Hinkley will leave Britain behind the curve on energy policy

 

This blog first appeared in Business Green

 

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Hinkley is a 20th Century solution to a 21st Century problem. Bigger is no longer better. There are faster, cheaper, cleaner and smarter ways to deliver affordable, secure, low carbon electricity to Britain’s businesses and consumers.

Nothing about this deal is good for Britain’s hardworking families. They will pay the bill for decades but most of the jobs will go abroad. It is a bad deal for consumers, for the climate and bad for the country.

The Prime Minister has missed a real opportunity to set Britain on course to a more productive and secure future. Instead she has committed us to an expensive and anachronistic energy policy that will leave Britain behind in a rapidly changing world.

Digitisation is increasingly making it possible for people to be both consumers and producers. It does this by allowing them to connect directly to each other. Through Uber and AirBnB this has begun an accelerating revolution in the taxi and hotel businesses. This is happening in energy too.

The falling costs of renewables and batteries and our growing capacity to manage big data are now making a similar rapid transition in the way we generate electricity. Large centralised power stations of any kind are a barrier to this transition. This is particularly so when they are as big, 3.2GW, as Hinkley.

May’s decision to go ahead with Hinkley will slow down, and increase the cost of, making this transition in Britain. It will mean we will fall behind the rest of the developed world in building a flexible electricity system fit for purpose in the 21st Century.

But this is not the only problem with Hinkley. The Investor Agreement that Greg Clark will sign with EDF is an irrevocable index-linked ‘take or pay’ contract to purchase 35 years’ worth of electricity from EDF at more than twice the current wholesale price.

This will cost British consumers £37 billion in subsidy, four times that originally forecast.1 It means Britain’s electricity consumers will pay more than £1 billion/year in subsidy to EDF for 35 years. It will prevent Britain’s consumers buying cheaper electricity if it would displace that from EDF. Furthermore, this deal binds future governments.

It is a treasured feature of British constitutional and democratic practise that one Government cannot bind its successors. This raises important constitutional as well as economic and energy policy questions.

Despite these profound implications the business case for the deal with EDF has never been subject to informed public scrutiny. Indeed, the Government has consistently refused to publish the analytic documents underpinning it.

The National Audit Office has already raised doubts that Hinkley represents value for money in the light of developments, including significant reductions in electricity demand forecasts, since it was first proposed.2 The National Infrastructure Commission has identified a package of other measures that could provide affordable, secure, low carbon electricity at lower cost. More recently, the National Grid has cut its forecast of the need for new centralised generation capacity in Britain by more than 50%.

The truth is that Hinkley is a ponderous white elephant at a time when the pace of change in technology is accelerating and putting a bigger premium for electricity systems on flexibility rather than size. No-one has ever suggested Hinkley will be flexible. Fortunately, Hinkley still has to overcome a number of obstacles before the elephant escapes.

The State Aids clearance for the UK subsidy is under challenge by the Austrian Government and others in the European Court. We are still waiting for the court to decide but if it annuls the European Commission’s decision then the current deal will fail and the UK will have to think again about how to pay for Hinkley.

EDF is already in such financial difficulties that it is being bailed out by the French Government in order to be able to afford Hinkley. Greenpeace has obtained a robust legal opinion that any such bail out will trigger a State Aids inquiry by the Commission. This will take time and even if the Commission does grant approval there is a high probability of its decision also being challenged in the European Court.

Even in the most optimistic scenario, Hinkley is unlikely to produce electricity until 2030. There are cheaper, faster, cleaner and more reliable options available to deliver affordable, secure, low cost electricity to British consumers.

These options include:

–      energy efficiency has reduced electricity demand by 25TWh ( 7% – the same as Hinkley will produce ) since 2010. A McKinsey report for the Government estimates that by 2030 demand could be reduced by a further 23% while reducing consumers bills;

–      the National Infrastructure Commission reports that additional interconnectors could supply 2-3 Hinkleys by 2025;

–      another National Infrastructure Commission report proposed investment in storage and smart grids that would provide the equivalent of 4 Hinkleys by 2030 and save £8 billion;

–      Dong Energy, the world’s largest wind energy company, could replace all Hinkley’s electricity sooner and at lower cost. Offshore wind costs are continuing to fall;

–      electricity from solar power is now also cheaper than Hinkley, having fallen by half in the last five years. From almost no solar panels in the UK, a third of a Hinkley has been added since 2010. Half of that was delivered in just 18 months.

