News July 2016

31 July 2016

Hinkley

The Hinkley delay has certainly ruffled diplomatic feathers, given China’s significant stake in the project. And it will create yet more uncertainty in an energy industry in which certainty is critical to fostering long-term investment. But it was the right decision, in light of serious concerns about whether the project represents value for money and the security risks of depending on Chinese investment for a project so critical to long-term national security. Yet the decisions that lie ahead will be even more difficult. Will the government kick the Hinkley decision into the long grass, as it has done with other difficult infrastructure decisions, such as additional airport capacity? Or will it use the coming months to reconsider how nuclear power fits into a long-term energy strategy? It is clear that Hinkley, as currently conceived, represents a terrible deal for taxpayers. Because nuclear power has such significant upfront costs, it will always require some form of state subsidy. By far the most efficient way is for the government to issue nuclear bonds, taking advantage of cheap borrowing costs.

[Read more…]

Posted: 31 July 2016

30 July 2016

Hinkley

A think tank that includes senior Conservative figures among its members has called for the government to call time on the Hinkley C nuclear power plant. Bright Blue, whose advisory board includes Francis Maude, Nicky Morgan and former DECC minister Greg Barker, has said the government needs a new “plan A”. The group stresses that its position is not necessarily endorsed by all members of the organisation, which includes more than 100 parliamentarians. “The Government should abandon Hinkley C – pursuing it in light of all the evidence of cost reductions in other technologies would be deeply irresponsible,” said Ben Caldecott, associate fellow, Bright Blue. “We need a new ‘Plan A’. This must be focused on bringing forward sufficient renewables, electricity storage, and energy efficiency to more than close any gap left in the late 2020s by Hinkley not proceeding. This would be sensible, achievable, and cheap.” Zac Goldsmith, also a Bright Blue member, has welcomed the government’s rethink.

[Read more…]

Posted: 30 July 2016

29 July 2016

Hinkley

Chaos over £18bn Hinkley nuclear plant. The government stunned the energy industry last night by announcing a further review of the Hinkley Point nuclear power station hours after EDF, the French state electricity giant, approved the project. Executives at EDF had been expecting the government to sign a subsidy deal connected to the £18 billion plant in Somerset today. Greg Clark, the business and energy secretary, said that he needed until September to study the subsidy contract. Mr Clark said: “The UK needs a reliable and secure energy supply and the government believes that nuclear energy is an important part of the mix. The government will now consider carefully all the component parts of this project and make its decision in the early autumn.” Industry sources tried to calm fears. “If it is a delay only until September then it’s not very significant, given that was when we’re expecting a decision to be taken anyway,” one suggested. “Until last week we weren’t expecting anything this side of the summer… and there has been a lot happening over the last few weeks.” Opponents seized on the British government’s statement to call on ministers to halt the project. John Sauven, executive director of Greenpeace, said: “Theresa May now has a chance to stop this radioactive white elephant in its tracks. She should look at the evidence and see that this deal would be a monumental disaster for taxpayers and bill payers. The UK needs to invest in safe, reliable renewable power. “The government should be embracing new innovative technologies that are powering northern European countries already and coming down in price every year. “We don’t want to be left behind and locked into an old-fashioned nuclear power plant that isn’t working anywhere in the world and isn’t fit for the 21st century.”

[Read more…]

Posted: 29 July 2016

28 July 2016

Hinkley

Michael Liebreich: Assuming its unions have not succeeded in stopping it, the board of EDF is today expected to wave through a decision on Hinkley C, the first new nuclear power station in the UK for 20 years and, at £18bn, the world’s most expensive power station. The obvious question is why this train-wreck of a project was not killed long ago. To answer this, you have to delve into the politics of the Conservative Party. In 2010, Tory support was being hit by defections to Ukip, whose average member was an older white guy: implacably anti-EU and hence anti-renewable energy, and very keen indeed on nuclear. A strong pro-nuclear position was seen as one way of shoring up the party’s right flank. The irony is that, all the while, the underlying logic for the project was being undermined. As soon as news broke of the Fukushima nuclear accident, the Tory right all but forgot its support for nuclear power, instead adopting fracking as its cause célèbre. The costs of renewable energy were plummeting to the point where wind projects could be built with little or no subsidy. And the cost of natural gas was falling too, driving down wholesale power prices. The National Audit Office this month released an updated calculation of the lifetime value of the subsidy to Hinkley: a mind-bending £37bn.

