Monday, January 29, 2024

How France left the British taxpayer on the hook as Hinkley costs go nuclear


Jonathan Leake
THE TELEGRAPH
Sun, January 28, 2024

Hinkley Point C is now predicted to come online in 2031 at an estimated cost of £46bn - HANDOUT/EDF ENGERY/AFP

For the future of Britain’s energy security it was a crucial decision, and one that lay in the hands of France’s biggest power supplier.

However, not a single minister or civil servant was present when the directors of EDF decided the fate of the UK’s two biggest nuclear projects in their Paris boardroom on Tuesday.

The finances of Hinkley Point C and Sizewell B, the nuclear power stations which might one day supply 14pc of Britain’s electricity were top of the agenda.

Shortly after the meeting ended, Luc Remont, EDF’s managing director, and his colleagues summoned their media managers to organise a briefing for analysts and journalists.

Hinkley Point C, they were told, stood no chance of firing up in 2027, as once promised. Its first reactor would come online around 2031 while the second has no date promised at all.

Additionally, costs have surged again to £46bn, a far cry from the £9bn EDF suggested when pushing the idea to politicians around 2007 or the £24bn proposed when contracts were signed in 2016.

Sizewell C was also likely to be put on ice unless British ministers came up with a big extra dollop of taxpayers’ money.

Meanwhile, as EDF’s directors and French civil servants decided Britain’s nuclear future in Paris, Andrew Bowie, the minister responsible for new nuclear projects, was on his feet in parliament, talking up the UK’s prospects.

Apparently oblivious of the disaster heading his way from Paris, he told a Westminster Hall debate: “We are speeding up our nuclear expansion. Hinkley Point C, Britain’s first nuclear reactor in a generation is being built, and we are making rapid progress on Sizewell C. Nuclear will ensure we are never again dependent on the likes of Vladimir Putin for our energy.”

For Claire Coutinho, the Energy Secretary, the news was infuriating. Not only had a decision vital to the UK been taken in Paris but it came just days after she unveiled the Government’s long-awaited Nuclear Roadmap.

It pledged that Britain would build 24 gigawatts (Gw) of new nuclear power in the next few decades. That’s equivalent to six power stations the size of Hinkley C. EDF’s decision undermined both the pledge and Coutinho’s credibility.

A statement rushed out that evening made clear that Coutinho blamed the French for Hinkley’s extra costs and delays. “Hinkley Point C is not a government project and so any additional costs or schedule overruns are the responsibility of EDF and its partners and will in no way fall on taxpayers,” a spokesman for her department said.

The comments irritated the French enough to hold a second round of media briefings, this time involving EDF’s owners, the French government.

The UK, it was made clear, would have to offer up billions of pounds more in taxpayers’ money if Sizewell C was ever to be built. Coutinho subsequently pledged an extra £1.8bn of taxpayers’ money for the project.

Meanwhile, EDF has refused to up its stake from 20pc and Bowie has admitted he now needs to raise £20bn of private finance, most likely meaning the Government will have to put more taxpayer cash in and guarantee the debt.

Delays besetting Britain’s nuclear power projects come as China makes rapid advancements with its own technology. The Chinese government approved 10 nuclear power projects last year, in addition to 10 given the green light in 2022. Even war torn Ukraine is building faster than the UK, recently commissioning two new reactors it plans to have online by 2032.

Hinkley Point, near Bridgwater, Somerset, was chosen as the site for one of the UK’s first nuclear power stations in 1957.

Hinkley Point A ran from 1965 to 2000 producing not just power but weapons grade plutonium. It was followed by Hinkley Point B, which ran from 1976 till 2022. Both were built by British companies and financed from within the UK – and both are now being decommissioned.

They leave behind a legacy of grid connections, coastal siting and community acceptance that makes the area ideal for a third nuclear power station, Hinkley Point C.

At the same time, Britain lacks the engineers needed to build a new generation of power plants, leaving the nation dependent on foreign companies for its nuclear rebirth.

Simon Taylor, professor of finance at Cambridge University, who specialises in the economics of nuclear energy, believes EDF’s reactor designs have some fundamental flaws.

“The EPR or European Pressurised Reactor were designed to be incredibly safe, and to reassure people, after the Chernobyl disaster of 1986 but have turned out to be just much more difficult to build than anyone had expected,” he says.

“The one at Hinkley is technically the fifth of its kind to be built. The first one is in operation but massively late. The second one in France is sort of commissioning now, but also very late. The two built by the Chinese came in behind time and are operating but they’ve had a few teething troubles.”

Taylor believes there is also a deeper problem, a cultural one that seems to infect all major UK infrastructure projects. He adds: “I’m drawn to the conclusion that the fundamental problem is systemic, a kind of structural weakness, where the state wants to get things done via the private sector and it just isn’t working very well.”

Ashutosh Padelkar, a senior analyst at Aurora Energy Research, says: “The key barrier to infrastructure projects in the UK is planning and consenting constraints.

“Comparing Hinkley Point C to similar projects in other countries, a station at Flamanville in France is costing about £11bn while another in Finland came online last year at under £10bn. They are each half the size of HInkley which explains some of the difference but not all.”

Such problems were, he believes, exacerbated by Britain’s turbulent politics over the last decade. The turnover of energy secretaries – nine since 2010 – is one factor, but the biggest was Brexit, he says.

And then there was Fukushima, the disastrous 2011 radiation leak in Japan triggered by an earthquake-generated tidal wave that swamped a nuclear power station, shutting down its cooling systems and prompting an explosion.

For the UK safety authorities, Fukushima also led to a complete rethink of its safety rules.

Stuart Crooks, managing director of Hinkley Point C, said this required EDF to make 7,000 changes to the project.

These included building a massive tank, known as the swimming pool, whose sole task is to contain billions of litres of water, ready to flood the reactor should it be hit by a tidal wave. The UK also told EDF to build a sea wall high enough to deflect any such waves.

Mr Crooks says such changes have made for the toughest of projects. “Restarting the nuclear construction industry in Britain after a 20-year pause has been hard … we faced inflation, labour and material shortages all on top of Covid and Brexit disruption.”

Amid a blame game between France and the UK, the biggest loser remains the British taxpayer. They now face several more years of reduced energy security and the prospect of power bills hikes to raise the £20bn-plus bill for Sizewell C.

A spokesman for the Department for Energy Security and Net Zero said: “Hinkley Point C is the first new nuclear power project built in the UK for a generation, and the first time the EPR reactor technology is being built in the UK. First-of-a-kind projects often face unique technical challenges and risks. Sizewell C will benefit from the lessons learned.

But can the UK really realise its ambition of several more power stations by 2050? Not a chance, says Aurora’s Padelkar. “We don’t believe that to be a feasible ambition.”

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