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How France left the British taxpayer on the hook as Hinkley costs go nuclear

the Government will have to
put more taxpayer cash in and guarantee the debt.

Sizewell C was also likely to be put on ice unless British ministers came up with a big extra dollop of taxpayers’ money.

A series of cost overruns and delays are undermining the UK’s nuclear power revival

Jonathan Leake, 28 January 2024 

For the future of Britain’s energy security it was a crucial decision,
and one that lay in the hands of France’s biggest power supplier.

However, not a single minister or civil servant was present when the
directors of EDF decided the fate of the UK’s two biggest nuclear
projects in their Paris boardroom on Tuesday. The finances of Hinkley Point
C and Sizewell C, the nuclear power stations which might one day supply
14pc of Britain’s electricity were top of the agenda. Shortly after the
meeting ended, Luc Remont, EDF’s managing director, and his colleagues
summoned their media managers to organise a briefing for analysts and
journalists.

Hinkley Point C, they were told, stood no chance of firing up
in 2027, as once promised. Its first reactor would come online around 2031
while the second has no date promised at all. Costs have surged again to
£46bn, a far cry from the £9bn EDF suggested when pushing the idea to
politicians around 2007 or the £24bn proposed when contracts were signed
in 2016.

Sizewell C was also likely to be put on ice unless British
ministers came up with a big extra dollop of taxpayers’ money.

Meanwhile, as EDF’s directors and French civil servants decided Britain’s nuclear
future in Paris, Andrew Bowie, the minister responsible for new nuclear
projects, was on his feet in parliament, talking up the UK’s prospects.

For Claire Coutinho, the Energy Secretary, the news was infuriating. Not
only had a decision vital to the UK been taken in Paris but it came just
days after she unveiled the Government’s long-awaited Nuclear Roadmap. A
statement rushed out that evening made clear that Coutinho blamed the
French for Hinkley’s extra costs and delays. “Hinkley Point C is not a
government project and so any additional costs or schedule overruns are the
responsibility of EDF and its partners and will in no way fall on
taxpayers,” a spokesman for her department said.

The comments irritated the French enough to hold a second round of media briefings, this time involving EDF’s owners, the French government. The UK, it was made clear,
would have to offer up billions of pounds more in taxpayers’ money if
Sizewell C was ever to be built. Coutinho subsequently pledged an extra
£1.8bn of taxpayers’ money for the project.

Meanwhile, EDF has refused
to up its stake from 20pc and Bowie has admitted he now needs to raise
£20bn of private finance, most likely meaning the Government will have to
put more taxpayer cash in and guarantee the debt.

Simon Taylor, professor of finance at Cambridge University, who specialises in the economics of nuclear energy, believes EDF’s reactor designs have some fundamental
flaws. “The EPR or European Pressurised Reactor were designed to be
incredibly safe, and to reassure people, after the Chernobyl disaster of
1986 but have turned out to be just much more difficult to build than
anyone had expected,” he says.

Amid a blame game between France and the
UK, the biggest loser remains the British taxpayer. They now face several
more years of reduced energy security and the prospect of power bills hikes
to raise the £20bn-plus bill for Sizewell C.

 Telegraph 28th Jan 2024

https://www.telegraph.co.uk/business/2024/01/28/edf-hinkley-point-c-costs-go-nuclear-uk-taxpayer/

January 31, 2024 Posted by Christina Macpherson | France, politics international, UK | Leave a comment

Hinkley Point C woes threaten to break UK and France’s nuclear fusion

Two former EDF executives told the Guardian the odds were stacked against Hinkley from the start. “I would have bet at the time that we would see the costs we have today. And I think they’ll climb higher too,” said one.

Cross-Channel dream is turning sour as EDF’s costs mount and Britain faces a long wait for the power to come on

Jillian Ambrose, 27 Jan 24,  https://www.theguardian.com/uk-news/2024/jan/27/hinkley-point-c-woes-threaten-break-uk-france-nuclear-fusion

rench trade unions wield significant political clout. But in the summer of 2016 there was little they could do to stop the French government from investing in what would soon become the most expensive power station in the world.