[Read more…]

Posted: 28 July 2016

27 July 2016

Stop Hinkley Campaign says a Final Investment Decision for Hinkley Point C would be little more than spin

EDF seems to be hoping that by acting swiftly after Greg Clark’s appointment as Secretary of State, it can minimise the risk that the highly favourable terms struck in 2013 to help to bankroll the station are watered down. Above all, EDF’s most cherished sweetener is a guaranteed price of an index-linked £92.50 per megawatt hour in 2012 prices – now worth around £100/MWh.

Stop Hinkley Spokesperson Allan Jeffery said:

If the Company does indeed make a positive Final Investment Decision on Thursday it will be little more than EDF spin. The largely French Government-owned company has a long list of problems to sort out before construction can begin. EDF says there will no concrete poured until at least mid-2019 and this will depend on the start-up of the EPR (the European Pressurised Reactor) at Flamanville, scheduled for the end of 2018 – six years late.”

First the EPR design has not yet been built successfully anywhere in the world. It has been described by a nuclear engineering professor as ‘unconstructable’. (1) In France concerns over the safety of the reactor pressure vessel at Flamanville have arisen after tests “revealed the presence of a zone in which there was a high carbon concentration, leading to lower than expected mechanical toughness values”. Further tests will continue until the end of this year. (2) The French safety regulator ASN is making no promises about what remedial action might be required. In the worst case scenario the entire project may need to be abandoned. (3)

And secondly EDF doesn’t have the money to pay for it. As this week’s Board meeting was being announced French finance authorities were raiding the offices of EDF as part of a probe into EDF’s disclosure of information to the market. Investigators are said to be concerned about the reporting of its domestic nuclear maintenance costs as well as the plans to develop new nuclear reactors in Somerset. (4)

EDF is a company in a very precarious financial situation. It has €37 billion of debt. The collapse in energy prices has pushed earnings down 68% in 2015. The Company needs to spend €50 billion upgrading its network of 58 ageing reactors by 2025. It is scrambling to sell €4 billion of new shares and €10 billion of assets to strengthen its balance sheet. EDF is also expected to participate in the €5 billion bailout of Areva, the bankrupt developer of EPR technology, by taking a 75 per cent stake. (5) About the last thing that it needs is a new €15 billion millstone around its neck. (6)

The European Union has opened a State Aid investigation into the French Government’s rescue plan for Areva. (7) And any French government financial support to EDF to enable the company to build the Hinkley Point C will almost certainly be blocked by the European Commission, according to a legal opinion commissioned by Greenpeace. (8)

Two legal challenges: firstly from Austria and Luxembourg, (9) and secondly from a group of German renewable energy companies (10) at the European court of justice against the European Commission decision to allow to subsidise Hinkley Point C have yet to be resolved.

Jeffery continued: “If this plant goes ahead highly radioactive waste would be stored in the heart of Somerset for perhaps the next 200 years. (11) Over its lifetime Hinkley Point C will produce waste equivalent to 80% of all the waste so far produced in the UK in terms of radioactivity – for what? So the Government can help its friends in the nuclear industry put the brakes on the renewable energy revolution taking place across the globe – they really do make King Canute look like an amateur.” (12)

The Government’s nuclear delusions are standing in the way of the West of England joining this energy revolution. Nuclear advocates can’t bring themselves to admit that smart, efficient and renewable energy systems are sounding the death-knell of nuclear power. It’s time that Somerset was given the opportunity to catch-up.”

The Stop Hinkley Campaign will be protesting against the Final Investment Decision in King’s Square Bridgwater 10am-1pm on Thursday 28th July

Notes

(1) Carbon Commentary 22nd October 2014 http://www.carboncommentary.com/blog/2014/10/22/cambridge-nuclear-engineer-casts-doubt-on-whether-hinkley-point-epr-nuclear-plant-can-be-constructed

(2) World Nuclear News 14th April 2016 http://www.world-nuclear-news.org/RS-Flamanville-EPR-vessel-tests-extended-1404165.html

(3) WISE International 15th October 2015 https://www.wiseinternational.org/nuclear-monitor/812/epr-fiasco-unravelling-france-and-uk

(4) Telegraph 22nd July 2016 http://www.telegraph.co.uk/business/2016/07/22/edf-raided-by-french-authorities-ahead-of-hinkley-greenlight/

(5) Times 7th May 2016 http://www.thetimes.co.uk/edition/business/sparks-to-fly-as-edf-board-faces-critics-over-hinkley-point-8wtzch2gq