So what about when the sun doesn’t shine and the wind doesn’t blow? As the former CEO of National Grid pointed out two years ago, ‘baseload’ is an outmoded concept. The fact is that no generator runs all the time, not even nuclear. Changes in renewable availability are highly predictable. This allows smarter management of the grid to cope with their variability.

Nuclear reactors fail, or in industry terminology suffer an ‘unplanned shutdown’, regularly. About a quarter of Britain’s nuclear fleet have unplanned shutdowns each year. Unlike the weather which we can predict days or weeks in advance a Hinkley outage is not predictable which means you have to be able to switch on 3.2 GW of spare power instantly. Because they come in big, unpredictable lumps, they are more of a problem than renewables variability. In any case, as the fast falling costs of batteries follows down those of wind and solar, the intermittency of renewables becomes even less of a problem.

 

Tom Burke

London

September 22nd 2016

 

Tom Burke is the Chairman of E3G

 

Footnotes

1.   This is also twice the largest figure presented to Parliament in the Departmental Minute of October 2015 that sought authorisation to take on the liabilities of the Agreement. This raises the question of whether the Government has the authority to sign the Agreement at this time.

2.   The NAO will produce a report on the deal ‘once EDF has taken its final investment decision to build HPC’ NAO July 13th 2016. Unfortunately, this report will be after the Investment Agreement has been signed and so can have no impact on the deal itself.

 

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Hinkley is a very expensive strategic mistake for the country – TRT World News

 

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TRT News: Joining me now from London is Tom Burke, Chairman of the environmental think tank E3G , and a former government advisor on climate change.

Hinkley Point, what’s your biggest problem with it?

Tom Burke: It’s a very expensive strategic mistake for the country. It’s going to produce electricity at more than twice the current wholesale price for 35 years. It’s going to cost 37 billion pounds in subsidies from the British consumer, and all of that for an untried reactor, no example of which is working anywhere in the world.  So it’s a very bad deal, there are cheaper, faster, cleaner, and more reliable ways to meet a low-carbon, affordable and secured electricity supply for the future. So what you are really seeing is a 20th Century solution to 21st Century problems.

TRT News:  Just to be clear, Tom, you are emphasising cost over security? How big are your security concerns?

 Tom Burke:  I am not very worried about the prospect of taking Chinese money, and the way that you fit nuclear power stations into your grid, doesn’t give them access to the kind of software that would expose you to security worries about crashing you grid. I think that the government is right to have taken a golden share, in order to prevent the reactors from being sold on, but the security worries aren’t really the biggest worries. There are of course other worries about what happens to the radioactive waste at the end of its life, and there is no available solution to that problem yet in the United Kingdom, or indeed anywhere else in the world.

TRT News:  Is the price you have to pay 24 billion dollars to have warmer relations with the Chinese?

Tom Burke:  I certainly agree that, that looks like it was a major factor in the decision. In a sense it was a white elephant that got so big that nobody could shoot it. That doesn’t make it anything like a good deal. It’s just, you’re basically selling out you energy policy for some marginal gains in the headlines. The really strategic problem is that is begins to point Britain in the wrong direction in term of the future architecture of it electricity system. We are moving into a world in which digitisation makes available all kinds of strategic and structural change in industry, that’s true of the electricity industry as well. What it means for Britain’s electricity consumers is all that they will continue getting through their letter box for the next 35 years will be big bills, and actually the world that we are moving into in for  electricity systems is one in which consumers won’t only be getting bills through their letterboxes, they will be getting revenue cheques as well.

TRT News:  Tom, post-Fukushima there was a taboo connected to nuclear energy, might a deal like this begin the process of reversing that taboo?  Reversing the questions that people have been asking about whether nuclear energy is the way to go?

Tom Burke:  I don’t think so. I suspect Hinkley will be a one off. Rather like Sizewell was in a previous government when there were big nuclear ambitions. Ten nuclear power stations were promised, but only one was actually built. I think that the economics are a real killer for nuclear. If you are worried about safety, what you should be more concerned about is the Chinese government proposing to build sixty nuclear power stations in the next few years. The idea that you can maintain the necessary level of safety and quality of build in order for those programs to be successful, I think that is a very, very big question mark.

