Nuclear power – at a price

 

        Are you today celebrating the fact that at last, after years of Labour and the EU closing electricity plant without effective replacements, a decision has been made that will help keep the lights on in the next decade? Or are you concerned that the drive to low carbon energy means  an expensive solution compared to current energy prices and the costs of keeping open older stations or driving hard for gas?

        I will give you my thoughts tomorrow when I have studied some of the detail of this new deal.

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95 Comments

  1. David Hope
    Posted October 21, 2013 at 7:13 am | Permalink

    Well at least like wind this will actually work and provide some energy security but…

    it does strike me as very expensive. I can’t help but feel that the Chinese with EDF are getting a very nice deal out of this and the government should have been a lot tougher in negotiations. How is British industry supposed to recover when energy is ever more expensive. As a small island that has little impact on emissions compared to other nations I’d like to see emphasis on shale gas and general fossil fuels to keep costs down

  2. lifelogic
    Posted October 21, 2013 at 7:21 am | Permalink

    Well it is better & cheaper than wind and PV, but with gas prices in the USA often below 2p per KWH (say 4p after conversion to electricity and with free heat too) – then over 9P per kwh looks very expensive even for 10 years time perhaps they are expecting much more infation! Especially as we have huge shale gas reserves and coal. Also nuclear is not as available “on demand” as are gas and coal. Though much more on demand than the absurd PV and wind.

    Gas, shale gas and coal first then nuclear, then wind and PV (if they ever do get then to be economical before we crack fusion). Stop all renewable subsidies now they are bonkers.

    • lifelogic
      Posted October 21, 2013 at 7:34 am | Permalink

      Some good news: they are scrapping bus lanes in Liverpool to reduce congestion. What is the point in empty bus lanes and all the 90%+ in cars, vans and trucks using half the road?

      They are just a total waste of road space and another excuse to fine & mug motorists. Get rid of all of them, they are a major cause of pointless congestion not a solution to it.

      I see Robert Preston gives a typical “BBC think” response to the Co-op bank story:
      “Co-op Bank story in brief: Co-op Group duffed up by a pair of hedge funds”
      was it not the incompetent bank that was trying to duff up the hedge funds?

      But to the lefties the Coop and John Lewis are always to be praised to the roof. Mind you I get free business banking with them, but I do not keep much money in them.

      • lojolondon
        Posted October 21, 2013 at 12:12 pm | Permalink

        Aha – remember that the Labour party owes the Co-Op bank £3,5 million that they are showing no sign of repaying, so the voice of the Labour party will hardly be criticising THAT bank, will he now??

      • lojolondon
        Posted October 21, 2013 at 1:07 pm | Permalink

        It seems that Labour leaders have been running the party the same way they ran the country – borrow to the hilt and let our kids pay the debt off.

        A very interesting article on the financial position of the Labour party and their dependency on the Co-Op bank.(argues that the Co-op Bank helps finance the Labour party ed) Perhaps Cameron should mention this next time the ‘Tories-Banking’ line is taken at PMQ!!

      • Richard1
        Posted October 21, 2013 at 3:13 pm | Permalink

        The Co-op bank is an interesting case which illustrates the nonsense of various leftist canards. one is that bank failures are all down to a few greedy fat-cats in the City (there are some but they wern’t the only or even the main cause). Another is that banks which don’t engage in securities business are somehow automatically safe (they arn’t it depends on their leverage). And a third is the whole nonsense of there somehow being a superior business model to profit making capitalism.

        The case also shows how its perfectly possible for a bank to be restructured without a penny of state support. Just hand it for restructuring to the creditors. That’s what Brown should have realised in 2008.

        John Lewis has been a successful business model, but they have never managed international expansion, so its no panacea for other sectors.

      • outsider
        Posted October 21, 2013 at 4:23 pm | Permalink

        Dear Lifelogic, I first encountered the idea that John Lewis represented some kind of unfair left-wing conspiracy about 15 years ago, when media creatures of City investment banks campaigned for it to be demutualised. It was pathetic then and is pathetic now. You can do better.

        • D K McGregor
          Posted October 21, 2013 at 6:17 pm | Permalink

          John Lewis’s mutual model may just save Britain as we know it. Dave’s Chop Suey a la Francais may fail to nourish .