(6) The Street 25th April 2016 http://www.thestreet.com/story/13542318/1/edf-can-t-affordhinkley.html

(7) FT 19th July 2016 https://next.ft.com/content/8d650906-4dcd-11e6-88c5-db83e98a590a

(8) FT 22nd April 2016 https://next.ft.com/content/c1cbfcca-0716-11e6-9b51-0fb5e65703ce

(9) Guardian 6th July 2015 https://www.theguardian.com/world/2015/jul/06/austria-files-legal-complaint-against-uk-hinkley-point-c-nuclear-plant

(10) Guardian 2nd July 2015 https://www.theguardian.com/environment/2015/jul/02/greenpeace-utilities-launch-suit-against-hinkley-nuclear-plant

(11) Feasibility studies exploring options for storage, transport and disposal of spent fuel from potential new nuclear power stations, NDA January 2014. https://rwm.nda.gov.uk/publication/geological-disposal-feasibility-studies-exploring-options-for-storage-transport-and-disposal-of-spent-fuel-from-potential-new-nuclear-power-stations/

(12) Stop Hinkley Briefing 25th Jan 2016 The Impact of a New Reactor Programme on the UK’s Radioactive Waste Inventory http://www.stophinkley.org/PressReleases/ImpactNewReactorProgrammeUK.pdf

Posted: 27 July 2016

Stop Hinkley Campaign Letter to Greg Clark

Dear Mr Clark,

Congratulations on your appointment as Secretary of State for Business, Energy and Industrial Strategy. We understand that you will now take charge of energy policy. We are writing to you to ask you to make the most of this opportunity to stamp your own mark on Government energy policy by ditching proposals for a new nuclear power station at Hinkley Point C (HPC) in Somerset.

Over the last few months HPC has been described as a white elephant; a deal whose flaws have become increasingly apparent; verging on insanity; alarm bells should be ringing deafeningly loudly; too expensive and unproven; will kill British manufacturing; bad for consumers, the taxpayer, business and potentially the environment; beyond any commercial logic; and a total waste of money. (1)

Even the Financial Times has called this project “a laughing stock”. It is at least eight years behind schedule and billions over budget, and cost estimates seem to rise every month, just as the date for a final investment decision disappears into the future. (2)

A recent devastating report from the Government’s spending watchdog – the National Audit Office (NAO) should provide you with a perfect excuse to ditch HPC. The NAO estimates that energy consumers could end up paying £29.7bn in top-up payments rather than £6.1bn estimated in October 2013 when the strike-price for the 35-year contract was originally agreed. The increase is due to the fact that wholesale energy prices are now expected to be much lower. (3) The Government itself estimated this figure could be even higher at £37bn. (4)

In May 2012 Charles Hendry MP, Minister of State, for Energy and Climate Change at the time told the House of Commons Select Committee that “We do not have five years. We need to get moving on [building new reactors] now to make up for the failure of investment and new plant over previous decades.” (5)

The five years is almost up but almost nothing has happened. Renewable energy and energy efficiency projects could be implemented very quickly and much more cheaply. Britain’s solar industry said three years ago it could install the same capacity as HPC in 24 months and at comparable cost. (6)

Other recent developments include:

• Solar energy has been advancing considerably faster than anyone expected just a few years ago. The American website, Climate Progress, says you’ll never believe how cheap solar energy is – in some parts of the world it costs less than 2p/kWh without subsidies. Because the cost of renewable energy has been falling so quickly “almost everything you know about climate change solutions is probably outdated,” (7)

• Offshore Wind Farms in the North Sea off the coast of the Netherlands are now expected to cost €87/MWh (£73/MWh) compared with £100/MWh for Hinkley Point C. (8)

• A crash programme to replace all the lights in the UK with LEDs could cut electricity bills, and cut peak electricity demand by about 8GW, a saving of about 15% of all power consumption. (9)

• Tidal Lagoon Power says the lifetime cost to consumers of its proposed Swansea Bay tidal lagoon would be the same as the Hinkley Point C. (10)

• Research by Forum for the Future, Farmers Weekly and Nottingham Trent University estimates that it would be relatively simple to get 20 GW onto the grid from farm-based solar and wind and some anaerobic digestion by 2020. (11)

• Domestic energy efficiency alone could save 40TWh/yr by 2030 and help eliminate fuel poverty into the bargain. (12)

• There are around 100 TWh of electricity savings detailed in a report for the Government by McKinsey for which there are currently no plans to capture. (13)

• Plans for alternatives to HPC have been published by Molly Scott Cato, the Green MEP for South West England (14); the Intergenerational Foundation (15); the E3G Think Tank (16); and Green Hedge – a leading developer and operator of low carbon electricity generation and storage projects. (17) The Green Hedge plan says transforming weather-dependent solar and wind into a stable generator is possible with energy storage and backup gas generators.

