by far the longest and by far the most robust rope-ladder up which those benighted politicians – and ever-more benighted pro-nuclear greenies – will soon – ever so thankfully – be able to climb.
 

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Comments

18. 03. 2016
andrew brown

As a child with my family, we went on a tour of Hinkley as it was being constructed and an engineer told us that it was already 20 years out of date !

Nothing much changes, it seems.

Bearing in mind that green energy is nothing of the kind when the Diesel generating back-up requirement is factored into the equation, what are your thoughts on MSR systems? They seem to have much more safety, much less radioactivity, be much simpler to construct, do not require to be near a great body of water and generally appear to be an ideal solution for the energy needs we have and will need over the next few decades.

03. 05. 2015
Peter

I do hope you're right!
I can remember, before the 2010 election, Zac Goldsmith saying confidently that new nuclear powers stations would only be built if their proponents could make a sound economic case in a free and fair market. There was to be no special pleading. I hadn't realise how much that market had been rigged subsequently!
The Lib Dems still claim that their role post this election is to be the conscience of the new government. I'm amazed and terribly disappointed how they caved in last time. Chris Huhne went from speaking good sense about nuclear, to being a fevered advocate in the blink of an eye.

07. 04. 2015
gerald hartley

Of course when it finally slips beneath the waves, the Cons, Lib Dems & Labour will say that it was the fault of the Austrians, the Chinese and anyone else they can distort the truth about. How will it impact on the much trumpeted proposed new Berkeley College where nuclear skills will be taught under the guise of one of a number of "renewables". Ha!

18. 03. 2015
Peter Mumford

I understand that a major reason for the complexity and cost of the financing for Hinkley C was down to the government's insistence that it simply had to be a private sector power station.
Simply put, very long timescales and large amounts of debt would be much cheaper for the state to do itself.

We can cry over the spilt milk of the lack of investment/development in smaller reactor tech (SMRs etc) but not sure that would do any good.
Nuclear in the UK seems to be in a similar place to CCS: in that if we really wanted to keep under 2 degrees then the units would appear too late to make a big contribution: however, the risk-adverse principle of hedging bets would seem to be sensible and hence we should continue with nuclear - either big state units or smaller private ones.

11. 03. 2015
Peter Smith

I do so hope you are right Jonathan. We know the elite and powerful classes are deluded in their belief in the safety and economics of nuclear power. It's interesting that those who are motivated by power and control are so lured by the massive power of splitting the mighty atom.
It's also extremely disappointing that both the Lib-Dems and labour have supported such a waste of resoiurces in developing the infrastructure for New Nuclear and will all have a lot of explaining to do when nuclear finally rolls over and dies.
Well done for being such a strong advocate for Renewables all these years.

11. 03. 2015
Cllr Christopher Williams

Dear Mr Porritt,
I was very relieved and encouraged by the first sentence in your blog. I was first alerted to the possible dangers of Hinkley at a NFLA meeting in Cardiff last November. My 'warning' letter to Wales National newspaper last week was followed by questions put to Parliament by Paul Flynn [Newport MP] which extracted alarming answers. I have asked for a presentation on 'emergency procedures in place' by my own Council [Vale of Glamorgan, 15 miles from Hinkley], tonight, but I fear those plans will be inadequate when viewed against the Fukushima experience. I can only say thank God for the courage of the Austrian Government.

11. 03. 2015
Chris Slade

While I support nuclear a part of the energy mix, Hinkley Point is an amazingly stupid place to site such a power station, especially bearing in mind the recent Japanese experience. Just over 400 years ago a massive wave, probably caused by geology rather than tides or weather, surged up the Bristol Channel and the water got as far as Glastonbury! It could happen again without warning. As George Santayana pointed out: Those who forget their history are condemned to repeat it!.

11. 03. 2015
Christina Macpherson

Come to Australia, Jonathon Porrit - WE NEED YOU!

We're just getting some high-powered shill from the UK - Dr Tim Stone - telling us how great it all is!

10. 03. 2015
Gerry Wolff

Excellent!

09. 03. 2015
Herbert Eppel

Superb, thank you! See also http://herbeppel.blogspot.co.uk/search?q=nuclear

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