TRT News:  Tom, 25,000 jobs will be created between now a 2025, aren’t you at least a little bit excited about that?

Tom Burke:  I’m not at all excited about it, I’m much more concerned about the 14,000 jobs in energy efficiency that the British government destroyed by an arbitrary change in its policy, and the 12,000 jobs in the solar industry that were also destroyed by an arbitrary change in policy. We could have got more than that number of British jobs, that would be long-life jobs, if we had continued with those policies and we simply wouldn’t have needed Hinkley at all for our secure supplies of affordable electricity. The thing to remember is that the cost of renewable, and the cost of batteries that allow you to deal with their variability, those cost are going down consistently.  Nobody has ever built a program of nuclear power stations where the cost didn’t go up over time.

TRT News:  Ok, good points. Unfortunately, we are out of time. It’s been great to talk to you. Thank you so much.

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Hinkley is a bad move for Britain – BBC News – 15 Sep 16

 

 

 

What we really need to be doing right now is investing in renewables.  We need to invest in wind, which is already available, and offshore wind is already cheaper than Hinkley will be. We need to invest in solar, so that people can have this on the rooves of their houses, put that together with batteries, and they could be getting revenues as well as bills.

 

 

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HINKLEY GREEN LIGHT A MASSIVE STRATEGIC MISTAKE, SAYS CLIMATE CHANGE THINK TANK

 

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FOR IMMEDIATE RELEASE : Wednesday 14th September 2016

 

E3G Press Release

 

Following reports today that the Government is about to give the green light to the Hinkley Point C nuclear power station, E3G, a leading climate change think tank said it would be a hugely expensive strategic mistake, using expensive 20th century technology that would soon be obsolete.

 

E3G Chairman, Tom Burke said: “It is a 20th Century solution to 21st Century problems. Bigger is no longer better. There are faster, cheaper, cleaner and smarter ways to deliver affordable, secure, low carbon electricity to Britain’s consumers.

 

Nothing about this deal is good for Britain’s hardworking families. They will pay the bill for decades but the jobs will go abroad. It is bad for consumers, bad for the climate and bad for the country.

 

The Prime Minister is missing a real opportunity to set Britain on course to a more productive and secure future. Instead she has committed us to an expensive and anachronistic energy policy that will leave Britain further behind in a rapidly changing world.”

 

Available for comment

Tom Burke, Chairman of E3G, is available for comment: please contact him on

Mobile: 07710 627616

Email:  tom.burke@e3g.org

Tom Burke is a former Government advisor and previously the Director of Green Alliance and Friends of the Earth.

 

Notes to Editors

  1. E3G sets out below ten reasons why this is a bad deal for British consumers and documents the range of cheaper, smarter, options for low carbon energy security that are better value for money.

 

HINKLEY POINT : The 10 Mistakes

 

  1. The Investor Agreement that Greg Clark will sign with EDF is an irrevocable index-linked ‘take or pay’ contract to purchase 35 years’ worth of electricity from EDF at more than twice the current wholesale price. This will cost British consumers £37 billion in subsidy, four times that originally forecast[1]
  2. This deal binds future governments as well as the current Government. It will prevent Britain’s consumers buying cheaper electricity if it would displace that from EDF.
  3. It means Britain’s electricity consumers will pay more than £1 billion/year in subsidy to EDF for 35 years.
  4. The business case for this Agreement has never been subject to informed public scrutiny. The arguments for HPC and the rest of the nuclear programme have never been stress tested.
  5. The National Audit Office has already raised doubts that it represents value for money in the light of developments, including significant reductions in electricity demand forecasts, since it was first proposed[2].
  6. The National Infrastructure Commission has identified a package of other measures that could provide affordable, secure, low carbon electricity at lower cost.
  7. The National Grid has cut its forecast of the need for new centralised generation capacity in Britain by more than 50%, announcing its estimate of growth for decentralised generation was 50 times too low[3]
  8. EDF’s unions will argue in the French Courts that delaying a Hinkley decision until 2018 would allow for a design review to be completed that would reduce the subsidy needed from £92.50/MWh to £75/MWh[4].
  9. State Aids clearance for the UK subsidy is under challenge by the Austrian Government and others in the European Court. A further State Aids challenge is likely to the French Government’s re-financing of EDF. If either is successful the deal will fall.
  10. Hinkley will not produce electricity until 2030. There are cheaper, faster, cleaner and more reliable options available to deliver affordable, secure, low cost electricity to British consumers. These include:
  • energy efficiency has reduced electricity demand by 25TWh ( 7% – the same as Hinkley will produce ) since 2010. A McKinsey report for the Government estimates that by 2030 demand could be reduced by a further 23% while reducing consumers bills;
  • the National Infrastructure Commission reports that additional interconnectors could supply 2-3 Hinkleys by 2025;
  • another National Infrastructure Commission report proposed investment in storage and smart grids that would provide the equivalent of 4 Hinkleys by 2030 and save £8 billion.
  • Dong Energy, the world’s largest wind energy company, could replace all Hinkley’s electricity sooner and at lower cost. Offshore wind costs are continuing to fall.
  • electricity from solar power is now also cheaper than Hinkley, having fallen by half in the last five years. From almost no solar panels in the UK, a third of a Hinkley has been added since 2010. Half of that was delivered in just 18 months.