• Writing on The Independent website Keith Barnham, Emeritus Professor of Physics at Imperial College says six bio-electricity technologies, all capable of continuous power operation, could provide ten times 3.2 GW before 2025. (18)

Ditching EDF’s plans for HPC would provide us with a wonderful opportunity to turn Somerset into a sustainable energy hub for England. We urge you to get on with it as soon as possible.

Yours faithfully,

Stop Hinkley Co-ordinating Team

(1) See http://www.stophinkley.org/PressReleases/pr160415.pdf for a full list
(2) FT 18th July 2016 http://blogs.ft.com/nick-butler/2016/07/18/energy-policy-under-a-new-government-a-chance-to-think-again/
(3) Guardian 13th July 2016 https://www.theguardian.com/business/nils-pratley-on-finance/2016/jul/13/poundlands-bid-decision-is-fine-but-please-dont-use-brexit-as-the-excuse
(4) Business Green 8th July 2016 http://www.businessgreen.com/bg/news/2464269/hinkley-cost-estimate-rises-to-gbp37bn
(5) See page Ev 17 “Building New Nuclear: the Challenges Ahead”, Energy and Climate Change Committee, Volume 1, 4th March 2013 http://www.publications.parliament.uk/pa/cm201213/cmselect/cmenergy/117/117.pdf
(6) Click Green 24th October 2013 http://reskin-cg.class-media.co.uk/opinion/opinion/123982-renewable-energy-boss-tells-pm-solar-power-could-match-hinkley-in-2-years.html
(7) Climate Progress 18th July 2016 http://thinkprogress.org/climate/2016/07/18/3797907/solar-energy-miracle-charts/
(8) Renew Economy 7th July 2016 http://reneweconomy.com.au/2016/dong-energy-build-700-mw-offshore-wind-farms-e72-70mwh-22550 See also Climate News Network 18th July 2016 http://climatenewsnetwork.net/offshore-wind-powers-ahead-in-europe/
(9) Ecologist 8th June 2016 http://www.theecologist.org/blogs_and_comments/commentators/2987760/the_urgent_case_for_an_mass_s witch_to_led_lighting.html
(10) ReNews 11th July 2016 http://renews.biz/103387/lagoon-cost-same-as-hinkley
(11) Farm Power: Exploring the size of the prize, Forum for the Future, November 2014 http://www.forumforthefuture.org/sites/default/files/Farm%20Power_Size%20of%20the%20Prize%20report_Nov-2014.pdf
(12) Energy Efficiency: Fighting to keep Bills Down Permanently, ACE November 201 http://ukace.org/wp-content/uploads/2013/11/ACE-November-2013-Energy-efficiency-fighting-to-keep-bills-down-permanently.pdf (See table 16, page 54)
(13) McKinsey, 2012 Capturing the full electricity efficiency potential of the U.K Draft report. http://www.decc.gov.uk/assets/decc/11/cutting-emissions/5776-capturing-the-full-electricity-efficiency-potentia.pdf
(14) The Power to Transform the South West, http://mollymep.org.uk/wp-content/uploads/The-power-to-transform-the-South-West_FINAL1.pdf
(15) Toxic Times Capsule by Andrew Simms, Intergenerational Foundation, April 2016 http://www.newweather.org/wp-content/uploads/2016/04/Toxic-Time-Capsule.pdf
(16) Guardian 18th Mar 2016 http://www.theguardian.com/environment/damian-carrington-blog/2016/mar/18/five-ways-to-power-the-uk-that-are-far-better-than-hinkley-point
(17) Regen SW 22nd April 2016 https://www.regensw.co.uk/blog/2016/04/hinkley-point-through-the-looking-glass/
(18) Independent 11th May 2016 http://www.independent.co.uk/voices/the-government-should-scrap-its-costly-hinkley-point-deal-and-accept-renewables-can-keep-the-lights-a7021196.html

