UK Treasury not happy with the Hinkley Nuclear power deal – especially after warnings on EPR safety

French reactor problems cast doubt on UK nuclear power plant, Ft.com Jim Pickard, Chief Political Correspondent, 14 June 15 Problems with a reactor in northern France have triggered deep concern in the British government about the future of the UK’s first new nuclear power station for 20 years at Hinkley Point in Somerset.

EDF Energy, the French state-owned company behind Hinkley, has suffered a five-year delay and escalating costs at its flagship Flamanville project in Normandy.

The £7bn French scheme — designed to showcase new atomic technology — is based on an “EPR” European pressurised reactor, the same model that will be used in Hinkley. Further concerns mounted last week when a leaked report from France’s nuclear safety watchdog highlighted faults in Flamanville’s cooling system. That followed a warning in April by the French Nuclear Safety Regulator that there was an excessive amount of carbon in the steel of the reactor vessel.

EDF’s struggles in France have prompted worries at a senior level of the Treasury about the £24bn Hinkley scheme.“I think there are serious questions about the technology,” said one Treasury figure.

………Talks between the government, EDF and its two Chinese partners over a final financing package were supposed to be completed by March but have dragged on. Now officials and executives are working towards a fresh deadline of October, when China’s President Xi Jinping has a state visit to Britain……..

The Treasury has struck an agreement promising to pay a guaranteed price for energy generated by Hinkley for 35 years.It has also promised to guarantee £16bn of debt towards the project — but it has inserted conditions to ensure that taxpayers are not left on the hook if the technology fails.

Instead the agreement stipulates that it will be shareholders and not the government that retains the “principal exposure to the viability of the EPR technology” — until EDF can prove the success of its other projects such as Flamanville………

there are growing suspicions in Westminster and within the industry that the Treasury has been dragging its heels over supporting the project. One source close to EDF said he believed there had been “briefings from people at the Treasury” against the deal.

Some civil servants believe the government struck an overgenerous “strike price” to buy energy from Hinkley’s two reactors for 35 years. “I think Treasury officials would not be disappointed if Hinkley never happened,” said one Whitehall source. “They have been foot-dragging for at least a year.”

One Tory figure said: “I think the Treasury don’t really want that deal to work.”……….http://www.ft.com/intl/cms/s/0/b8741dd0-1048-11e5-bd70-00144feabdc0.html#axzz3d4bv74Km

June 15, 2015 - Posted by Christina Macpherson | business and costs, politics, UK

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