        • lifelogic
          Posted October 21, 2013 at 9:09 pm | Permalink

          I am not against Waitrose nor John Lewis. I am all in favour of variety. I am just against the BBC and lefties worships of them as though they were some sort of vision of heaven.

    • APL
      Posted October 21, 2013 at 9:02 pm | Permalink

      lifelogic: “Also nuclear is not as available “on demand” as are gas and coal.”

      Then build nuclear to supply hydrocarbon synthesis plants. Now, I admit I don’t know how practical (or efficient) that would be.

      But we could probably divert the billions earmarked for the HS2 to build a couple of feasibility plants. After all, without energy – HS2 might as well be so much scrap metal.

      Or we could develop Thorium reactors – it is a safer fuel cycle with less radioactive byproducts compared to the Uranium or Plutonium fuel cycle.
      An opportunity for the UK government to take a lead in non proliferation nuclear technology.

    • uanime5
      Posted October 22, 2013 at 4:10 pm | Permalink

      Given that nuclear, gas, and coal all produce power the same way (turning water into steam and using steam to turn a turbine) they’re all ” on demand” in much the same way.

      • APL
        Posted October 22, 2013 at 9:24 pm | Permalink

        Uanime5: “Given that nuclear, gas, and coal all produce power the same way”

        They are? A gas fired turbine really produces steam?

        I think you’ll find you are wrong.

        uanime5: “on demand” in much the same way.”

        A coal furnace has to be fired and brought up to temperature – it probably takes a couple of hours.

        A nuclear reactor has to have the moderators withdrawn to generate the steam, that might take an hour or so.

        A gas turbine would be more like turning the key in your car. To all intents and purposes instantaneous.

        I think you are wrong ……. again.

  3. The PrangWizard
    Posted October 21, 2013 at 7:42 am | Permalink

    The French and communist Chinese building a nuclear power plant should be considered a day of shame. The result of years impoverishment through political incompetence and self interest, City short-termism and quick profits for the spivs, with the promotion of perverse economic philosophies where the industries of England have been put up for sale to anyone and everyone. The skills and the knowledge we once had and which Mr Redwood keeps saying are so important to us have been exported. Foreign countries and companies now pull the strings here. What if China reverts to Communist type? How long before their Navy turns up uninvited in the Bristol Channel when there is a dispute? Our leaders are taking us rapidly to third world status, how may places have we fallen in the league tables in the last 15 years or so? And in the case of Hinkley how many people will need to come here to help build it, where will the high quality materials come from? If some comes from England, who owns these suppliers?
    Maybe Mr Redwood, you could tell us when you have done the research.

  4. Douglas Carter
    Posted October 21, 2013 at 7:46 am | Permalink

    I’m rather more concerned that the Government – the one of free markets and…. you know the score… – has signed off on the notion of guaranteed profits for the operating Cartel (because that is what it will be).

    I take it all the Tesco stores local in Wokingham negotiated a guaranteed profit arrangement with the local authority before committing to building their outlets?

    • alan jutson
      Posted October 21, 2013 at 11:34 am | Permalink

      Douglas

      Take your point, but those with the money call the tune.

      We have not got any money, so we have to beg and borrow, thus we are in a weak postion to negotiate anything from the start.

      That is why so many of us get rather frustrated at the continuing spending and borrowing that all Parties seem to want to undertake.

    • Hope
      Posted October 21, 2013 at 1:25 pm | Permalink

      Rolls Royce has its own nuclear power plant to generate its energy in Derby. When JR gets back to us perhaps he will also mention the mini nuclear plants being created in the US, quicker and cheaper to build. Perhaps he could also let us know the EU rules that place so much of the cost onto the consumer/taxpayer and why Cameron lets the EU dictate to us on a policy that is central to our economic security, food security (more land to grow food than site wind machines) energy security and national wellbeing. Particularly as Grieve was reported to say that remaining in the EU would help our wellbeing- what an absolute load of pro EU drivel.

      • Cliff. Wokingham.
        Posted October 21, 2013 at 6:14 pm | Permalink

        What also caused me to get annoyed was the fact that, now our elected government has agreed a contract and have decided to build a much needed power plant, they must now ask the EUSSR for its permission for us to go ahead with it.

