Will it all come to nothing? Artist's impression of the planned Hinkley C nuclear power station. Image: EDF Energy.
EDF to postpone Hinkley C start until 2019 or beyond
22nd July 2016
EDF's 'final investment decision' on the Hinkley C nuclear power station next week will be pure theatre, writes David Toke. The truth is that no concrete is to be poured until 2019 at the earliest. Meanwhile post-Brexit UK is running out of money to pay for it, and EDF is under investigation by the Financial Markets Authority for concealing information on Hinkley from investors.
We need to ask ourselves - can the public sector deliver Hinkley Point C, a third runway, HS2, a northern powerhouse, nuclear decommissioning, Trident renewal and restoration and renewal of the Palace of Westminster all at the same time?
The media are full of stories that EDF is about to announce a 'final investment decision' on Hinkley C nuclear power station.
However the logic of its own press statements suggest that the project is in fact in deep freeze.
Once again, EDF's superb public relations is convincing people that its disastrous Hinkley C power plant project is moving ahead, whilst the reality is that it is announcing that the project will not be started until at least 2019.
And even this date seems to be associated with the commissioning of the terribly delayed sister project at Flamanville: if that's later than promised (and it probably will be) or abandoned altogether (very far from impossible), then expect further delays at Hinkley C.
I have lost count of the number of times that EDF has sparked speculation that it is about to announce a final investment decision for the project. These 'announcements', given through press briefings about which EDF bristles with annoyance if people question their connection with reality, have occurred several times since 2012.
And yet EDF's own press release in effect says the opposite of the 'final investment decision' press stories that EDF have inspired. The document, released by EDF yesterday (July 21st) actually says: "The first concrete of reactor 1 of HPC, scheduled for mid-2019, would coincide with perfect continuity with the start-up of the EPR at Flamanville, scheduled for the end of 2018."
So, what is actually happening is that (as experts familiar with the saga know only too well), EDF is confirming that Hinkley's construction could not possibly begin until the safety issues surrounding the reactor design have been cleared and the working of the Flamanville project has been demonstrated. This is not going to happen for a minimum of three years.
And even that would depend on a huge bailout by the French state
Of course even this possibility defies commercial logic given that the project would bankrupt EDF without massive subsidy from the French state.The UK has agreed in principle to pay EDF (in today's money) around £100 per MWh for 35 years of operation for the project, but even this price would not go close to covering the risk that EDF would take with the project.
Hence the need for a massive handout from the French state to EDF, in the form of buying shares in the company and taking dividends as shares rather than cash - which may well prove to be illegal under EU competition law even after Brexit. The French unions and many financiers and managers inside and outside the company regard the whole thing as a politically motivated piece of industrial suicide.
Even the UK Treasury has long since sidled away from the project, effectively cancelling its offer for guaranteeing the bulk of the loans that EDF would hope to take out for the project - since under the conditions agreed by the EU, Flamanville would have to be up and running by the end of 2020 for the guarantees to take effect.
Indeed, contrary to what seems to be widely assumed, the UK Government has not even offered EDF a legally binding contract. It beggars belief how seriously one can take a project that has not even got an offer of a contract from the people who are supposed to be paying for it!
But then the project has long since departed from being based on any sense of commercial reality, and linkages with commercial reality have always been tenuous, as they will be with any nuclear power project that has to meet the sort of safety standards demanded in developed countries these days.
Whatever 'decision' will be reached at next week's EDF Board meeting (almost certainly affirmative), it will, as EDF clearly state, not lead to the construction of the Hinkley project being started. But it will be just a continuation of the public relations pantomime that we have been witnessing for several years now.
Cut Hinkley C, urges National Audit Office chief
Meanwhile the Brexit vote is making the project much more unattractive than it already is. Sterling has fallen some 10% against the Euro following the referendum, reducing the value of the electricity sales from the power plant, while many of the costs remain level.
And today the comptroller and auditor general of the National Audit Office, Sir Amyas Morse, urged the government to treat leaving the EU as an "emergency" and that many large capital projects would need to be cancelled or delayed. Lined uip on the chopping block are Hinkley C, a third London runway, the HS2 rail project, the £7 billion refurbishment of the Palace of Westminster, Crossrail 2 and the 'northern powerhouse'.
"We need to ask ourselves - can the public sector deliver Hinkley Point C, a third runway, HS2, a northern powerhouse, nuclear decommissioning, Trident renewal and restoration and renewal of the Palace of Westminster all at the same time?", he told the Guardian.
"All these projects are drawing on the same pool of skills and many of these contain optimism bias that they will be able to meet their skill needs at an appropriate cost. You are going to have to rein in projects ... and say, what is the benefit? How damaging is it not to have it for a period of time? Can we afford it?"
And EDF is now facing a big, unexpected headache of its own: yesterday morning investigators from France's Financial Markets Authority (AMF) made a dawn swoop on EDF's offices, demanding a meeting with EDF's secretary general, Pierre Todorov, and the production of series of documents. A surprised witness told Le Monde that it was "a real search, even if it does not bear the name".
The documents concerned EDF's €55 billion 'major overhaul' of all its French nuclear power plants, and the €22 billion Hinkley C project: in both cases the key question being whether EDF wrongfully concealed information from shareholders who have lost 45% of their value in company in three years, while in late 2015 the company was excluded from the CAC 40 index flagship of the Paris Bourse.
Email your MP: 'Stop Hinkley C nuclear plant' (Greenpeace UK).
David Toke is Reader in Energy Policy at the University of Aberdeen. He blogs at Dave Toke's green energy blog where this article was originally published.
Additional reporting by The Ecologist.
Using this website means you agree to us using simple cookies.