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Hinkley Point C nuclear project obsolete already, but would cost £22 billion compensation if it were to be scrapped

Times 27th June 2017,The lesson of the Hinkley Point C saga is not to repeat it. Contractors
started pouring concrete for the Hinkley Point C power station three months
ago and could be still at it in ten years‘ time.

By then, there is a chancethat the economics of energy will have suffered a surprise upheaval making
nuclear power genuinely affordable, but that chance is slim to vanishing.
It is more likely that current trends driving down the cost of renewable
and gas-fired power stations will continue.

Hinkley Point C will meanwhile be vulnerable to the sort of delays and cost-overruns that have plagued
every other reactor so far built to the same design, none of which is yet producing power. If experience is any guide, electricity from Hinkley Point will command more than twice the price of power from other sources,
including low-carbon renewables.

The value of subsidies to honour that “strike price”, which is meant to compensate the contractors for taking on
the risk of the project, will have more than quintupled since being agreed.

Hinkley Point C will create jobs but in a white elephant that will be technologically out of date before being connected to the grid. It is being built in part to keep the lights on without relying on highly polluting coal, but mainly because technology moves faster than bureaucracy. In complex matters politicians tend to rely on bureaucrats’ advice, and many
backed the plan before Theresa May gave her final approval last year.

Not one had the courage to cancel it when it was still possible to do so without exposing taxpayers to the risk of multibillion-pound compensation claims.

Sources close to an internal review of the project under way at EDF, the lead contractor, say that its budget is already edging up towards £20 billion from last year’s £18 billion estimate. Its completion date is now expected to be 2027 rather than 2025. The value to EDF and its Chinese partner of the “contract for difference” agreed in the deal has risen from
£6 billion to £30 billion as the price of gas and renewables, especially solar, has fallen.

The most alarming figure in the NAO report is an estimate of £22 billion that investors in Hinkley Point C could claim in
compensation were it to be scrapped.


June 28, 2017 - Posted by | business and costs, politics, UK

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