        I was also annoyed to see a young woman enviromentalist on the state broadcaster’s six o’clock news state, that SHE, as a citizen, would not let it happen and would get in the way of all the contracting parties: I really don’t know who the hell this person thinks she is…..Message to her; if you don’t like it, vote for a party that is against it and try to get others to back that party too, so that democracy will stop it from happening mind you, I don’t know how you’ll convince the rest of us that you’re right and we’re all wrong, especially the jobseeker that is hoping to work on the construction of the said power station.

      • lifelogic
        Posted October 21, 2013 at 9:10 pm | Permalink

        See Matt Ridley in the Times today on the topic.

      • uanime5
        Posted October 22, 2013 at 4:16 pm | Permalink

        Care to name some of these mini nuclear power plants the US has built, along with how much power they produce per year.

        • stred
          Posted October 22, 2013 at 8:10 pm | Permalink

          One of the power stations named by Christopher Booker in the Sunday Telegraph is the Babcock and Wilcox ‘m power’ 180mW modular type which, when doubled, will produce more than the offshore Atlantic Array with 240 wind turbines between Devon and Wales, but all the time, not occasionally. It is based on well tried marine designs, should be approved in 5 years and operating by 2020. then they can be mass produced, transported to site and built in 3 years.

          If you search ‘low power nuclear’ you will find on the Word Nuclear Association site that other countries are developing similar systems and willing to sell them, including India, S.Korea, Japan, China, and Russia. Surely enough to obtain a competitive tender. Sites could be found. For example Dungeness, where the natural habitat stopped permission. Perhaps this type would be less of an eysore as the reactor is built below ground.

  5. They Work For Us
    Posted October 21, 2013 at 7:57 am | Permalink

    I am a fan of nuclear energy and believe we should have a few more nuclear power stations placed nearer to the places that consume the most electricity rather than transmit power over long distances.
    But what does the price guaranteed per unit to the consortium actually mean?
    Is this fixed in pounds sterling or is it index linked.
    If it is not indexed then the pound is predicted to have half its current buying power in ten years time. If so why should we encourage anyone to save their money?

  6. Brian Tomkinson
    Posted October 21, 2013 at 8:22 am | Permalink

    JR : “are you concerned that the drive to low carbon energy means an expensive solution compared to current energy prices and the costs of keeping open older stations or driving hard for gas?” – YES! However, we know that none of the triplets in Westminster will go against their EU masters and only care about consumers if they think it will affect their re-election. I have news for you, it will.

  7. alan jutson
    Posted October 21, 2013 at 8:23 am | Permalink

    Like you John I do not know the details.

    What has now been proved however is that we do not have a private energy market/policy, as the Government /taxpayer is funding this. and it is reported our Bills will go up as well, so double bubble.

    Whatever happened to our great British engineers, inventors.
    Why are the energy companies not funding this (too many hidden oncosts).

    A sad day when foriegn Companies take over the lifeline of the Country, but it is happening in almost every industry now, so why should I be surprised.

    Clearly Nuclear should be cheaper than wind, panel generation, but I always worry about safety and waste.

    Perhaps its my age !!!

    • lifelogic
      Posted October 21, 2013 at 10:38 am | Permalink

      Nuclear (in the UK especially) has an excellent safety record. Just keep them away from Tsunami’s.

    • Roy Grainger
      Posted October 21, 2013 at 12:10 pm | Permalink

      “Why are the energy companies not funding this”

      Simple answer: not enough in it for them. With the threat of Labour price freezes on the horizon why on earth would they choose to invest billions in building a nuclear plant ? Why should they build any new plants in UK at all ? It is not clear they would get any return on their investment at all.

      Separately to the pure economic argument I think the risk in terms of future decommissioning and environmental costs make it impossible for a purely private solution – the downside risk if far too great for any sensible company to take on without government participation.

      Of course this is partly driven by the government’s desire to reduce CO2 emissions (even if it results in the unexpected emission of far more deadly components) – even so there is the usual wailing from the Guardianistas over this decision. They should understand that you can have low CO2 emissions or you can have cheap energy. You can’t have both.

