Thursday, 17 October 2013

Hinkley C: A Secret blank cheque is in the post (update)

Update - well, I wrote this under the expectation that the Government would soon formally agree a contract with EDF, they would go ahead, and later on EDF would come back for more money as the project exceeded its budget with the usual construction delays.

But as Mark Johnson has kept reminding us, the contract has never been signed. It is just a proposal, and a proposal which even if issued would only partially underwrite the deal. Perhaps this is not enough for EDF and their Chinese allies. Certainly it appears that the Chinese interests want some government to underwrite the deal, whether it be the French or British Government - to issue a water-tight bank cheque. But the Treasury is saying at least that they don't want this.  But what is the case is that there is a widespread belief that this is a project that should not go ahead even among many nuclear supporters. So, as yet no blank cheque has actually been received by EDF for Hinkley C!

But, here's the bad news - Labour think tank IPPR and, it seems, the Labour Energy Team now want to offer them a blank cheque for real! See my June 2015 posting 'Pressure Grows for blank cheque for Hinkley C'

This is the version I wrote in 2013:

The Government's hoo-hah over the Hinkley C nuclear deal hides what should be regarded as a decision by the British state - after denying it for years - to give a blank cheque for the power plant. In that sense, the headline price, whether £90 or £93 per MWh over 35-40 years does not really mean very much. All it means is that the owners of the power plant will get the returns they want (provided the plant actually works) no matter how much the plant actually costs or how long it takes to build and how much interest charge is racked up in the process. The state will take the losses, and given the history of nuclear power, this is all but assured. Never mind the fact that all of the competitor renewable energy plant have to take and pay for their own risks, nuclear is to be given a special, state-bankrolled place in the firmament, with a price tag attached as a bit of window-dressing. The cost of Hinkley C, when calculated on the same basis as other generation technologies, is more like £150 per MWh or higher, depending on the assumed contract length.

The consumer is now to be locked in to a deal which will shut out what are now, and what will assuredly be even more so in the decades to come, much cheaper alternatives, and be committed to pay extra for the near certainty of extra costs in future years on top of the declared 'strike price' of £90 or so per MWh. That is a key thing to remember. The fact that this deal breaks the key Government  commitments to financial competitiveness and previous refusal to 'underwrite' nuclear costs is interesting, but secondary to this point. We are to be kept in the dark about the extent of the Government's commitments to EDF in this deal. The details will leak out in the years to come, of course, and people will ask, how can this happen? How indeed! Not only will we witness in the unfolding years the very high probability of the usual nuclear saga of cost overruns, lengthening construction schedules, and blaming of this Government by future Governments, but once again the state will have paid heavily for this technology not just as it is being built, but ultimately to dismember it and take care of its nuclear waste products for decades and centuries to come.

I have observed in the past that Hinkley C would not be built without a blank cheque - indeed I assumed that since the Government kept denying that it would agree to this, the natural assumption was that Hinkley C would not be built. But now it seems the pass has been well and truly sold. All that remains now is for us to wait for the European Commission to take its time to approve the deal, and then the tragic comedy show of what could well be one of the last (if not the last) nuclear power station(s) built in the West will begin.

There is a lot of coverage of this, but of course, see

and of course the key passage:

'Treasury negotiators are said to have made concessions on power prices, profit sharing and construction guarantees to achieve a breakthrough in talks that have teetered on the brink of collapse'

No comments:

Post a Comment