Friday, July 29, 2016

What is going on at Hinckley Point?

Must admit I was very surprised by last night's Govt statement that it was 'pausing' the final decision on signing the deal with EDF (the French Govt) and the Chinese General Nuclear Power Corporation. Like most people, I had assumed that the key decision was that of the EDF Board on Thursday, and that the Friday signing would be no more than a formality. The Chinese certainly thought so, having travelled over to Hinckley from China for the party. The marquee just flapped in the Somerset breeze - unused and empty. Actually we had two surprises. First was the degree of  disagreement and opposition within the EDF Board. And second Greg Clarke's statement that the UK Gov't was going to study the deal before signing it off. There may have been some connection. Was certainly a thought in my mind.

Anyway, it's interesting to indulge in conjecture about why. I don't think we have any real idea. Firstly it may just be that the new Prime Minister wants to have a detailed look at the books before signing it off. Fair enough, but does seem a bit late in the day. We did know the EDF decision was coming a good while back. Couldn't have been a surprise. Personally I don't think the Prime Minister (if it was her decision) was being unreasonable. So much concern about the project (particularly the technology) that it's no surprise she wants to consider it carefully. It seems not even the French are fully sold on the deal. As soon as it emerged that there would be a pause, the shares in EDF jumped skywards.

The media seem to think it's about the involvement of the Chinese - a long term security consideration. 
And not so much the £6 billion investment planned for the Hinckley Point project, but subsequent investments in Sizewell and Bradwell.  No way we can know if this is true. But if it is, it would mark a big change in attitude towards Chinese investment by the new Prime Minister/Chancellor team from previous regime. The Chinese are reported to be "bemused" and "frustrated". I suspect that's Cinese for absolutely bl*****y furious. 

Not really sure where we are now, or what view to take. I had been very much against the UK pulling out of the deal, because of the reputational damage it would do to the UK and to investor confidence. But the French Govt reaction may be a great sign of relief, that a humiliating decision had been taken for it. Since the strike price was agreed EDF has spent £2/3 billion on preparing the site. That's a very big sum to write off. 

Anyway we will have to wait and see. What I really do hope is that there is no knock-on negativity impacting on Wylfa B and Moorside. 


Anonymous said...

Are the Coservatives in favour of the Hinckley Point nuclear power station or not. Just can't make it out.

mairede thomas said...

EDF has spent the last couple of years, raising Chinese investment; absorbing Areva’s debts and announcing delay after delay before making its final investment decision on Hinkley C. Meanwhile other players in the nuclear power sector have been making strides in ways that make Hinkley C look like poor value.
For example, UK based Moltex Energy announced on 14th July that their Stable Salt Reactor will have a capital cost of around a quarter that of Hinkley C and a Levelised Cost of Energy far below the cost of new gas or coal fired units.
Molten salt reactors could be built and operational in around the same timeframe as Hinkley C. So given recent developments, a review of the Hinkley deal seems fair enough. It is EDF that has put the project in jeopardy.

mairede thomas said...

The latest MIT article on China's plans for Molten Salt Reactors:-

mairede thomas said...

Can Theresa May and her Secretary of State for BEIS grasp the opportunity Molten Salt Reactors provide to create safe, clean, cheap, flexible, reliable, and abundant energy?
Molten Salt Small Modular Reactors will transform our ability to compete in global markets. But if we also own a share of the intellectual property and/or product commercialisation, then the Treasury will also reap the rewards of selling a UK manufactured innovation into a global marketplace, which is crying out for power stations that don’t produce GHG emissions and can be deployed almost anywhere.
So will the Government invest our money developing this new technology as the foundation for our 21st Century industries; a source of secure cheap power for our homes and businesses; a manufacturing renaissance that will create all manner of quality jobs; a product that will reduce our international trade deficit in goods, and a great investment vehicle for our pension funds?