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Why would anyone invest in energy when the policies are so fickle?

28 January 2016

6:08 PM

28 January 2016

6:08 PM

In 2007 Vincent de Rivaz, chief executive of EDF’s UK arm, made the now-infamous promise that by Christmas 2017 we would be cooking our turkeys using energy generated at Hinkley C nuclear power station. That has already been put back to well into the 2020s. But if you are making plans for Christmas 2025 it might be an idea to base them around eating cold turkey sandwiches by candlelight around a wind-up gramophone.

The French newspaper Les Echos reports today that an EDF board meeting about Hinkley has been postponed, amid fears that EDF is having more problems funding the project. EDF has already looked to China’s Nuclear Power Corporation, which last October agreed to take a one third stake in the project. If it is still having funding problems after a government promise to guarantee a price of £92.50 per MWh for its electricity – twice the wholesale rate for electricity – it doesn’t look exactly promising.


Any further delay to Hinkley would be catastrophic for UK energy security. The government has already announced that all coal-fire stations – which between them currently generate 22 per cent of our electricity — must close by 2025. Along with the closure of older nuclear power stations, the Institution of Mechanical Engineers calculated this week that Britain is heading for a gap of 40 – 55 per cent between what we can generate on a typical day and what we currently use. The loss of Hinkley C would widen that gap by another 7 per cent.

The gap isn’t going to be filled with wind – not without huge new infrastructure for storing electricity. The government has suggested that the gap could be filled by combined cycle gas plants, but not at the current rate of building. Even with Hinkley we would need 30 of them, built over the next decade to replace coal. Over the past 10 years we have managed to build four.

Trouble is, who would want to invest in a gas-fired power station knowing the fickleness of energy policy? Commit to building one now and what guarantee is there that this or the next government might renew Ed Miliband’s pledge to close down all gas power stations, as well as coal power stations, by 2030?

Unless someone invents a miracle form of new energy extremely quickly, we are heading for electricity rationing which will make the three-day week look like a minor inconvenience. Truth is, we are doomed to have an energy crisis as long as we have a Climate Change Act which legally binds Britain – and Britain alone – to drastic and arbitrary reductions in carbon emissions.


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