The EDF decision; where does that leave the development of new nuclear in the UK?
For people like me who believe that Britain needs to generate a significant amount of its electricity from new nuclear power stations in the next forty years in order to meet its carbon emission reduction targets last week’s news from EDF was a setback.
The reluctance of the EDF board to sign off the final investment decision for Hinkley Point C wasn’t a great surprise to anyone who’s studied the recent smoke signals in Paris. Nevertheless its effect is to threaten to bring the already tortuously slow progress of this project to a complete standstill.
Given the implications this has for security of electricity supplies in Britain it must also have sent a frisson through the Government. Ministers may not yet be contemplating the previously unthinkable risk of an indefinite delay in Hinkley’s construction timetable but they would be well advised to start dusting down Plan B.
The unwelcome truth is that the delays and cost overruns affecting the other two EPRs being built in Finland and France, and the problems with the reactor vessel in one of these, mean that without more financial guarantees EDF may now find it hard to move ahead with Hinkley.
EDF’s new Chinese partner, CGN, already consider the price of their one third stake in Hinkley to be very steep so they won’t rush to step forward. This leaves the British government, whose support for Hinkley so far has been steadfast, as a possible lender of last of last resort.
But here in Britain criticism of Hinkley’s high costs persist. Even George Osborne may pause before writing a blank cheque to save a project effectively owned by the French taxpayer and a Chinese company, however embarrassing an indefinite delay at Hinkley would be to the government.
Nobody who believes in the future of our industry can rejoice at this news. I sympathise deeply with the frustration and disappointment of all the many people who’ve been working hard to get Hinkley up and running.
The anti-nuclear brigade will gloatingly but mistakenly claim that these difficulties shows that new nuclear is unsustainable. That conclusion is wrong. The industry is still fully able to overcome both technical and financial challenges. But given that the UK is something of a flagship market in Europe for new nuclear it may be time to take an objective look at the available options.
With construction work on the Horizon project at Wylfa Newydd in Anglesea not due to begin in earnest for another couple of years and NuGeneration’s plans at Sellafield even further into the future there’s no immediate replacement for Hinkley around the corner.
As fossil fuel prices may stay relatively low for quite a time and as the cost of some renewables is still falling it’s likely that any new proposals will not only have to pass the scrutiny of the ONR but also satisfy a value for money test.
This makes it increasingly sensible to look beyond Europe for an answer, as indeed the Government’s invitation to CGN to build at Bradwell has already recognised. The scale of China’s domestic programme means that for the first time nuclear power stations may be commoditised, with the helpful cost savings that come with scaling up production.
CGN still may still have some hurdles to overcome, though. Bradwell was supposed to follow Hinkley and Sizewell, not replace them. It’s not completely clear whether, in the absence of Hinkley, the British authorities will give Bradwell the green light. There are also background mutterings from the trade unions about how much of the supply chain work will stay in Britain.
CGN isn’t the only game in town. The Kepco led consortium in UAE claims that by 2020 its four new APR-1400 reactors will be producing electricity more cheaply than gas fired power stations. That’s barely a decade on after the original contract was signed. If achieved it will provide evidence of how nuclear projects can deliver in a timely manner.
Not far behind is the Finnish consortium Fennovoima, which claims that in 2024 its electricity will be priced at less than half the strike price agreed for Hinkley Point. Using Russian technology, and accepting Rosatom as a minority shareholder in a consortium, would raise wider political issues and would probably stimulate public discussion but surely those are considerations to be weighed in the balance rather than reasons for dismissing the possibility out of hand.
Obviously the merits of any foreign investment in new nuclear capacity in Britain would also be judged by how much of the construction and development work flows through to UK companies.
Public acceptance of nuclear, and in particular of the subsidy which the Government is prepared to approve, will be greatly facilitated if the benefits are seen to extend beyond provision of competitively priced electricity to real opportunities for the UK supply chain. The comments this week from Sheffield Forgemasters show that industry harbours some doubts about the likelihood of this happening.
Whether or not the present cloud overhanging Hinkley Point C lifts, and personally I hope very much that it does, a cool and analytical debate about how to find the most cost effective and economically advantageous way to generate secure, low carbon baseload electricity is overdue.