One thing we have learnt this week – Hinkley C

There have two major environmental stories this week and one of them involves emissions at stories this week, the second being Hinkley C.  Hinkley C is something we have covered before multiple times.  None of the arguments against have changed in fact they have intensified. In our book we cover a whole heap of these but new ones keep appearing!

 

 

To summarise the sad story so far.  In 2005 Tony Blair (after the general election) said we needed new nuclear build.  EDF said they could build new nuclear without subsidy.  Since then costs have steadily risen and there was a nuclear disaster in Japan.  It became gradually apparent that EDF could not build Hinkley C without some form of subsidy and negotiations between the government and the consortium were taking place.  In the end an electricity price of 9.5p/unit was agreed, index linked for 35 years*.  The reactor would be making toast by 2017.  This was not enough and still no formal agreement was reached to go ahead.  The Chinese appeared on the scene as financiers, but naturally wanting some work.  Ground clearing at the site started, then stopped with almost everyone laid off.  At the same time we have learnt that Areva the French reactor builder is in big trouble financially due to huge delays and cost runs at the Franch and Finnish reactors (same design as Hinkley C).  Then oil and gas prices collapsed.  Recently the Secretary of State for Energy and climate change has admitted that solar is cheaper than nuclear – a wholly remarkable statement.  At the same time the government announced its ending all subsidies for renewables (except offshore wind).  This week the Chancellor on a visit to China has tried to kickstart the project by guaranteeing the loans for the Chinese investors to the tune of £2billion.  Lastly almost everyone in the city and pro-nuclear advocates think this is a bad deal.

Where does this lead us?

It seems slightly more likely that Hinkley C will go ahead but much more likely that it will be a disaster.  The company building it is not in great financial shape.  The technology is only proven to take longer to build and cost more than planned and all the alternatives will be cheaper by the time it opens, in 2025??!!?  The government may cynically kill of the solar industry for the next 5 years until other countries force grid parity, but in 5 years time it will be back.  There will be large chunks of the day/year when very little grid electricity is required and wholesale prices may go negative.  In the meanwhile I think the government will have to decide whether it decides to pay for all or part of this £24 billion project.

* much higher than both the current wholesale price of electricity and higher than all renewable subsidises going ahead, except offshore wind, although recent reports suggests costs of this technology are falling fast and it will be cheaper before Hinkley C opens.

Neil

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