Hinkley Point C nuclear power station deal approved by UK government

hinkley_point_2Today the UK government have approved plans for a new £18bn nuclear power station, although has enforced “significant new safeguards” in the interest of national security. The new plant will be built at Hinkley Point in Somerset with funding coming from the French and Chinese governments. The UK government has stressed that it will have control over the foreign investment and ministers have the power to stop EDF, the French state controlled energy company from selling its stake in Hinkley Point C.

EDF will finance two-thirds of the project which is set to create more than 25,000 jobs, whilst China will invest the final £6bn. The power plant will meet 7% of British energy demand, and the Chinese stake in the construction of Hinkley Point C will also see developments of a new nuclear power station at Sizewell in Suffolk, with the understanding that the UK government will give the green light to a Chinese led project at Bradwell in Essex. Critics of the plan have concerns over national security given the level of involvement from China and the guaranteed strike price of £92.50/MWh for 35 years of generation.

The decision on investment was confirmed by EDF’s board in July, with agreement in principle with China when President Xi made a state visit to the UK in October 2015. The approval decision was then delayed by the UK government on 29 July before giving approval today.

Source: BBC

Where did it go wrong for Hinkley Point C and why is it being delayed?

hinkley_pointIn our last blog post we asked the question what is Hinkley Point and why is it important? Now, a few weeks later, we are left asking the question: where did it go wrong for Hinkley Point C and why is it being delayed?

Nuclear power issues are rarely black and white, and in a post-Brexit, post-Cameron political climate, the case of Hinkley Point is more nuanced than most.

There have been question marks raised against the cost of the gargantuan multi-billion-pound project; there have also been concerns about China’s involvement; along with renewed questions about the need for nuclear power plants in the first place.

These are just some of the uncertainties delaying the Hinkley Point project from officially starting. In this week’s blog post we look further into these questions and hazard a guess at what the government’s final verdict will be.

Why nuclear?

The Northern Hemisphere requires a vast amount of energy during the months of January and February. The base load – that is, the minimum amount of energy required – in these winter months is an amount that solar and wind-powered energy alone cannot supply. This is where the question of the energy mix comes in to play. If there were a way to store the amount of energy generated during hot and windy days, the question of nuclear would not be so pertinent.

How has Brexit affected Hinkley?

Sources such as Nuclear Engineering International magazine have stated that Brexit made an uncertain plant still more uncertain. Would Hinkley still be subject to State aid rules that prevent EDF or its partners benefitting from public funds? As both those within Britain and those within Brussels make sense of the new landscape, Brexit has certainly been a large factor in delaying the final verdict on Hinkley.

Who will the costs fall to?

The project is set to cost upward of £18bn but, like a lot of grand-scale projects, time and costs invariably fall foul to the planning fallacy and run over. EDF, along with its partners are due to foot the bill, with Chinese partner China General Nuclear (CGN) fronting one-third of costs and maintaining a notable share in the project.

How is China involved?

The state-owned Chinese company CGN will supply some of the parts and workers for the proposed project. This has raised concerns with the UK’s intelligence agencies who are said to be suspicious that a ‘back door’ could be built in to allow China access to control systems. Conspiracy theories aside, others have raised concerns about China’s human rights record, and whether such a long-term project is wise to have so many external stakeholders.

What next?

Plans for the project have been delayed until September. What will the verdict be next month? The safest answer we can provide at this point is: we don’t know.

Uncertainty is rife following Brexit, Theresa May is still settling in at Number Ten, and the divisive project has even caused a member of the EDF board to resign. At this point, the grand scale project that could create 25,000 new job opportunities looks likely to be delayed further still.

Rather than a definitive yes or no, there is a strong chance that the verdict in September will bring more delays. The government set the Hinkley Point C ball in motion back in 2008. It has taken eight years for the EDF board to approve the project, it is unlikely the final decision will be made imminently. The most we can say at this point is… watch this space.

Editor: Saul Bush – One