The finance director of EDF, the French energy giant, has quit over its plans to build George Osborne’s new pet project : a new power plant at Hinkley Point in Somerset. At first glance, this seems odd: isn’t the whole problem that the Chancellor has pledged so much taxpayers’ money to this white elephant so the public will be royally ripped off to the benefit of French (and, recently, Chinese) investors? When it’s up and running, yes. But meanwhile someone has to build this, and there have already been delays and cost multiplications. Osborne has sold a third of the stake to the Chinese – not known for their prowess in civil nuclear energy. But the French still need to find the cash for the remaining two-thirds stake in this £18 billion project – and they’re struggling. No matter how much the Chancellor promises to rip off the taxpayer when it’s up and running.
So Thomas Piquemal of EDF has now joined an army of environmentalists who are up in arms about the Hinkley Point C nuclear power station. And they’re all right to be concerned: but not as concerned as the British taxpayer should be.
The most remarkable thing about the project is how it has managed to evade Osborne’s cull of subsidies for other low-carbon power projects. While money is being saved on wind and sea power, the battle to bail out Hinkley Point C is being fought as if the Chancellor’s career depended on it. He used his recent trip to China to offer yet another sweetener for investors in Hinkley Point. The government, he said, would guarantee £2 billion worth of loans for the project, describing the deal as a ‘golden relationship between Britain and China — the world’s oldest civil nuclear power and the world’s fastest-growing civil nuclear power’. China has even been invited to build its own plant in Essex, to the dismay of our spies, who spend much time trying to ensure nuclear power stations are protected from Chinese cyber-espionage.
The Treasury’s bribes may only be the start: it has sought, and been granted, EU permission to guarantee up to £16 billion worth of loans — enough to fund nearly two thirds of Hinkley Point’s current estimated construction cost of £24 billion. There is no reason to believe that figure, though. The chosen design for Hinkley Point C is the European Pressurised Reactor, which doesn’t yet exist, although some are under construction in France, Finland and China. All have been delayed, the Finnish one by nine years so far.
Though Hinkley Point C is more than six years behind schedule, it was only this week that its supposed sponsor, the French state-owned EDF, was finally poised to commit itself. In 2007, EDF promised that we would be able to cook our turkeys on power generated at Hinkley C by Christmas 2017. An interesting promise, perhaps minted by the company’s media strategist Andrew Brown (brother of the then-Prime Minister Gordon). EDF put a lot into wooing the Brits, but it’s now talking about turkeys by Christmas 2023. At the earliest.
Osborne’s loan guarantee is a straightforward bung to the Chinese state, whose energy agencies will be providing finance. It’s all rather odd: having privatised energy in the 1980s in the hope of drawing in private finance, the Conservatives now seem quite happy to use British taxpayers’ money to help other people’s governments build our energy infrastructure.
But that isn’t where the financial pain for the British public will end. There is also the small matter of the jaw-dropping price that the Treasury has agreed: £92.50 per MWh, which is double the current market rate. This will rise with inflation for 35 years. If that price seemed daft enough two years ago when the promise was made, it looks even more ludicrous now after a collapse in energy prices. The world energy outlook is changed utterly — and it looks like we’re being saddled with a very expensive solution from a bygone era.
Nuclear power has defied the fear-mongers of the 1950s in proving itself extremely safe. Yet it can hardly claim to be a great boon for the environment either. The problem of what to do with radioactive waste has never really been solved. While no nuclear accident has killed vast numbers — estimated deaths related to the Chernobyl disaster are still in double figures 30 years on, while not a single death has been attributed to the Fukushima accident following the tsunami of 2011 — the economic cost of a nuclear accident in a crowded country such as Britain would be unbearable. If a 20-kilometre exclusion zone had to be set up around Hinkley, as it was around Fukushima, it would mean the abandonment of Taunton, Bridgwater and Weston-super-Mare, as well as the closure of the M5 and the main railway line to the West Country.
In the early days of nuclear power, such risks seemed worth taking in return for an endless supply of cheap energy. But with electricity at twice today’s market rate? Nuclear power may end up going the same way as the hovercraft and Concorde: a British-developed technology which impressed the world for a while — but which has ultimately proved just too expensive.
As the government wrestles with the legacy of Ed Miliband’s time as Environment Secretary, the world is moving on. A revolution in gas extraction through fracking has led to a collapse in gas prices as well as a steep cuts in carbon emissions in the US. Gas has trumped nuclear power just as the Boeing 747 trumped Concorde: the practical, cheap workaday technology eclipsing the flashy but expensive one.
That said, Osborne can claim to be a pioneer in one regard: no other country has found a way of making nuclear power cost anything like £92.50 per MWh. Two years ago, the chemical giant Ineos — one of the world’s largest energy consumers — agreed a price guarantee on a French nuclear power station of just £32.60 per MWh. Austerity-struck Britain may be about to produce the most expensive energy in the world.
Hinkley C began as a panic project to try to meet the arbitrary target in Miliband’s Climate Change Act to cut carbon emissions by 80 per cent by 2050. EDF smelled the fear and negotiated accordingly. Osborne has kept the project going way beyond the point at which common sense said it ought to have been dumped. Hinkley C won’t be cooking our turkeys two Christmasses hence. As even the French now seem to know, it has itself become the turkey.