 

  1. E3G is an independent global think tank, working to accelerate the transition to a low-carbon economy. E3G specializes in climate diplomacy, climate risk, energy policy and climate finance.
  2. In 2016, E3G was ranked the number one environmental think tank in the UK by the Go To Think Tank Index, second in Europe and sixth in the World.

 

Footnotes:

[1] This is twice the largest figure presented to Parliament in the Departmental Minute of October 2015 that sought authorisation to take on the liabilities of the Agreement. This raises the question of whether the Government has the authority to sign the Agreement at this time.

[2] The NAO will produce a report on the deal ‘once EDF has taken its final investment decision to build HPC’ NAO July 13th 2016. Unfortunately, this report will be after the Investment Agreement has been signed and so can have no impact on the deal itself.

[3] Daily Telegraph August  18th 2016

[4] Le Journal du Dimanche August 7th 2016

 

 

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Sky News – How significant is it that the US and China have ratified the Climate Deal?

 

Sky News:  Two of the world’s biggest polluters the US and China have ratified the Paris agreement on climate change. The move is being hailed as a major breakthrough, but does it go far enough? Tom Burke is the chairman of environment think tank E3G, and former British government advisor and he joins us from Central London. Good Afternoon, and thanks for joining us Tom.

So you’ve got the two biggest polluters and they have signed up to this accord, how significant is that?

Tom Burke: I think that it’s very significant. When the first agreement was made in Paris last year, the momentum for it was built by exactly this sort of thing, by America and China, as the biggest polluters, getting together, and they really created a big momentum. So the agreement was made in December, and now that we are going to ratify that agreement, it’s the same thing happening again. And that means that around half the countries that need to ratify before that deal comes into force have ratified it. So we are really on our way to having this agreement coming into force by the end of the year, which is real progress, especially when you think that this is likely to be the third year in a row that it will be the warmest year ever, so we really do need to get on with things.

Sky News: So when they sign this accord, what actually are they agreeing to Tom?

Tom Burke: What they have agreed to is that they will reduce emissions so that we keep the rise in temperature “well below” 2 degrees Centigrade, and if possible try to keep it below 1.5 degrees. So it’s a very, very ambitious agreement, to move from a high carbon economy to a low carbon economy, and to do it very rapidly indeed.

Sky News: And who is going to hold these countries to account once it all kicks in? Ban-Ki Moon is saying by the end of the year it should be ratified, so once this happen who is going to hold these countries to account?

Tom Burke: One of the things that is important about this agreement is that there will be a ratchet mechanism that keeps both lots of transparency of what countries are actually doing, and then gets them to meet every few years and wind up their ambition. But the important piece about this agreement is that we are changing from a position where the political risks of doing something about climate change are now going down, and the political risks of not doing anything are going up, so the underlying equation is changing. So it’s easier for governments to get agreement to do the things that are necessary. Also we are seeing that the focus of the debate is shifting away from being a debate about how do you stop carbon, a bad thing, coming out of our economy, to how do you actually take advantage of the falling cost of renewables, and the falling cost of batteries, to take the opportunity of building a cheaper, cleaner, faster energy system. I think that what we are going to see is much more competition between countries to take advantage of the economic opportunities, rather that people trying to cheat on the commitments that they have made.

