Hinkley project still uncertain

30 August 2016

A new report by the Energy and Climate Intelligence Unit (ECIU), ‘Hinkley What If?’, says the UK does not need the Hinkley Point C NPP in order to meet its energy needs. ECIU director Richard Black said: "We wanted to know how essential Hinkley is for the 'energy trilemma' - keeping the lights on whilst cutting greenhouse gas emissions and keeping costs down. Our conclusion is that it's not essential; using tried and tested technologies, with nothing unproven or futuristic, Britain can meet all its targets and do so at lower cost."

In its report, ECIU assumed that "the total annual cost of Hinkley will probably be about GBP2.5bn. It then calculated the cost of a basket of alternative measures to meet energy and climate change targets, and concluded that bill payers, both domestic and business, would end up paying a total of GBP1bn ($1.3bn) less a year for their energy Building more wind farms and gas-fired power stations could be enough for “keeping the lights on” as long as demand is managed correctly, the report says. It added that replacing all Hinkley electricity with additional offshore wind farms would cut the average household bill by GBP10-20 ($13-26) a year and replacing its peak-time output with gas-fired units would save GBP16bn in infrastructure costs.

The report adds to growing uncertainty about the future of the £18bn Hinkley plant after the government delayed a decision on its approval and Prime Minister Theresa May raised concerns about China’s financial involvement in the project. A final decision is due to be made by the government in September.

French firm EDF, which is financing most of the project, approved the investment at a board meeting in July but the government then announcement that it wanted to delay its final decision to could carry out a review. If it goes ahead, Hinkley Point is expected to deliver 7% of the UK's electricity, which would help towards achieving climate goals. EDF said while all approaches put forward by the ECIU would be included in the ideal future energy mix, large scale nuclear generation would also be part of it.

"The scenarios outlined in the ECIU report are not credible alternatives to Hinkley Point C," the company added. "Hinkley Point C's cost is competitive with other large-scale low carbon technologies. It will generate electricity steadily even on foggy and still winter days across Northern Europe. It will play a crucial role as part of a future, flexible energy stream."

However recent press reports suggested that government officials reviewing the Hinkley project are exploring how the UK might withdraw from the deal while minimising financial risk and damage to international relations. Westminster sources told The Independent that civil servants are looking to see if there is any loophole, clause or issue in contracts yet to be signed that allow the government to pull back without huge loss and while also saving face. A spokesperson from the Department for Business, Energy & Industrial Strategy said: “No contract has been signed and it is only right that a new government considers all component parts carefully before making a final decision.”

Sensing the uncertainty, EDF Energy CEO Vincent de Rivaz in a 28 August article in the Sunday Telegraph, appealed to the government to approve Hinkley. He said critics of the plant are “overlooking the positive impact” of the project and the fact that the UK needs to add nuclear power to its mix, noting that the plant could “have a lasting impact on our industrial capacity and will create thousands of jobs and hundreds of apprenticeships”.

As to concerns about China’s involvement, Rivaz argued that EDF will gain expertise and advice from the China General Nuclear Power Group (CGN) who are set to invest GBP6bn. “We know and trust our Chinese partners. Beyond that, the UK independent nuclear regulator has only granted Hinkley Point a nuclear site licence after being satisfied that security has been properly addressed,” wrote Rivaz. He also insisted that the plant would be safe from hacking: “All staff on nuclear projects are rigorously vetted, wherever they come from. As is standard practice, the control systems at Hinkley Point C will be isolated from IT systems and the internet.” 



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