News January 2016

31 January 2016

Hinkley

BRITAIN could withdraw financial support for the controversial £18bn nuclear power station at Hinkley Point, Somerset, if a similar plant being built by France’s EDF is not running by 2020, The Sunday Times can reveal. The condition, attached to a Treasury loan guarantee, raises fresh questions about the future of Britain’s first new atomic power plant in a generation. Last week EDF, which is 84% owned by the French state, postponed a board meeting in Paris to approve Hinkley Point, amid concerns about the heavily indebted company’s ability to fund the project. The plant will be financed by EDF and its Chinese partner CGN, with the backing of a 35-year contract to sell power to households at above-market rates. The arrangement hinges on a Treasury agreement to guarantee up to £17bn in loans. Mounting problems at Flamanville, where EDF is building a plant of the same reactor design, could void that commitment. Flamanville is years behind schedule and three times over budget. Last year inspectors uncovered “very serious anomalies” in the €10.5bn (£8bn) plant’s reactor vessel. In the worst case, France’s nuclear regulator, which is carrying out a review of the project, could force EDF to break the steel vessel out of the reactor building, adding years to the timetable. Another project, in Taishan, China, has also been delayed. When the European Union signed off on the Treasury’s guarantee of Hinkley Point, it insisted it be conditional on Flamanville having “completed the trial operation period” and other operational milestones by December 2020. If Flamanville misses that deadline, EDF would be forced to immediately repay any loans that benefited from government support.

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Posted: 31 January 2016

30 January 2016

Hinkley

The spectacle of the disastrous attempts to build a new generation of nuclear reactor – the European Pressurised Reactors (EPRs) – and EDF’s apparent desire to carry on despite the increasing likelihood that the financial losses from this will destroy EDF as a going business (see my earlier blog posts on this) raise the question: If this is true, then why do they carry on with this apparent financial suicide? The answer can be analysed through something well known in political science: rational choice theory. This says that actors will pursue their self interest so that they can achieve the best outcome in a given set of circumstances that define their dilemmas. This can often lead to outcomes that are worse for everyone, despite people apparently pursuing their ‘rational’ self interest (eg see ‘prisoners dilemma’).The set of choices facing the leaders of EDF appear to them as follows: a) abandon Hinkley C and effectively end EDF’s visions as being leaders of a world (or even French) nuclear resurgence. Ok, why not? Well, the leaders believe they would have to resign! b) carry on spending money on Hinkley C and hope that not only the French Government will bail them out of any further difficulties (mounting up now, with the french and Finnish reactors going pear shaped) but that somehow the British project will come right. But what seems more likely is that the French Government will end up pouring billions into the project, as well as needing to salvage the Finnish and French EPRs still being built. Now choice a) involves, to them, the certainty of loss of face and resignation. choice b) involves a probability of disaster (and eventual resignation), but the faint hope that they still might win out (and regardless they remain in power for a while longer). Of course the interests of the French state are clearly to avoid losing billions of euros, so rationally, of the two, option a) would be better.

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Posted: 30 January 2016

29 January 2016

Hinkley

EDF has told contractors at Hinkley Point to restart “unconstrained spending” in anticipation of the £18bn nuclear plant obtaining the final green light within days. The instructions to suppliers, reported by the industry magazine Building, comes despite EDF’s unwillingness to press the last investment button at a board meeting on Wednesday. The state-owned French group delayed the decision after last-minute pressure from its investors and unions over the cost of the scheme, but contractors in Somerset are being told to restart work, which stopped in April last year. A source told Building: “EDF used the words ‘unconstrained spending’ to the supply chain to get the project moving. By ‘unconstrained’ they mean ‘we’re going to go on as if a decision has been made’.”

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Posted: 29 January 2016

28 January 2016

Hinkley

What if EDF says no to Hinkley Point? What if the French power generator, under pressure from its unions and potential lenders, decides it can’t finance the £18bn project, even with the Chinese chipping in? After all, the disgruntled French workers make a reasonable point. EDF’s last big foreign adventure, in Finland, is nine years behind schedule and massively over-budget, so why risk another expedition? EDF’s share price, remember, is down 85% since 2004: the company is in a weak position to resist its local critics. The short answer is that the UK’s nuclear strategy would be in tatters if EDF backs out. If EDF can’t get financing for Hinkley, then Sizewell C, the company’s intended follow-on project in Suffolk, would also bite the dust. The same goes for the next plant at Bradwell in Essex, where Chinese constructors are supposed to be taking the lead but are relying on Hinkley’s and Sizewell’s infrastructure and momentum. And, if the UK’s nuclear strategy becomes a non-runner, then the government’s entire energy policy is dead. By the mid-2030s, Hinkley and other new nuclear plants are supposed to have replaced the current clapped-out fleet and added capacity on top. EDF is still at the table and the French government, when push comes to shove, tends to be supportive. The best guess – still – is that the funds will be forthcoming. If not, Osborne’s difficulty with Google’s tax bill would look like a storm in a tea cup. All the subsidies, and the grovelling for Chinese cash, would have yielded nothing except proof of the horrible economics of nuclear power in the 21st century.