All six trade union representatives on the board of Électricité de France (EDF) voted against a deal to build a nuclear power station in the UK. It was just weeks after its finance chief, Thomas Piquemal, resigned from the company over fears that Hinkley Point C in Somerset was too great a risk. The project was approved by 10 in favour and seven against.

In the last seven years these fears have proved well founded. EDF revealed this week the latest delay to Hinkley, which may not now open until 2031, well beyond its original decade-long schedule. Its costs have climbed to £35bn in 2015 prices, almost double the original forecast of £18bn in 2016. In today’s money Britain’s first new nuclear plant in 30 years could cost £46bn. The spiralling costs were blamed on inflation, Covid and Brexit.

Hinkley was meant to represent a nuclear renaissance on both sides of the Channel, and further the nuclear ambitions of China. It was an opportunity for EDF, once the world’s leading nuclear developer, to secure a future for its reactor designs in a low-carbon world.

For the UK, the first new nuclear power plant in a generation marked the start of the government’s campaign to replace its ageing fleet of reactors. And China saw it as a way to showcase its nuclear expertise, furthering its ultimate aim of building its homegrown HPR1000 nuclear reactors at Bradwell in Essex.

The deal was struck in 2016 just weeks after the Brexit vote, making Hinkley an opportunity to forge fresh ties between old friends – and create opportunities for new economic alliances too. China General Nuclear Power Group (CGN), a state-run energy company, agreed to take on a third of the project as the first step in a plan to roll out a string of nuclear plants in the UK built with its own reactor design.

The chancellor at the time, George Osborne, argued that Britain should “run towards China” to help boost the UK economy. Within months of the Hinkley deal the French president, Emmanuel Macron, and his Chinese counterpart, Xi Jinping, began talks on strengthening ties between the two nations. These led to trade deals worth about $15bn (£11.8bn) and an order from Beijing for 300 aircraft from Airbus worth tens of billions of euros.

But the rationale for all three nations now looks precarious. Hinkley’s costs have climbed as diplomatic relations between China and the west have soured. By the time the former UK prime minister Boris Johnson vowed to purge China’s Huawei from the UK’s telecoms network over security fears, the notion of Chinese-built nuclear reactors powering British homes had become politically unthinkable. CGN has ruled out any further investment in Hinkley – leaving French taxpayers to pick up the tab.

Two former EDF executives told the Guardian the odds were stacked against Hinkley from the start. “I would have bet at the time that we would see the costs we have today. And I think they’ll climb higher too,” said one.

Philippe Huet, a former head of EDF’s internal auditing in Paris, said the deal was based on political strategy rather than a commercial rationale. The British government offered EDF a contract that would guarantee payment of £92.50 for every megawatt hour of electricity generated by the nuclear plant. It was criticised for being both eye-wateringly expensive for UK bill payers but not nearly enough to cover the risks of constructing the project.

“At the time that it was agreed it was already known that EDF’s estimates understated the cost and schedule of the project. Key decision-makers chose to ignore this because it was too important strategically. As they would say, if a project cannot be profitable it must at least be strategic,” Huet said.

Hinkley is one of many costs facing the French taxpayer after the government renationalised EDF last year. The company’s future investments – in maintaining its existing fleet of nuclear reactors, building new ones, and investing in renewable energy – could exceed €20bn (£17bn) a year, according to Agnès Pannier-Runacher, the country’s energy transition minister.

The French government is reportedly calling on the UK government to provide financial help for both Hinkley and the next planned plant, Sizewell in Suffolk, to keep the struggling nuclear revival afloat. The UK government has been quick to quash any suggestion that Hinkley’s financial fallout will be borne by UK taxpayers. A spokesperson said the government “plays no part in the financing or operation of Hinkley Point C”, which was a matter for EDF and its shareholders.

Huet has predicted that EDF may even try to renegotiate its contract with the government. He estimates it could seek to raise how much it charges per megawatt hour of electricity produced by about 15% to make Hinkley a worthwhile venture.

January 30, 2024 Posted by Christina Macpherson | France, politics international, UK | Leave a comment