Britain’s Hinkley Point C nuclear power project “at very serious risk of collapse”

The Government is reportedly so worried that Hinkley will be delayed it has commissioned a “secret review” into the project. The probe, being led by the Treasury, is said to be examining whether the 2023 completion date is likely to be met and is apparently costing “tens of millions of pounds”. The outcome of the investigation is expected at the end of the year, which The Times says is why EDF delayed taking a final investment decision this summer until January or February.

Hinkley Point C – A Review of the Year, nuClear News Dec 14 “………… To many it feels like the project is sleep walking towards disaster. It’s just that no-one is quite sure whether the disaster will be a virtually ‘unconstructable’ power plant struggling to come into operation years late and vastly overbudget or the collapse of the whole project before it even starts.

Cambridge nuclear engineer, Tony Roulstone, recently described the type of reactor planned for Hinkley as ‘unconstructable’, and said Areva, the French company that owns the EPR design, is no longer actively selling power stations of this type. In those countries still looking to expand nuclear power, such as Saudi Arabia, China and Turkey, Areva is now pushing an alternative reactor.

In China, where two EPRs are currently being constructed, the authorities have indicated that they will not use the design for future power plants. In other words, the Hinkley design is already regarded as a failure by those with most knowledge of it. (3)

The European Commissioners decided to approve subsidies reported to be up to £17.6 billion to EDF Energy in October. Doug Parr, Chief Scientist at Greenpeace calculates the subsidies to be closer to £37billion on an undiscounted basis. (4)

The Austrian Government has declared its intention to take the Commission to the European Court of Justice over the decision, (5) In the UK independent energy supplier Ecotricity is also among companies and organisations considering a legal challenge.

There appears to be a groundswell of opinion among renewable energy companies and associations in Britain and

Europe that something should be done. (6) This could leave the project in limbo. Legal action would take at least a year to conclude and EDF Energy would have to decide whether or not to risk proceeding with the project in the meantime in case it has to be abandoned if the legal action is successful.

And despite welcoming the Hinkley deal shadow energy minister Tom Greatrex has called on the National Audit Office to review the subsidy arrangement for the nuclear project, which means there will be uncertainty surrounding the project until at least after the General Election in May. (7) Labour has never said that if it wins the General Election it would stop new reactor construction after Hinkley. But in writing to the National Audit Office and the public accounts committee asking them to review the subsidies and to investigate whether further concessions could be secured Labour appears to some to be threatening to unpick the deal. The Times said that if a future Labour government backs changes to the deal, EDF could be forced to review something that has taken more than two years to resolve. (8) ………..in late 2012, EDF delayed ‘first concrete pour’ to mid-2015, and now the plant isn’t expected to open until 2023 at the earliest.

The Government, for its part, has refused to confirm that it will sign a contract with EDF allowing Hinkley C to be built before April 2015. In answer to a Parliamentary Question tabled by Caroline Lucas MP, Energy Minister Matthew Hancock gave an evasive response underlining the shaky status of the project. (11)

It is still unclear exactly who will invest in the project besides EDF. According to the Department of Energy and Climate Change (DECC) China National Nuclear Corporation (CNNC) and China General Nuclear Power Corporation (CGNPC) could take up to a combined 40% share of the equity; (China Daily most recently said the Chinese are discussing an estimated 35% stake (12))

EDF could take 45-50%, and Areva 10%, and discussions have been ongoing with other interested parties – possibly the Saudis (13) and Qataris (14) – who might take 10-15%. Building Magazine claimed that reports the Saudis might be interested in investing are untrue. (15)

Nick Butler, writing in the Financial Times, questioned whether French reactor vendor, Areva, which is in deep financial trouble, would be able to fund its 10% share? (16) Standard & Poor’s ratings agency has downgraded the company’s long-term and short-term debt to BB+ from BBB- , with a negative outlook, citing uncertainty about cash flows and recovery. (17) The UK’s nuclear future could be cast into doubt by the financial crisis at Areva, according to the

Business Green website. The French engineering company saw its shares drop by nearly 25%, after directors suspended future profit predictions because of problems at a project similar to Hinkley at Olkiluoto in Finland.

Steve Thomas, professor of energy policy at the University of Greenwich, London, says the Hinkley project “…is at very serious risk of collapse at the moment. Only four of those reactors have ever been ordered. Two of them are in Europe, and both of those are about three times over budget. One is about five or six years late and the other is nine years late. Two more are in China and are doing a bit better, but are also running late.” (23)……

According to The Times the Chinese are demanding that their own manufacturers are handed a big slice of the contracts for Hinkley. This demand for a share of the supply contracts has thrown the talks into disarray. ………http://www.no2nuclearpower.org.uk/nuclearnews/NuClearNewsNo69.pdf

December 17, 2014 - Posted by Christina Macpherson | politics, UK

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