News October 2015

31 October 2015

Hinkley

A number of multimillion-pound contracts on the £18bn Hinkley Point C nuclear power plant are being renegotiated, Building understands. EDF said last week it will make a final investment decision on the power plant in Somerset “within weeks”, after it secured £6bn of investment from China General Nuclear Corporation (CGN). The French energy giant also announced it had agreed final terms on five major contracts with suppliers. However, sources have told Building that while a final investment decision is now expected to be “a formality”, several major contracts agreed over the last three years are currently being renegotiated due to cost inflation. These contract values include those where final terms have been agreed, sources said. One source told Building: “There’s a lot of to-ing and fro-ing with contracts at the moment. Discussions are happening all the time. “Also, a lot of contracts were originally negotiated during the recession. Now firms are finding that they don’t necessarily need the work.” The news comes after a Kier and Bam joint venture announced last week it had signed a new contract for the enabling works worth £203m, more than double the widely reported figure of £100m when the contractors were selected in 2012.

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Posted: 31 October 2015

30 October 2015

Hinkley

Details of the costs of Hinkley to consumers – an average of about £150 to £660 per customer over the 35 years of the deal – are exposed in a document quietly put before parliament last week and which has only just come to light. It also reveals that taxpayers would have to pay up to £22bn compensation to the owners, French energy giant EDF and the Chinese government, if the UK government or the European Union do something that forces the plant to close early. The opening of Hinkley Point C has been delayed twice, from 2017 to 2025, but the operators will now be penalised if it is later than that, and government can cancel the deal if it is not operating by 2033.

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Posted: 30 October 2015

29 October 2015

Bradwell

CAMPAIGNERS claim Bradwell is being treated as a guinea pig for potentially-dangerous Chinese nuclear testing, after a new power station deal was agreed.

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Posted: 29 October 2015

28 October 2015

Hinkley

EDF’s apparent obsession with continuing with the increasingly financially toxic European Pressurised Reactor (EPR) programme by building another two units at Hinkley C could spell doom for EDF. Further drastic losses on Hinkley C similar to the mounting losses accrued by AREVA and EDF on the EPRs being built in Finland (Olikuoto) and France (Flamanville) might lead to what hitherto has seemed also unthinkable – the break up of EDF. At least a major sell-off of assets seems almost certain if EDF is to finance Hinkley C, but if the project then went badly in the same way as the Olikuoto and Flamanville projects then both privatisation and a break seems a plausible outcome. Financial institutions are issuing increasingly strong warnings about the financial wellbeing of EDF, the electricity multinational which dominates the French electricity market. Both Moody’s and Standard and Poor have issued warnings that EDF will face credit downgrades if it goes ahead with Hinkley C.

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Posted: 28 October 2015

27 October 2015

Chinese Deal

The Tories are paying the Chinese billions to avoid democratising the energy industry. Britain’s energy deal with China is remarkable. It will see us stump up some £18 billion on a “flagship project of cooperation”, commit to a new generation of nuclear power plants and make us dependant on a major power whose politics and strategic interests are a world away from our own. We are investing in the potentially ruinous white elephant of Hinkley Point and simultaneously slashing support for solar at precisely the point when the latter looks set to start paying its way. Whatever became of austerity? Or even plain old-fashioned common sense? The government argues harsh necessity – a need to keep the lights on, no matter what the woolly-hat brigade might prefer. Behind the practicalities, though, sit some rather less palatable political choices: a preference for central control and big business over anything which smacks of democracy. In place of this top down command-and-control structure, imagine a world in which individual citizens capture electricity through small scale home initiatives and then feed this back into the grid. Once you add storage to the mix, you can imagine individuals building up a significant credit. Community and collaborative initiatives will contribute to that. Internet-enabled price negotiation will give communities the power to deal with the power companies on the basis of commercial parity. Faced with a choice between encouraging technologies that will in time reduce the power of the utilities and introduce some rudimentary democracy to our electricity contracts, the government has opted to pile most of its eggs into one very expensive Chinese nuclear basket. Even allowing for the traditional Conservative distaste for renewables, which has only focussed on price so long as it worked in their favour, this looks remarkably like a desperate attempt to maintain the status quo. So this isn’t just a bad deal when it comes to traditional accounting measures. It’s a bad deal all round. It fails to take account of where the electricity industry is headed or recognise that, as this century unwinds, power will, bit by bit, return to the people.

