UK nuclear new-build: no realistic alternative

Author : Alan Franck, Editor, HazardEx

24 April 2013

EDF Energy announced on April 23 that “as part of good project management, and to control costs”, it had taken steps to refocus activities at its proposed Hinkley Point C nuclear plant, which would mean a reduction in the number of people working on the project. EDF wants to build two new plants at Hinkley and Sizewell in Suffolk for about £14 billion, but needs assurances that it can recoup its investment with a government guarantee to support energy prices, the so-called ‘strike-price’.

Those close to the negotiations between EDF and the Treasury say an impasse has been reached, with EDF holding out for far higher prices for Hinkley C-generated electricity than government is prepared to agree to. It is understood that EDF wants at least £100 pounds per MWh, while government would prefer around £80.

EDF CEO Henri Proglio says his group is in no hurry and he is prepared to risk failure. "We have precise conditions in mind, and we are negotiating with the British," he told reporters. "We obtained an extension of the lifespan of existing plants. As far as I am concerned, negotiations can also fail."

Lord Hutton, chairman of the Nuclear Industry Association, said in an article in The Sunday Telegraph on April 14: “Time is of the essence. EDF Energy has spent £1 billion already on the Hinkley site and the project is at present costing the company £1 million a day. More than £100 million has now been spent keeping the project ticking over since EDF’s first agreement deadline of December was missed.”

He warned that failure to agree “threatens not only the first new nuclear power station for a generation, but potentially all those that will come in its wake”.

This was confirmed when a senior Hitachi executive in Tokyo told The Daily Telegraph: "EDF is the front-runner for us. We're watching the strike price conditions very carefully."

Hitachi took over the Horizon joint venture last year, which plans to build two more nuclear plants in the UK, at Oldbury in Gloucestershire and Wylfa on Anglesey.

Beyond nuclear, Hutton also said in his Telegraph article that failure in these talks would undermine the UK’s credibility with investors and threaten other projects across the energy sector.

It is hard to disagree with his conclusions.

Decades of incompetence and buck-passing by different governments over energy policy have led us to where we are: that cannot be changed.

Just one month after two LNG carriers had to be diverted to the UK to ensure the lights were not switched off, it is time for a bit of realism.

We must sign up to initially expensive new nuclear-generated electricity and work to bring prices down through economies of scale - now. There really is no realistic alternative.