Sky News: So do you think that there is going to be quite a big impact on industry? That all these positives that you’re talking about will actually outweigh the negatives?

Tom Burke: I think that is exactly right, and I think that is a very important message for the fossil fuel industries to take on board so that they don’t become barriers to what is really a better world that we are building for the future. And it’s also important for governments to understand that you can’t just switch off the existing fossil fuel industries, you have got to help them adjust. As we saw Mrs Clinton doing recently in coal country in the US, talking about what you do with the coal miners that you no longer need. We can’t just walk away and abandon them. So we have to start going beyond the piece where we’re just thinking about how do you reduce emissions, to how do you cope with the social consequences of the large scale transition that we are undergoing?

Sky News: And just finally Tom, Obama said that it’s “the day we decided to save the planet”. Do you think that we are past the point of no return when it comes to emissions? Or do we still have hope?

Tom Burke: I think that we still have hope. We have lots of reason to hope, largely because technology and markets are really delivering for us. We don’t really have any technological obstacles to staying below 2 degrees, and there are no economic obstacles to doing it. It’s really about the politics. It’s about the change in the pattern of winners and losers that will occur, and how you make sure that the losers don’t get in the way of the winners.

Sky News: Thank you so much. Tom Burke, the Chairman of Third Generation Environmentalism (E3G).

 

 

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BBC News – China and US ratify Paris Climate Deal

 

 

BBC News: It’s been reported this morning that China has announced that it will formally ratify the Paris Climate Change Agreement, paving the way for a joint US / China statement on global warming later today. The country is the largest emitter of harmful C02 emissions. To discuss this we are joined from our London Studio by Tom Burke, from the Environmental Think Tank E3G.

Morning, It’s difficult to know where to start on this isn’t it, because there is so much for them to get through, and certainly at this point, there are several people on the global stage trying to put their name against this aren’t they? President Obama, for example, is one of them.

Tom Burke: That’s right, but it’s important to remember that the agreement that we got in Paris was better than most people expected, partly following a joint initiative by Obama and Xi in the middle of last year, and I think that’s what they are planning to do again this afternoon. So I don’t think it should be seen it as a misalignment between the Chinese and the Americans. I think that there is a real sense that if they speak together on this issue they are going to add real momentum to the process of getting ratification to complete.

BBC News: So the significance of the Paris agreement was “to keep any temperature increase globally to below 2 degrees” how are they suggesting that can be achieved?

Tom Burke: What is really important about the Paris agreement is that it didn’t only set that goal, but it also set up a mechanism to keep countries rolling forward towards achieving it. In a sense, Paris represents the turning point. We are moving from a situation in which all the focus was on how dealing with climate change would constrain your economy, to a situation in which we are increasingly focused on how dealing with climate change creates amazing opportunities to kick your economy back to life. We are seeing also that the political risks of not doing something about climate change are growing. This year will be the hottest year ever for the third consecutive year. Whereas the political risks of actually dealing with climate change are falling very rapidly as the costs of renewables, and the costs of all the alternatives, of a low-carbon economy, go through the floor.

BBC News: How easy will it be to police this agreement? And how legally binding might it be?

Tom Burke: I think people are concerned about whether other countries will perform their part of the role. There is no international police force in the way that there is an international court that can force you to do things, in that sense, you can’t put a gun to people’s head and force them to do it. But what you are seeing in the Paris Agreement is that you can create real transparency, and reporting on what people are actually doing. So that you have a very transparent process and everybody can see what everybody else is doing, and you have a ratchet mechanism, for every few years, lifting up the targets that people have set. But if you only think about this as people being forced to do something that they don’t want to do, you are missing the trick about the extent to which this is now increasingly opportunity driven, rather than constraint driven.

Sky News: Tom Burke, thank you very much.

 

 

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Chinese firm with military ties invited to bid for role in UK’s nuclear future

By 

This piece was published by The Guardian

 

inside Hinkley

 

China National Nuclear Corporation on government list of preferred bidders for development funding for next-generation modular reactors

 

Tom Burke, chairman of the environment thinktank E3G and a former British government adviser, said there were legitimate concerns over the company. “I don’t fuss very much about the Chinese owning a nuclear power station [China General Nuclear in the case of Hinkley]. But I would be much more concerned about bringing in CNNC because they are known to be much more closely involved with the military and Chinese nuclear weapons programmes,” he said.

