Friday, 3 April 2015
EDF abandons Hinkley C project after Chinese demands cannot be met
As EDF has for the umpteenth time put back of the date of its 'final investment decision' on the building the Hinkley C nuclear power station, it has emerged that key stumbling blocks are two very tough demands being made by the Chinese nuclear companies on the British and French Governments. EDF has suspended its work on the project. It has been a marvel how the 'groundwork' has been carrying on for so long. I suppose you could call it a job creation activity digging holes in the ground for probably little purpose.
The Chinese nuclear interests, who are needed to provide a large part of the equity investment in the project, are demanding that the French Government agrees to carry the can and pay for cost overruns on the project. Given the delays and thus cost overruns in the four EPR projects currently being built in Finland, France and China, cost overruns seem a racing certainty if Hinkley C goes ahead. So in this way the Chinese are only being rational.
Chinese nuclear interests are demanding that, in effect, the British Government give them the go-ahead to build a Chinese reactor design at a future power project at Bradwell in Sussex. In other words, it seems that the Chinese are interested in the Hinlkey project in so far as it can advance their interests in getting into the British electricity market.
But there are big problems with the idea that either the French or the British government will or can agree to these demands. In the case of France, it is already trying to fund the massive deficit in an effectively bankrupt (albeit state owned) nuclear industry, including the massive debts accrued by constructors AREVA in its development of the EPR reactor. The nuclear interests are very strong in the French state. But are they really going to persuade the French taxpayer to effectively pay for a large chunk of a very expensive power station for the alleged benefit of British consumers?
In the case of the British Government it seems very difficult to understand how it can undercut all of the regulatory procedures to give an automatic clearance, in advance, for a new reactor design - wherever it could be from. The procedure will take years.
Of course the supporters of the project argue that without it the light will go out, Given the tremendous uncertainty about when such a project would actually generate electricity, it would seem more plausible to argue that the lights are much more likely to go out if we are excluding other projects (particularly renewable ones) in order to wait for Hinkley C to come online!
It has always been irrational to expect the economic projections made by government on nuclear power to come to fruition, since the project defies any commercial logic to it. In that sense reality is merely calling the government's bluff.
For background stories see: