News April 2013

30 April 2013

Electricity Market Reform

The government’s controversial electricity market reform (EMR) programme has been dealt a serious blow with the resignation of the top civil servant working on the scheme, which aims to promote investment in energy infrastructure. The departure of Jonathan Brearley came as a leading energy analyst warned that it would be “imprudent” for ministers to rely on gas – including shale – to bail out the UK from a looming energy crunch. Brearley, director of energy strategy and futures at the Department of Energy and Climate Change (DECC), is leaving just as the EMR is moving through the legislative process via an energy bill. The EMR has already been at the centre of rows over whether its provisions to bring forward a lower-carbon Britain will succeed or are too complex and whether it will cost too much. Brearley did not turn up to a renewable energy conference in Scotland, where he was meant to be speaking on the EMR on Monday. Delegates to the event, organised by the Infrastructure Journal, were told the civil servant was not coming because he had left the department.

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Posted: 30 April 2013

29 April 2013

Nuclear Subsidies

Behind the continuing negotiations on new nuclear in the UK one big question remains unanswered. Who is going to pay? Senior officials are concerned that the pressure to close a deal is undermining a sensible negotiating strategy by separating the terms – including the strike price and the issues of risk allocation – from the question of funding. To grasp what is happening you have to understand the degree of desperation which now exists in Government to deliver growth. Growth is the justification of the whole economic strategy and of course the solution to the challenge of rising borrowing. Growth is seen as the only platform from which either coalition party can go back to the electorate. But growth is elusive and time is running out. The risk as seen from Whitehall is that the company is forced to come back in the autumn to say that they have not found the money, and that the deal will have to be rewritten – for instance to offer investors some interim payments during the construction period . Alternatively of course the UK Government could provide the funding itself – a decision which would certainly raise questions in Brussels and in other less privileged parts of the energy business. To get to that point would be humiliating and would undermine any of the anticipated economic and political benefits.

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Posted: 29 April 2013

28 April 2013

Sizewell

Sizewell B is being shut down on Friday for about five or six weeks as part of a planned “refuelling outage” which takes place every 18 months. An additional 1,000 workers are being brought on to the site to carry out work while the plant is shut down.

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Posted: 28 April 2013

27 April 2013

Hinkley

The chances of a state-owned Chinese company becoming involved in Britain’s nuclear programme have moved a step forward with EDF of France signing a new co-operation deal with China Guangdong Nuclear Power Holding Co. Amid repeated speculation that the Beijing-based CGNP might become an investor in EDF’s potential new reactors at Hinkley Point in Somerset, the new deal made specific mention of “co-operation in future international projects”. EDF declined to comment on whether the CGNP could replace Centrica, which withdrew from the Hinkley project in February, saying it needed to complete negotiations with the British government on financial support first.

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Posted: 27 April 2013

26 April 2013

EDF

Chinese involvement in UK nuclear new build has come a step closer following an announcement by EDF of a long-term cooperation deal. The French-owned utility company, whose Hinkley Point C proposals are the most advanced for UK new nuclear, formalised ties with the Chinese on Thursday. EDF has entered a tripartite agreement with China Guangdong Nuclear Power Holding (CGN) and French nuclear engineering firm Areva to foster “deeper industrial and commercial cooperation”. In the near term, the three are to work together on the building of two reactors in Taishan and improving safety, maintenance and performance of CGN’s existing reactors. They will also “consider cooperation in future international projects”. CGN has long been rumoured to be first in line to invest in Hinkley Point C if it goes ahead. Henry Proglio, chief executive of EDF, said the agreement “will benefit the whole nuclear sector in France”.

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Posted: 26 April 2013

25 April 2013

Electricity Market Reform

There is a lot of electricity market reform happening in Europe at the moment. There is also a lot of discussion as to whether these reforms are necessary, inadequate, or simply misguided. However, it is less clear that these discussions represent true engagement regarding a well-defined and well understood set of issues. The territory is littered with terms such as ‘market reform’, ‘market failure’, ‘central planning’, ‘the internal energy market’ and ‘capacity payments’ that are poorly defined and yet seem capable of arousing passionately held beliefs. Wouldn’t it be great if we could identify some common ground from which to build a coherent pan-European debate? There must be some areas of consensus that we can use to define the challenge we face and help us to explore potential solutions.

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Posted: 25 April 2013

24 April 2013

Hinkley

Britain’s first new nuclear power plant for a generation has been thrown into fresh doubt after French contractor EDF Energy began laying off staff at the site of the £14bn Hinkley Point C reactor. As the stand-off with the Government continued over the “strike price” for electricity from the plant, EDF said it would cut “the number of people working on the project for the time being”. The state-backed French company, which has so far spent around £800m on the project, declined to say how many of the 800 staff and contractors on the site would be stood down. But EDF sources said it would be a “significant” number, while denying the lay-offs amounted to brinkmanship. “This is not a bargaining chip. It’s good project management,” said a source.

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Posted: 24 April 2013

23 April 2013

Hinkley

Delays in fixing the price for energy from the planned Hinkley Point C nuclear power station is putting Britain’s nuclear industry at risk, energy experts have warned. Eighteen leading nuclear scientists say plans for five new plants by 2030 could fail because of a lack of progress on the first of the projects. Amyas Morse, the controller and auditor general of the audit office, has written to MPs suggesting that he may investigate a deal, potentially drawing the process out further. He said: “If the Government reaches agreement with EDF an audit could review the process and outcome of the negotiations and whether they have secured value for money.”

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Posted: 23 April 2013

22 April 2013

New Nukes

Britain’s nuclear industry is being put at risk by ministers’ dithering over the building of new plants, a senior group of energy experts has warned. Writing in today’s Telegraph, 18 leading nuclear scientists suggest that plans to build five new plants by 2030 could be under threat due to a lack of progress on the first of the projects. Building a “fleet” of new power stations could lower household bills, provide a much-needed source of low-carbon energy and position Britain as a world leader in the global nuclear market, they claim. But the apparent stalling of talks with EDF Energy over its planned Hinkley Point C power station “undermines” this ambition and could scare away the investors who are needed to secure the country’s future energy supply. The group, which includes Prof Sir David King, former chief scientific advisor to the Government, warns that it is “becoming increasingly concerned at the apparent slow progress of negotiations”.

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Posted: 22 April 2013

21 April 2013

Nuclear Subsidy

The National Audit Office has opened the door to an investigation into any agreement between EDF Energy and the Government over building the £14bn Hinkley Point nuclear plant. Amyas Morse, the controller and auditor general of the audit office, has written to MPs suggesting that he may investigate any deal. Mr Morse, who produced a report into the Government’s energy policy last year, said: “I expect to follow up my earlier memorandum with further reviews to support parliamentary scrutiny of the Government’s implementation of its energy policy and in particular I will consider the case for a review of the negotiation of the Hinkley strike price if one is agreed. “If the Government reaches agreement with EDF an audit could review the process and outcome of the negotiations and whether they have secured value for money.” This could “inform the continued management of the contract” and “provide lessons for future negotiations” of the so-called “contracts for difference”.

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Posted: 21 April 2013