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Posted: 28 January 2016

27 January 2016

Hinkley

George Osborne’s gamble on a nuclear future for British energy looked increasingly risky last night as the company set to build the first new reactor for a generation postponed its “final investment decision”. EDF had been expected to announce the go-ahead for the £18 billion Hinkley Point project today but the French state-owned company pulled back amid growing financial problems. It is reported to be seeking extra support from the French government amid a collapse in energy prices and the value of its shares. Hinkley Point C, in Somerset, was to be the beginning of a new nuclear era in Britain with EDF building the plant and China providing financial support. EDF has seen its debts reach €37 billion (£28 billion) and share price fall from €29 in April 2014 to €11.87 this week. It is being forced to take over Areva, the company that developed the European pressurised reactor (EPR) technology, which is in question after a nine-year delay delivering a plant in Finland. Paul Dorfman, of the Energy Institute at University College London, said: “It looks like EDF is looking for an escape door.” He added that the EPR was flawed and that this could be the beginning of the end for French investment in Britain’s nuclear industry. Peter Atherton, an analyst at Jefferies, the US investment bank, said: “Financing such a massive project will place a significant strain on EDF’s finances.”

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Posted: 27 January 2016

26 January 2016

Hinkley

A French union has published a set of last-minute challenges to EDF over its plans to build an £18bn nuclear power plant at Hinkley Point in Somerset, with just days to go before an expected final investment decision. People close to the deal said they expected the decision about whether the project would go ahead to happen at a board meeting on Wednesday. EDF declined to comment. The CFE-CGC energy union, which is represented on EDF’s board, has drawn up a list of 15 questions it says have yet to be answered. The list includes an expression of serious concern about the plant’s viability and what it might cost the company, and is the latest sign of worries about a deal that has attracted criticism in the UK and France. The document reveals that the Infrastructure UK arm of the government has attached a BB+ credit rating to the project – below investment grade – reflecting worries in Whitehall that it might not be completed. The Treasury did not respond to a request to comment. Among the questions from the French union are several asking what happens if the project, which has been delayed many times already, is not built before 2025, as planned. The union expressed concern that “significant” financial issues related to the Hinkley plant could “put EDF in danger” in the long term. It asked: “What is the rationale for starting construction on two EPRs, at the same site, in such a short period of time?” Given that the other projects appeared to be taking 10-15 years to build, its asked of Hinkley Point: “How can EDF estimate a construction time of nine years?” Much of the concern in France about the project focuses on how EDF plans to pay for the reactor while continuing to pay its dividend. A report this month in the French business newspaper Les Echos suggested that EDF’s finance for Hinkley Point could come from selling stakes in eight other British nuclear plants, for more than 6bn euros. The company, which has 37bn euro net debt, has some huge investments to make in the coming decades, including an estimated 55bn euros to increase the life expectancy of the 58 nuclear plants in France from their current 40 years to 50. It is also taking a majority stake in Areva’s 2.5bn euros reactor business, which some close to the company said they expected also to be discussed at Wednesday’s meeting. Last week, EDF, which faces increased competition and difficult markets in France, announced plans to cut 5 per cent of its staff over the next three years. It said that it was planning cost cuts of 700m euros by 2018. Francis Raillot, representative of the CFE-CGC, declined to comment on the meeting on Wednesday and which way the union representative would vote, but said that key questions about Hinkley had “still not been answered” by the management. One person close to the deal said he expected the vote to still be carried but that it could be delayed. “We have been here before,” the person said. “I wouldn’t bet my mortgage on the final investment decision being this week, even though that is what the company has been gearing up for.” John Sauven, executive director at Greenpeace, which opposes nuclear power, said: “It is shocking to think that both EDF and the UK government are determined to push ahead with a project that EDF’s own staff say is too risky and too expensive, potentially threatening the survival of the company.”

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Posted: 26 January 2016

New reactors would quadruple waste stockpile

The Stop Hinkley Campaign has published a new briefing on the huge impact a new reactor programme would have on the UK’s radioactive waste stockpile.

The proposed Hinkley Point C nuclear power station alone would produce radioactive wastes and spent fuel with a radioactivity inventory equal to roughly 80% of the radioactivity in all of the UK’s existing radioactive wastes put together.

