News March 2016

31 March 2016

Hinkley

The cost of building a new nuclear power station at Hinkley Point in Somerset could rise by nearly £2 billion, piling more pressure on the over-stretched finances of the French energy giant EDF, according to a report seen by The Times. An independent analysis of the £18 billion project claims that Areva, the French company that developed the EPR reactor earmarked for Hinkley, is repricing the technology before a final investment decision, which it expects to be signed by EDF and its Chinese partners in May. Michel Degryck, managing partner of the Paris-based corporate finance company Capitalmind and an expert on EDF who produced the report, said that Areva had in recent weeks been asking suppliers to resubmit detailed offers for key components of the Hinkley station. Mr Degryck said: “We understand that a number of costs were probably underesti mated when they did their last pricing [of the reactor] in 2013. They will have to take into account new costs . . . The cost of the project could rise by 10 per cent.” The updated price of the station could be as high as 25.3 billion euros (£19.8 billion), according to the research. The development casts further doubt on the future of the project, under which two new reactors to be built at Hinkley are set to generate 7 per cent of UK electricity once operational, probably in the late 2020s.

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Posted: 31 March 2016

30 March 2016

Hinkley

Senior engineers at French utility EDF have called for at least a two year delay at the controversial Hinkley Point nuclear project in the UK and recommended a redesign of the reactor technology. An internal white paper written by dissenting EDF engineers, which has been seen by the Financial Times, argues that Hinkley Point is so complex and untested that the company should announce a later completion date than the target of 2025. The paper, circulated among top executives, said that the “realistic service date was 2027” due to the size of the project, continuing design modifications to the European Pressurised Reactor system and the “very low” competency of French supplier Areva in making some of the large components. The white paper also made the case for a “new EPR”, calling on the company to redesign the current reactor technology to make it smaller, cheaper to build and less complicated. Three people close to the company said that CGN, EDF’s Chinese partner for Hinkley, also feared possible delays, attempting to insert a clause so it would take on a lower financial risk if there were a large problem. But the majority of the 18-strong board is likely to vote in favour of the deal in May, according to people close to the group. The company is 85 per cent state owned, and the government wants the project to go ahead.

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Posted: 30 March 2016

29 March 2016

Moorside

Listening to NuGen CEO Tom Sansom’s evidence to the Energy & Climate Change Committee last week (23rd March), MP’s might have gone home thinking that all was going swimmingly-well with the consortium’s plans for new-build at Moorside. However – and leaving aside the myths he peddled to the parliamentarians about three reactors being on target for operation at Moorside by the mid 2020’s, and the Westinghouse AP1000 reactors being a ‘proven technology’ (no such reactor has yet been built let alone operated anywhere in the world) – things are not exactly hunky-dory for NuGen who, as Sansom was singing its praises at Westminster, were forced into writing a grovelling apology to some local West Cumbrian residents. How come?

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Posted: 29 March 2016

28 March 2016

Hinkley

The ability of EDF, the French utility, to fund the £18 billion Hinkley Point C nuclear power plant has been thrown into further doubt after reports suggesting that CGN, its Chinese partner, would shoulder a smaller-than-expected amount of financial risk. Despite having a 66.5 per cent stake in the project, EDF would assume a higher proportion of the liabilities associated with costs overruns or delays, according to Le Journal du Dimanche. The French newspaper cited a note by Thomas Piquemal, EDF’s former chief financial officer, to the company’s audit committee regarding the project, which is mired in controversy on both sides of the Channel. The note is understood to state that, in the case of a 5 billion euro cost overrun, EDF would be liable for 80 per cent of the additional costs. Should the project be delayed by six months, the state-controlled French group would have to refund hundreds of millions of euros to CGN. A payment of 1.6 billion euro would also be payable to EDF’s Chinese partner in the event that the Austrian government succeeds in its complaint to the European Commission over what it regards as illegal state aid for the project. Mr Piquemal quit this month, apparently believing that Hinkley Point C could put the whole of EDF’s finances at risk. He became the second senior resignation at the French group, after the departure of Chris Bakken, the project director, last month.

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Posted: 28 March 2016

27 March 2016

Terror

Two Belgian nuclear power plant workers have joined ISIS leading to fears the jihadis have the intelligence to cause a meltdown disaster. Belgian security services are fearful that ISIS operatives may have been looking to target a nuclear plant as it emerged two workers from a plant in Doel fled to Syria to join ISIS. One of the men, reportedly known as Ilyass Boughalab, is believed to have been killed in Syria, while the second served a short prison sentence in Belgium for terror-related offences in 2014. With an extensive understanding of nuclear facilities, the convict’s short jail sentence has raised further questioned of the Belgian security services as well as fears he may have passed on important knowledge about the site’s to the terrorist group.