      Reply EDF are investing in this.

      • ian wragg
        Posted October 21, 2013 at 5:17 pm | Permalink

        Yes and only because a 100% subsidy is promised. Why can’t the government fund it rather the the stupid HS2 which we seem to have the cash for.

      • alan jutson
        Posted October 21, 2013 at 7:06 pm | Permalink

        Reply Reply

        I thought I heard on the news that the Government were underwriting, some of the cost/finance.

        Also hear that the fixed price guarantee can be broken if additional unforseen costs come into force.

        But the devil or givaway, will be in the detail of the final contract.

        I hope for the best, but Government negotiated contracts have a record/history for being a disaster for the taxpayer.

  8. Richard1
    Posted October 21, 2013 at 8:24 am | Permalink

    I couldn’t care less that Chinese and French money will be invested in UK power generation, just as I don’t in any other sector of the economy. But I’m very concerned the Govt are locking UK consumers and businesses into c. 2x the market rate for the power that will be generated. The only thing that can be said for it is its not as bad as wind.

    The Conservatives really need a face-saving U-Turn on green taxes and subsidies and energy costs in time for the election.

  9. alastair harris
    Posted October 21, 2013 at 8:27 am | Permalink

    well the headlines don’t make for encouraging reading. the question to ask is energy at what cost?

  10. stred
    Posted October 21, 2013 at 8:37 am | Permalink

    It appears Labour and the Coalition have looked after the consumer in the worst way possible. Firstly, swallowing the Nuclear Power No Thanks agenda and then selling the Westinghouse design for a song, followed by the loss of our own nuclear construction industry. Then selling the best sites to a foreign nationalised company, while financing the deal. Finding that costs of their latest station have tripled the cost of generation of their older nukes and agreeing to accept these, despite the cost of making it work being historic. Then, despite world costs being much lower, inviting the Chinese in at the last minute, only to share with the French.

    Like PFI, it is only Treasury rules which prevent the government raising finance itself and obtaining tenders at World prices, providing EU regulation has not been rigged to suit the French. Now it appears that less expensive and safer standard thorium reactors will be available in ten years , with shorter construction times. These are smaller and could be built on older power station sites. However, as usual, the greens will be out in force to prevent this, and ignoring the more dangerous alternatives and energy security.

    Meanwhile we have decided to tax carbon at a level which will close most existing stations before nuclear is ready, and we are offering mainly foreign companies lucrative subsidies to provide diesel backup when the wind fails, whist building huge offshore windfarms in the Atlantic, where they will be subject to storms, salt and fast tides. They will be paid even more than the land based wind and paid again when they are stood down.

    Coal stations are being converted to burn wood at 3 x the cost, although the EU scientific committee does not think this will actually save CO2 as claimed.

    All the deals are guaranteed for half a lifetime and linked to inflation. If our personal financial plans had been hanlded with this level of competence, the claims lawyers woulf be lining up.

    • stred
      Posted October 22, 2013 at 8:18 pm | Permalink

      On checking, the smaller reactors being developed were low grade uranium and not thorium. This is considered safer and has been used in marine and small land reactors.

  11. boffin
    Posted October 21, 2013 at 8:40 am | Permalink

    It won’t be helping to keep the lights on in the next decade, unless we are able to avoid Finland’s unhappy experience:
    http://www.world-nuclear-news.org/NN-TVO_prepares_for_further_Olkiluoto_3_delay-1102134.html

    Too little, too late.

  12. Posted October 21, 2013 at 8:52 am | Permalink

    On the surface it seems a good deal, but as we will have to wait ten years before it comes on line, do what are we going to do in the meanwhile?
    The strike price agreed for the electricity, I suspect, will be cheap by the time the station comes on line (unless there is some possible increase, such as index linking, that we haven’t been told about). Prices have gone up by about 10% this year, and there is no reason to suspect that increases will be any less in future yeas as gas prices rise. If so prices would double in just over 7 years and be two and a half times the present prices in ten years time.
    Just let’s hope the Greens, LibDems and all the other antis don’t delay the project by either physical obstruction or various court cases.

    Reply Yes there is index linking of the price.