CNNC was not involved in the original Hinkley deal but it was reported on Sunday that the company has agreed in principle to buy half of China’s 33% stake in the £24bn project if it goes ahead.

 

See full article here

 

 

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The nuclear option: Where next for Hinkley Point?

This piece was first published by BusinessGreen

 

HINKLEY BUSINESS GREEN

 

 

 

 

 

 

 

 

 

BusinessGreen asks a range of experts their views on what should come next for the controversial and further delayed nuclear project

Last week was quite a rollercoaster for those involved in low carbon energy policy. French utility EDF spent the first part of the week drumming up media excitement for a final investment decision on its Hinkley Point C development, briefing heavily that the project would likely be green lit by the board on Thursday – a decision widely viewed as the final hurdle for the UK’s first new nuclear power plant in a generation.

But in a surprise twist of events, just hours after EDF approved the investment – losing a board member and angering its own unions in the process – the government launched a review into the project’s “component parts”, pushing the contract signing back into the autumn, assuming it happens at all.

Plans for a VIP party at the site of the proposed plant in Somerset were hastily shelved as EDF came to terms with the shock turn of events. Meanwhile, UK trade unions fumed, environmental campaigners cheered, and journalists hoping to have put the Hinkley saga to bed finally before their summer holidays wearily returned to their keyboards.

So what now for the beleaguered energy project? Is this review really just a chance to double check the finer details? Or could this be the start of a major shake up of the UK’s clean energy policy? BusinessGreen spoke to a range of experts to get their views on where next for Hinkley Point.

Tom Burke, chairman of E3G

What will be different in September? And what was it that caused the plug to be pulled so late in the day? The story that is now coming out is that this is all about the Chinese involvement. But those concerns were made public last October, so it will be no surprise to Mrs May that there are anxieties about China’s role in the project. I think the government is now working on a way to secure the Chinese investment while alleviating these security concerns.

But really, the government should drop the project. It’s now taken most of the political damage for abandoning it anyway. All of the people opposed to it – financial analysts, credit rating agencies, environmentalists, even members of the EDF board – have been encouraged to redouble their efforts to stop what is now I think pretty widely recognised by everybody outside of government and nuclear theologians as a very bad deal indeed. You now have huge momentum behind the calls for the government to enact a Plan B.

There are so many things that you could do that would be faster, cheaper, cleaner and more reliable than Hinkley. There’s no shortage of alternative plans that would actually keep bills down for people and be low carbon, such as a new energy efficiency programme, a new fleet of offshore wind farms with power two-thirds the price of Hinkley’s, and more interconnectors to bring clean energy for the continent.

The big obstacle to this is that there is still a vast illusion among the commentariat that you need baseload power which only nuclear can supply – but that’s coming from people who haven’t caught up with where electricity grid technology has got to. This is really all about letting go of bad ideas.

 

 

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HINKLEY DECISION GRINDS TO A HALT

 

TOM BURKE HINKLEY

 

 

On Thursday 21st July the Prime Minister dined with Francois Hollande in Paris. On the same day, EDF announced a meeting of its Board had been called for the 28th of July. A press release stated simply that the new nuclear power station at Hinkley Point would be on the agenda.

Since it has been on EDF’s Board agenda for many years this was no surprise. Subsequent media briefing, however, both in Britain and France, made it clear that EDF would now make its final decision to proceed with Hinkley. This was a surprise as earlier briefings were that this decision would be made in September.

On the 26th of July an Extraordinary General Meeting, the shareholders of EDF agreed to a €4bn recapitalisation. This meeting cleared the way for EDF to make its Final Investment Decision (FID) at its Board meeting two days later.

In Britain, meanwhile, preparations went ahead to sign the Investment Agreement that would lock the British Government into keeping its part of the bargain on the next day, July 29th. As well as committing British electricity consumers to providing a subsidy of £37 billion over 35 years, this Agreement would prevent any future British Government from changing its mind about Hinkley.

