If Hinkley Point C doesn’t go ahead, the UK needs a Plan B and fast
Echoing recent warnings on this website the Financial Times concluded a leader column last week with the words “politically painful it may be but the case for halting Hinkley Point C is becoming hard to refute”.
Sadly the latest smoke signals from Paris are far from encouraging. Despite the best efforts of EDF, backed up by steadfast, indeed generous, support from the British government, the prospect of this project ever reaching fruition is fading fast.
It’s a decade since Tony Blair belatedly realised that Britain cannot achieve security of electricity supplies and reach its carbon emission reduction targets without significant investment in new nuclear.
But after ten years of dither and delay Britain is no nearer generating a single kilowatt of electricity from a new nuclear power station than it was in 2006. So the question now is where is Plan B?
In sharp contrast to this lost decade in Britain progress in some other countries has been positive. Take the UAE for example where a Korean led consortium signed a contract for the construction of four new nuclear power stations in the UAE in 2010.
Next year it expects to start generating electricity at a price well below the £92 per megawatt hour which Britain had to guarantee EDF to get them to proceed with Hinkley, proving that it doesn’t have to take for ever to build new nuclear.
Regrettably Kepco, which leads this consortium, received so little encouragement from the British government that it closed its London office in order to focus on opportunities elsewhere in the EU.
The problem for Britain is that abandoning Hinkley Point C has consequences which go far beyond the crowing by the anti nuclear brigade that the news will undoubtedly provoke. Hitachi has not yet secured investors for its proposed new power station at Wylfa and recently warned that this project will be in doubt if Hinkley does not proceed.
There will be acute embarrassment also for the British ministers who courageously went out on a limb to back EDF and its Chinese partner CGN. But every problem contains an opportunity. Decisive leadership from Government could still turn this current challenge to advantage by exploiting the valuable cards Britain can play when it comes to new nuclear.
The first is a best in class regulator whose approval is seen by overseas developers as a valuable imprimatur which can facilitate their entry into other markets. As a result there is a queue of potential developers who would jump at the chance to build in Britain.
Secondly Britain still possesses skills and expertise, albeit in need of the nurture which a new project would provide, which can supply the needs of those developers. An early decision could allow these firms to build capacity which could eventually be deployed in export markets as well as at home.
Thirdly the commendable willingness of the Government to welcome foreign investors in Britain’s energy infrastructure is attractive to new entrants into the market.
So a clear sign that Britain will immediately consider replacement projects to fill the gap which will be created if Hinkley does not proceed should provoke considerable interest. Three weeks ago in this column I identified three potential runners and riders.
Choosing which of these to back won’t be easy. As always the political considerations which determine the outcome will take account of factors beyond simply energy policy.
But while sympathising with the many people whose sterling efforts in trying to bring the Hinkley C project to a conclusion look almost certain to end in disappointment we must face the facts.
Hinkley isn’t the only game in town and never was. If Amber Rudd, with the support of her mentor George Osborne, recognises this quickly she could yet emerge as the heroine who brought cheaper electricity to British consumers and more jobs to British industry.
As John Maynard Keynes observed “when the facts change I change my mind. What do you do?” The only question now is how long will it take for British ministers to accept that the facts have changed.