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Posted: 27 October 2015

26 October 2015

Hinkley

The UK Government “is on the wrong side of history” as it is supporting nuclear and cutting subsidies for green energy. Frans Van Den Heuvel, CEO of Solarcentury told ELN subsidising nuclear power will lead to increased energy bills for consumers. The company claims the government’s proposed £7 million budget for solar is equivalent to subsidising Hinkley Point for just two days. Mr Heuvel said: “It’s unbelievable, isn’t it? We know already from the Contracts for Difference… that the offers made with solar are already lower than the strike price – the minimum guaranteed price for investors – than nuclear. 10 years from now imagine what the price will be for solar. It has been reduced by 50% in the last seven, eight years.”

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Posted: 26 October 2015

25 October 2015

Hinkley

So they went ahead and did it – British Prime Minister David Cameron looked like the cat that got the cream this week as his Conservative government finally pushed through the deal for the controversial Hinkley Point C nuclear power plant in England’s southwest. The government needs to explain why it is drastically cutting support for solar energy while offering double the subsidy to Hinkley. It also needs to explain why it is championing overseas state-backed utilities over British solar companies which, given stable support, would have considerable growth prospects.”

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Posted: 25 October 2015

24 October 2015

Hinkley

The only successful thing about the Hinkley C project is the management of the news to imply that there has been progress in the project. In fact there has been absolutely no progress, certainly not in the financial terms, and in many ways things have got worse. That is compared to two years ago when the UK Government’s much criticised terms, for paying EDF £94 per MWh (2015 prices) for 35 years underpinned by a 60 per cent loan guarantee by the Treasury, were given state aid clearance by the EU Commission.

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Posted: 24 October 2015

23 October 2015

Hinkley

The Stop Hinkley Campaign today declared the campaign against the proposals to build a new nuclear station at Hinkley Point C as far from over. All national newspapers have expressed disquiet about these proposals, and today one described the deal with China as “sheer folly”. Stop Hinkley spokesperson Roy Pumfrey said “there is still every possibility that this reckless plan will be defeated. This will be the eighth time that EDF Energy has announced that a final investment decision is just around the corner. Jean-Bernard Levy, chairman of EDF, claims that hundreds of workers could be starting work on the construction of two new reactors at the site by the end of the year. But given the number of issues still to be resolved one has to wonder which year he is talking about. The EPR Reactor is the Windows 8 of the Energy World. Why would anyone buy that when Windows 10 is already available,”said Pumfrey. Renewable energy is going from strength to strength. Solar photovoltaics could provide the same amount of electricity as Hinkley Point C for half the subsidy cost and onshore wind and solar are both likely to be competitive without subsidy in the next decade. Apart from the archaeological discoveries on site the only successful thing about the Hinkley Point C project is EDF’s news management. After yesterday’s announcements we now know it won’t be ready before 2025 at the earliest; that the Chinese are not willing to invest as much as EDF wanted; so there is a£10bn black hole in the finances and there is still no signed contract with the UK Government. So not really any progress at all – a false dawn.”

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Posted: 23 October 2015

22 October 2015

Hinkley

The announcement that some form of funding structure for Britain’s nuclear new build at Hinkley Point in Somerset has been agreed must be read with care. UK consumers and taxpayers are not allowed to see the whole agreement – that privilege is restricted to the French and Chinese governments and their state-owned enterprises – but it is clear that this week’s statements do not amount to the final deal. Much remains to be negotiated, with the UK at a considerable disadvantage because of its all too evident desperation to complete a deal. Construction cannot seriously begin until the complete financing agreement is in place, and that cannot be signed before all legal challenges have been resolved. Luxembourg has now joined Austria in one challenge; others may arise. Beyond those considerations there is the question of whether construction should start before at least one of the existing projects to construct comparable European Pressurised Reactors at Flamanville in Northern France and Okiluoto in Finland have been successfully completed. That is not now an absolute requirement under the terms of the agreement but it would surely make sense to learn the lessons from two projects that are both billions over budget and y ears behind schedule. The problems in Finland helped to break Areva – once one of the giants of French industry – and the delays at Flamanville have launched a debate in France about whether the nuclear industry can retain the central role in the energy system it has held since the 1970s. Those delays and problems deterred many investors from getting involved at all in Hinkley Point and it is hard to blame them. The question of how we got into this ludicrous position will be the subject of numerous inquiries for many years to come. It is high time that the Public Accounts Committee, the National Audit Office and the various relevant select committees in parliament started that process. Looking back and learning the lessons is one step. But given the importance of continuous energy supply to the whole economy the more immediate requirement is for a viable plan B which ignores optimistic PR claims and puts in place the capacity that is needed before it is too late.

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Posted: 22 October 2015