At Hinkley, a marquee was erected, a lavish celebratory lunch prepared, French, Chinese and British guests invited and an extensive round of media interviews scheduled. At 6.30pm on the 28th the Board of EDF duly announced that it had made the FID.

Then, at 8.00pm, the same evening, to astonishment, the British Secretary of State, Greg Clark issued a statement that said, ‘The Government will now consider carefully all the component parts of this project and make its decision in the early autumn.’

Subsequent briefing insisted that the decision to puncture the carefully crafted balloon of expectations at the last minute had been taken by the Prime Minister herself. The public surprise of Britain’s partners in this massive venture has been accompanied by private fury. The political damage is considerable.

Most obviously damaged are Britain’s relations with both the French and Chinese Governments at a time when the need for cordial relations with them is at a premium. Both have been publicly humiliated. The Prime Minister’s  own strategy for reassuring the country that Brexit was not undermining our economic prospects has been heavily dented. Hinkley was the flagship project to demonstrate that Britain retained the confidence of foreign investors.

Her personal reputation for being a steady hand has also taken a hit. The Government is now competing in the headlines with  the Labour party for possession of the word ‘chaos’. Whitehall keeps large barrels of plain vanilla spin to hand for occasions like this. Nothing to worry about chaps, just a few ‘i’s to dot and ‘t’s to cross – the new boss just wants to take a look under the bonnet.

The plausibility of this line didn’t last long. Reports at the weekend informed us that she had actually warned Hollande about her doubts over dinner the previous week and confirmed them with a phone call on the Wednesday before the EDF Board meeting.

If so, these warnings lacked clarity. No-one in Hollande’s office thought they were sufficiently serious to give EDF a heads up. The company’s track record for ducking the issue on its FID would have led to little surprise if it had done so again. This might have been embarrassing but it would not have been as damaging.

The problems facing Hinkley can now only get bigger. Doubts about the viability of the project are already in full flood. The EDF Board split on the decision; senior managers have resigned; the unions are taking legal action; the ratings agencies have threatened a further downgrade. In Britain Parliamentary, public, media and official sentiment has shifted sharply away. There are calls for a plan B.

It no easier to see why the Prime Minister made such a dramatic, and politically expensive, decision at such short notice than it is to see what will have changed by September. The arguments surrounding this project have been extensively rehearsed. So what exactly is going to be reviewed. There is a small clue, however, in the wording of Greg Clark’s statement.

It contains an obscure reference to considering carefully ‘all the component parts of the project’. One component part of the deal for the Chinese financial contribution to Hinkley involved agreeing to allow China to build one of its own reactors at Bradwell in Essex. Accepting Chinese money is one thing, letting a Chinese company closely tied to the military know enough about your grid software to connect its reactor to the grid is another.

The Prime Minister’s chief of staff made his reservations about China’s involvement in Hinkley public almost a year ago. If these have been augmented and caught the Prime Minister’s ear this may be the component which she wishes to review. If so it will take political gymnastics of some skill to both answer the questions this raises and keep China’s money.

Even if the document signings and celebrations planned for last Friday had gone ahead, the new reactors at Hinkley faced formidable obstacles before construction could begin. The Prime Minister’s abrupt decision last week has just added another.

 

 

Tom Burke

London

July 31st 2016

 

Tom Burke is the Chairman of the China Dialogue Trust and of E3G.

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Hinkley delay is a really big deal – BBC News

 

 

I am finding it extremely difficult to think what could have caused such a massive dislocation, not just to our relations with other countries, as we have heard they are all going to be upset, but also to Mrs May’s own program of persuading us in this country that the economy was safe and secure, and that we really were still attractive to investment, that really was the highlight of that reassurance strategy, and that has gone out of the window.

Mrs May was abroad when the decision to pull the plug on Hinkley was taken, nothing at this scale is normally done with the Prime minister being abroad without there being some new factor, something new and big that nobody knows about.

In a way Theresa May has taken the political hit for abandoning the project now, so in a sense the political imperative, which was there very strongly, to get on with it even at the expense of having a white elephant, to some extent she has taken the hit for that. The pressure now is to really re-examine Hinkley, and that has never been done by the way, the assumptions with which this project has been brought forward have never been subject to any kind of descent forensic examination. I think the pressure for that will now become very, very strong.

 

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