Posted: 27 July 2016

27 July 2016

Hinkley

John Sauven: George Osborne’s reputation as a master political tactician may have gone the way of Leave’s £350m a week for the NHS, but the spectre of his misguided energy policy could haunt Britain for decades, and at Hinkley in north Somerset, for millennia. Theresa May’s government urgently need to seize the opportunity to minimise the damage, an opportunity which only lasts while her government can portray them as the last regime’s errors, and disown them. This week we learned that the UK has lost 12,000 jobs in the solar industry. This economic disaster was due to Osborne’s ideologically driven subsidy cuts to what was a vibrant and growing sector of the economy. The ideology in question was not opposition to state subsidies, of course. Hinkley C has now become so uneconomic that it has been condemned in editorials in the normally pro-nuclear Times, Telegraph and Mail, and many EDF executives and employees think it might be a bad enough plan to completely destroy the state-owned utility. On Thursday EDF’s board will make a widely trailed decision on whether to proceed with this “investment”. After years of delay, this unseemly hurry looks a bit like panic. To be clear, the Hinkley subsidies are not bungs to power brokers or inexplicable government largesse; Hinkley’s problems are so severe and so numerous that it requires potentially illegally high levels of state support in order for it to be built. Listing them all – the legal risks, the engineering risks, the liability risks, the credit risks, the safety risks – would take so long there would probably be some new ones before I’d finished. But they all spring from a reactor design, which has so far proved impossible to make work, and has even been described as “unconstructable” by an engineering professor. One of the few arguments Hinkley’s defenders had left was that offshore wind, a technology that has the potential for huge amounts of power, but has received a tiny fraction of nuclear’s research and development outlay in both time and money terms, was still more expensive than Hinkley. However, even this last advantage has now evaporated. The NAO has claimed this month that new offshore wind would actually be cheaper than new nuclear energy, a claim confirmed by Danish firm Dong Energy building two offshore windfarms for €72.70 (£61.10) a megawatt hour, compared to Hinkley’s £92.50.

[Read more…]

Posted: 27 July 2016

26 July 2016

Hinkley

The final investment decision on Hinkley Point C (HPC) could still “go either way”, analyst at investment firm Whitman Howard has told Utility Week.

[Read more…]

Posted: 26 July 2016

25 July 2016

Hinkley

On Thursday the board of EDF will meet in Paris to give a final green-light for its £18 billion project to build a nuclear power station at Hinkley Point in Somerset. Billed as a critical piece of kit to meet Britain’s future electricity needs, while also cutting carbon emissions, Hinkley Point could churn out 7 per cent of British electricity for 60 years. The French government, which owns 85 per cent of EDF, hopes that by acting swiftly, only two weeks after Theresa May’s appointment as Prime Minister, it will stifle critical voices within her new administration and minimise the risk that highly favourable terms struck in 2013 to help to bankroll the station are watered down. Above all, EDF’s most cherished sweetener is a guaranteed price of an index-linked £92.50 per megawatt hour, well over double the present wholesale price, for 35 years. A final investment decision now also would help to avoid the risk that the project gets bogged down in the complexities of a French presidential election cycle, which will start in the autumn. Mr Clark says that he supports the scheme, but other senior figures within Mrs May’s administration are less convinced. Last year, Boris Johnson attacked the project as “disgraceful” and an “extraordinary amount of money” to spend. Nick Timothy, one of Mrs May’s key advisers, has described the project as “baffling” and warned of the security risks of allowing Chinese state-owned companies to invest in UK infrastructure projects. Steering Hinkley Point on to the UK grid is likely to take up a lot of Mr Clark’s time.

[Read more…]

Posted: 25 July 2016

24 July 2016

New Nuclear

Russian, Chinese and South Korean nuclear companies should be offered subsidy contracts to build reactors in the UK if they are cheaper than other projects already under development, a prominent nuclear lobbyist has said. Tim Yeo, the former chairman of the House of Commons energy select committee, said EDF’s proposed £18bn plant at Hinkley Point, which is expected to get the go-ahead this week, should be allowed to proceed, but he urged the Government to rethink its approach to future projects. Mr Yeo, the MP for South Suffolk for 32 years until the 2015 general election, now chairs New Nuclear Watch Europe, a lobby group whose members include the Korean nuclear firm Kepco. He urged the Government to “urgently examine which nuclear vendors can deliver the cheapest electricity, maximise the number of UK supply chain jobs and minimise the risk of construction delays”.

[Read more…]

Posted: 24 July 2016