In his article, “Let’s kill off this nuclear white elephant”, former Northern Rock chairman and climate change denier Matt Ridley hinted at EDF’s precarious financial state (‘it cannot get the capital together’, more in Bloomberg). He also pointed to the problems at two other sites in Finland and France, where the European pressurised reactor (EPR) design is beset by technical problems, many years behind schedule and several times over budget.
Ridley reports that the cost of building has roughly trebled before a brick has been laid. At £18 billion, or more like £24 billion including finance costs, Hinkley Point C would be the most expensive power station ever built.
In the latest instance of political vested interest in the nuclear power industry it is reported elsewhere in the Times that Sir Edward Davey, the minister who agreed that EDF Energy could charge twice the wholesale cost for electricity generated by the new Hinkley Point plant, now works for MHP Communications, the lobbyists who advise the company.
The premium strike price eventually agreed by the coalition government with EDF was £92.50 per MWh, but the Cameron government has now agreed to index-link it so that by the time Hinkley opens in the mid-2020s, it might charge about £120 per MWh. Ridley explains: “Strike price is an agreement between government and a foreign-owned company that it can charge you almost three times the going rate for electricity for 35 years. As far as a poor pensioner in a draughty cottage is concerned, for whom electricity is a very high percentage of her cost of living, it is very much on-balance sheet: it’s added to the electricity bill. There is a whiff of interest-group capture of government at our expense”.
Ridley offers ‘better’ Japanese and Chinese options: small modular reactors needing less up-front financing and shorter lead times which might generate economies of scale through repeat orders and harness the cost-cutting benefits of the mass production of smaller units.
Most readers will prefer models from countries which offer safer, cheaper and largely non-polluting electricity generating models, one being Germany, which generated 31% of its electricity from renewables throughout the first six months of 2014 – let’s catch up!
Charles Macdowell writes: “Matt Ridley is nearly right. There are indeed better, smaller options than EDF’s nuclear white elephants. They can go on the roof of his notional poor pensioner’s draughty cottage, if only George Osborne can be persuaded to bring back the incentives for solar energy”.