Tuesday, 17 February 2015

British minister claims there is 'no delay' in Hinkley C construction

UK energy minister Matthew Hancock has told a Parliamentary Committee that 'We do not expect a delay' in building Hinkley C as a result of the Austrian challenge to EU Commission's consent to state aid for the power station(s). He also declared that 'the cost of nuclear is not going up'. He was being interviewed before the Environmental Audit Committee on 10th February and quizzed about nuclear funding by green MP Caroline Lucas. 

Hancock's statements have some interesting implications. First, given that EDF have been announcing construction to start in early 2013, so in that sense there is already a delay, thus his answer is in formal terms, simply wrong. But one assumes that what he really means is that EDF are going to ignore the issue of the court challenge and go ahead building the power station, pronto (although, as stated in the last blog post in reality the project was falling apart anyway regardless of the Austrian challenge). 

This view once again highlights the gap between government policy and reality. EDF are certainly not going to go ahead without at least a guarantee of compensation from the UK Government in the event of an adverse judgement from the EU Court of Justice judgement (final judgement taking maybe 2 years).

But the UK Government could not, itself, give compensation without breaching the state aid rules which are the very subject of the dispute. The only way this could be done would be through the back door, through AREVA, the effectively already bankrupt (French) state owned nuclear constructor of the EPRs. But that idea doesn't seem even likely to be discussed. The French Government is distinctly unhappy already about increasing demands for the Chinese investors in Hinkley C to be insulated against cost overruns, so much so that we haven't heard much at all from the French Government complaining about the Austrian challenge. Again, see the last blog post for more comment

Hancock's statement about the cost of nuclear power not going up are also interesting, given the increases in occurred in government estimates for nuclear power since out nuclear programme was first announced in 2006. Then nuclear power was going to cost around £40 per MWh for a shorter contract length than 35 years. It is even more interesting given the fact that the costs of the EPRs being built in Finland and France (not to mention AP1000s being built in the USA) are spiralling out of control well beyond their original estimates. Of course the real central issue barring the way to building Hinkley C is which Government would provide guarantees for the cost overruns. If the answer is 'nobody', then nobody will build them!

You can see a transcript for the discussion at the Environmental Audit Committee at:
  see http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/environmental-audit-committee/a-201015-progress-report/oral/18182.html

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