Friday, 7 August 2015

Why EDF is a good example of why we don't need public ownership of electricity generation in the UK

Jeremy Corbyn has just announced that he favours public ownership of the electricity industry in the UK. Does that mean a return to the days when electricity generation was one big nationalised monopoly as in the days of the CEGB? That would be a bad idea. We need innovation in electricity in the UK. Monopolies (nationalised or private) generally mean that the incumbent industrial interest groups merely perpetuate their existing technologies, which is certainly something we don't need in electricity at the moment. Admittedly privatised, liberalised, markets need various types of intervention - but nationalisation is definitely the wrong direction. Corbyn mentions nationalisation  sometimes, and then talks about decentralisation - confusing.

I appreciate that Jeremy Corbyn is opposed to new nuclear power plant, but nationalisation is more likely to to generate this outcome than present arrangements. The CEGB could only ever think of centralised larger and larger power stations, including a nuclear build programme which was stopped in its tracks by the fact that the newly privatised industry realised that nuclear power was a financial black hole. It is no coincidence that the only companies that will consider investing in nuclear power in the UK are themselves state owned - in France or China.

EDF, still owned by the French state, is quite a good example of what can go wrong with nationalised electricity industries. EDF works hand in glove (and indeed is soon to be formally amalgamated) with the state-owned nuclear constructors AREVA. The fact that nuclear power was becoming more expensive, its construction costs uncertain and that it was being overtaken by a range of other generation technologies has passed this state complex by completely. How can dinosaurs change?  This insistence on ploughing ahead with nuclear power technology has produced a terrible financial mess so far for AREVA along with the failure of the 'new' power station design, the European Pressurised Reactor (EPR). The French electricity consumer and taxpayer is paying large sums for this failure.

But instead of changing, this complex is still lurching in the same loss-making direction. EDF-AREVA seems poised to guarantee to pay the construction cost overruns of the already ill-fated Hinkley C. That is, at least, the only way that Hinkley C will go ahead now that the British Government appears to be saying  (that's the current story) that it will not offer a blank cheque for new nuclear power in the UK. But if EDF does underwrite the cost overruns (and large cost overruns seem a racing certainty, even on top of £25 billion already projected), then further financial disaster will beckon for the EDF-AREVA conglommerate.

The dinosaurs went extinct.

What would be good is if there was grass roots campaigning to start up local energy companies - that is useful decentralisation - and this can be supported by legislation to allow independent energy companies easier terms to set up as suppliers. But this is not to be confused with 'nationalisation', and it requires people and companies at the grass roots to do the organising.


  1. Actually the CEGB were also involved in developed new generation technologies including pumped hydro and wind amongst others. They and the supply companies also acted as champions for UK power technologies all of which has mostly gone now of course.

  2. well, a little bit - very tokenistic I think to satisfy their own boffins, but they were notorious for using their control of the electricity grid so that independents found that the payments for electricity they generated were too low