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Posted: 27 March 2016

26 March 2016

ONR

Britain’s nuclear industry is under threat from cyber-attacks, terrorism and state-sponsored espionage, regulators have warned. Buried in the Office for Nuclear Regulation’s 2016-20 strategic plan are bleak references to the growing threat of attack on Britain’s 15 operational reactors, which account for nearly a fifth of the country’s electricity. The Independent has established this is the first time that the ONR has explicitly acknowledged the growing terrorist threat to the nuclear industry. The document states: “The threat of terrorism in the nuclear sector will continue to be managed proportionately and effectively through national and international capabilities. The capabilities of potential adversaries to operate in cyberspace will continue to grow.” At the top of a list of the industry’s corporate risks, the ONR writes: “Failure to protect the confidentiality, integrity and availability of sensitive information and assets from both known and emerging security threats to the UK nuclear infrastructure (eg, cyber-attacks, terrorist activity, state-sponsored espionage).” The news comes at a sensitive time, with French giant EDF weighing up whether to risk its balance sheet on building a £24.5bn reactor at Hinkley Point on the Somerset coast. John Large, the nuclear expert who warned in a 2014 report for the French authorities that reactors are highly vulnerable to drone attacks, said the admission was “a step forward”, but warned: “It might be too late. The problem is that the plants were designed in the 1950s and 1960s and those designs ignored terrorism. That’s one of the problems they [the nuclear industry] face.

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Posted: 26 March 2016

25 March 2016

Hinkley

MPs have written to the energy secretary to ask if a Plan B exists in the event of the collapse of EDF’s deal to build an £18 billion nuclear power station at Hinkley Point in Somerset. Angus MacNeil, chairman of the energy committee, wrote to Amber Rudd to express disappointment at the energy company’s failure to both set a firm timeline for the project and to make a final investment decision. “Given the uncertain timetable, I would like to know what contingency plans you have in place in case Hinkley Point C does not materialise . . . what the costs would be to the UK,” Mr MacNeil wrote. There has been growing concern about the cost of the project. MPs on the committee asked about the terms of a 2013 deal to pay EDF a guaranteed price for electricity of £92.50 per megawatt hour, treble the current wholesale price, for 35 years. “The track record to date at Hinkley and overseas does not inspire confidence,” Mr MacNeil wrote.

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Posted: 25 March 2016

24 March 2016

Hinkley

EDF Energy has insisted it will take a decision to go ahead with new reactors at Hinkley Point in Somerset but was unwilling to say exactly when despite being pressed by exasperated MPs. The French government, which owns 85% of EDF, has previously said it was aiming for the start of May but Vincent de Rivaz, the chief executive of the UK arm of EDF, was unwilling to set a timescale. “I can’t give you this morning a precise date. I just have to give the one provided by the [French] economics ministry,” said de Rivaz after repeated requests to name a date by MPs on the energy and climate change select committee. A succession of expert witnesses at the select committee hearing lined up to pan the Hinkley project saying it should be scrapped for costing too much.Peter Atherton, a utility analyst with Jefferies investment bank, said the French had got a “great, great deal” from the UK bill paper via the government’s subsidy regime, adding “once it’s operational that power station is going to be gold”. Simon Taylor, a specialist in nuclear financing and a lecturer at Cambridge University, said Hinkley “looks poor value for money” and it would be best if the French government pulled the plug on it. Doug Parr, policy director from Greenpeace, said there were cheaper and cleaner ways of meeting energy security and carbon targets via renewable energy and storage. “If it is built, it will be an act of political will of the UK and French governments … [it was now] beyond any commercial logic.”

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Posted: 24 March 2016

23 March 2016

Hinkley

French utility EDF should not delay the investment decision on plans to build two nuclear reactors in Britain as it could risk losing the contract, French Economy Minister Emmanuel Macron said on Tuesday. Macron said he could understand calls to delay the 18 billion pound project until problems with two nuclear projects in Flamanville, France and Olkiluoto, Finland are sorted out, but the British government would see this as a renunciation of the project. “We need to understand that a delay would create a strong risk that we would lose the contract,” Macron told parliament in a briefing about EDF, which is 85 percent state owned. Macron said Chinese nuclear firms – which already have a strong presence in Britain – would be ready to take over the contract, which he said has an excellent return on equity. He added that losing the contract would have grave consequences for investment and employment in the French nuclear industry and for its credibility. Macron said EDF should make the Hinkley Point investment decision in early May, not at the next board meeting on March 30. He hoped that by early April there would be an agreement about conflicts relating to Olkiluoto, which is the subject of an arbitration suit in which reactor builder Areva and its Finnish customer TVO claim billions from one another.

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Posted: 23 March 2016

22 March 2016

Hinkley

The uncertainty is over Hinkley C is beginning to have an impact on the local political landscape. With the Conservative MPs still convinced the project will go ahead there appears to have been a change of heart in the Labour group. The Bridgwater parliamentary candidate in the last election has cast doubt over the wisdom of putting the project in the hands of the French with help from the Chinese. He told the Bridgwater Mercury about his concerns over the way things have panned out this year with the: “Chinese are apparently attending meetings at the French Embassy in China trying to persuade EDF and the French Government to reach the final investment decision and get on with the project.”He said: “The rising costs of the Hinkley project and the fear of not completing the build within the timescale and the possible downturn in China’s economy; suggests there needs to be a rethink by the British Government as to how to fund the growing demand for cleaner energy, while making sure that the ‘lights stay on’, now needs further discussion.“Major infrastructure projects should be in the control of the British government and the Government could issue Bonds for investors. The Government could then raise the necessary funding for infrastructure projects, such as Hinkley C. The government would then be in control of the Nuclear Generator development and would decide on which companies would build the new generation of reactors and who would manage the new stations.”

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Posted: 22 March 2016