The Stop Hinkley Campaign uses figures from Radioactive Waste Management (RWM) Ltd which show that the UK’s proposed 16GW new reactor programme will altogether increase the UK waste inventory in terms of radioactivity four-fold. And if the industry ever finds a site to put this dangerous waste deep underground the amount of space required underground would almost triple.

As the Stop Hinkley Campaign notes it is morally reprehensible and totally irresponsible to go ahead with building new reactors when we still have no idea what we are going to do with the waste we have already created.

 The Impact of a New Reactor Programme on the UK Radioactive Waste Stockpile

 

 

 

 

 

Posted: 25 January 2016

25 January 2016

Hinkley

A final investment decision on the UK’s first nuclear plant in a generation could be made within days with the project’s construction chief revealing that work could begin within weeks. Speaking exclusively to Construction News, Hinkley Point C’s construction site director Nigel Cann said he was “expecting in the next few weeks” both the final investment decision and, subsequently, the start of pre-construction work. Mr Cann said: “Very openly, we are planning to start when FID is announced, that is a planning assumption, no more than that.” The investment decision could be made as early as this week, with reports citing EDF’s board meeting on Wednesday (27 January) as a key date. While Mr Cann would not reveal a date for the final investment decision, he said his team would be able to start construction ”as soon as they [EDF board] were ready.” The news will put contractors set to work on the £18bn job on high alert, but Mr Cann warned that any further delays to the investment decision could also see construction work put back. He said: “If they decided not to make a decision at the end of this month then, clearly, we would have to come up with another plan.”

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Posted: 25 January 2016

24 January 2016

Hinkley

Sources in France say decision on whether to give the green light to controversial project would be made on Wednesday. The final decision on whether to build Britiain’s first nuclear power station in decades is set to be made by energy giant EDF this week, amid claims of “panic” among the French firm’s board over the viability of the £18bn project. Sources in France said the decision on whether to give the green light to its controversial plant at Hinkley Point, Somerset – on which ministers are depending to “kick-start a major new generation of nuclear power stations” – would be made on Wednesday. But the largely state-owned company refused to comment, or even to confirm or deny that the meeting is taking place. This secrecy reflects the extreme sensitivity about the decision with practicalities and politics pulling in opposite directions. The project suffered a serious blow last week when French regulators delayed a decision on what to do about safety flaws in a similar reactor. But cancelling it would be a huge humiliation for British ministers, and could cause a cross-Channel diplomatic row. The “final investment decision” by EDF’s board – repeatedly delayed over the past two years – is the project’s only remaining hurdle. Both Ms Rudd and David Cameron are privately confident that Hinkley will go ahead, while George Osborne is relying on it to spur increased Chinese investment in Britain. A senior union source said that it was unlikely EDF would turn against it: “We haven’t heard much out of France, which suggests the situation isn’t going Pete Tong [wrong].” Yet there are signs of last minute jitters. Union leaders are reportedly warning the company of “financial, industrial and legal risks” in the project, while the French financial journal Boursier.com has suggested that there is “panic on board”.

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Posted: 24 January 2016

23 January 2016

EDF

Unions are to hold an urgent meeting with EDF Energy executives amid speculation that the company wants to cut more than 2,000 jobs in Britain. Concern among staff escalated yesterday after reports in France that EDF, the state-run giant that owns EDF Energy, is planning 6,000 redundancies worldwide. There are fears that the company is intending to cut up to 2,500 jobs in retail operations in Britain over the next few years through natural attrition. Eamon O’Hearn Large, national officer for the GMB union, said: “A number of employees have expressed concern about the figures being bandied around and we are extremely concerned and seeking urgent clarification.” Les Echos, the financial daily, said that the company wanted to reduce its worldwide workforce from 160,000 to 154,000 by 2019, mainly affecting EDF Energy, the British division that boasts six million customers and 15,000 employees. EDF, which is building the next generation of Britain’s nuclear reactors at Hinkley Point in Somerset, said on Thursday that it would trim 5 per cent of its 67,000 posts in France by 2018 by not replacing workers who retired or left. The reports come as EDF plans to modernise its ageing nuclear power stations in France. The original cost estimate was €55 billion, but that was cut to €51 this week. The company is also engaged in tense talks over its plans to buy the reactor unit of Areva, the crisis-torn state-run French nuclear company, for about €2 billion. Critics fear that the deal will saddle EDF with Areva’s widely criticised new EPR reactors. One, at Olkiluoto in Finland, was supposed to be completed in 2009, but will not come on stream until 2018, at the earliest. A second, in France, was meant to be operational in 2012 at an overall construction cost of €3.3 billion. It will now enter service in 2018 at a cost of €10.5 billion — assuming that all goes to plan. David Cameron has ordered the same model for Britain.

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Posted: 23 January 2016