  13. oldtimer
    Posted October 21, 2013 at 8:54 am | Permalink

    I suggest you look at this post by Mr McKie at CityAM:
    http://www.cityam.com/article/1382324404/defective-eu-carbon-trading-scheme-adding-billions-uk-energy-costs

    My impression is that lunatics are in charge of the asylum.

    • lojolondon
      Posted October 21, 2013 at 12:06 pm | Permalink

      Yes, also that the quoted amount that green energy is costing each household is way short of the true amount!

  14. Atlas
    Posted October 21, 2013 at 9:24 am | Permalink

    No John, I’m not excited by Davey’s announcment. Rather I am sad that our children are being lumbered with such costs for so long. Especially when we have the prospect of cheap fracked gas.

    This is rather like the way PFI actually turned out in practice – an expensive way to buy inferior services.

    • outsider
      Posted October 21, 2013 at 4:13 pm | Permalink

      Spot on, Atlas. The details of the deal make this clear.

  15. ian wragg
    Posted October 21, 2013 at 9:24 am | Permalink

    John, I don’t understand why the government can’t fund the new generation of nuclear stations and lease them to the power companies. We seem to have £50 billion plus sloshing about for HS2 and £billions for foreign aid and the EU.
    Not enough kudos in nuclear power.
    What happens when the French or Chinese will not supply spares or use the stations for blackmail in the future.
    50 years is a long time.

    • D K McGregor
      Posted October 21, 2013 at 6:28 pm | Permalink

      Your first point about why “we” don’t have the cash for essential services like power but have three or four times as much for a useless medium speed train in a shorter time frame is very valid .

  16. Denis Cooper
    Posted October 21, 2013 at 9:34 am | Permalink

    I’m concerned that the Queen opened the world’s first nuclear power plant at Calder Hall in 1956, but we are now reduced to asking the Chinese to build them for us.

    • lojolondon
      Posted October 21, 2013 at 12:07 pm | Permalink

      Absolutely, that is what the idiot ‘greenies’ have done to our country and our technological capabilities.

      • David Price
        Posted October 21, 2013 at 6:27 pm | Permalink

        I disagree. The idiot greenies have delayed the construction of power generation by anything except fairie dust. The loss of engineering and technological capabilities however has a much wider circle of blame. For the most part it has been given away to competitor countries and foreign companies courtesy of clueless consumers, disinterested politicians and unilateral free-market fanatics.

  17. alan jutson
    Posted October 21, 2013 at 9:51 am | Permalink

    I understand that the Chinese are providing the funding and construction of energy plants not just at this one location in the UK but all over the world.

    Clearly they see a long term benefit (perhaps not just financial), otherwise why do it.

  18. peter davies
    Posted October 21, 2013 at 9:58 am | Permalink

    Without going into costs, (I know EDF have come out of this well cost wise) so its going to be expensive thanks to previous govts ruining our N Power industry.

    The UK has 3500 odd windmills which according to Gridwatch are producing 1.68 GW this morning.

    According to the Telegraph, Hinckley Point on its own will give us around 7% of our energy needs, which is approx 3 GW, almost double what all our windmills are producing now and I presume its windy in most of the UK right now.

    It took me 2 min to come up with that conclusion – in essence 10 Hinkley points around the UK with the rest supplied by gas/wind/water is what the UK should be planning for right now – I know Wylfa B is going ahead as well as one in Gloucester, not sure what else is in the pipeline.

    Well done New Labour yet again for selling off what was left of the UK’s Nuclear energy capability – as ever so many decisions these people made in the last decade are now coming back to bite us.

    • lojolondon
      Posted October 21, 2013 at 12:10 pm | Permalink

      Peter, bear in mind this is Autumn, we all know it is the windiest time of year. Wait until mid-winter, when there is snow on the ground, the highest energy requirements, and a massive high pressure system over Europe. When you need it most, windmills produce 0% of our requirements, which is why you need to duplicate every single megawatt of wind capability some other way.

      • peter davies
        Posted October 22, 2013 at 11:09 am | Permalink

        Someone in West Wales pointed out that in no winds they use energy to keep turning else the gearboxes seize up. It’s a peripheral power source at best and unless their energy can be stored should not be factored into planning requirements.

    • uanime5
      Posted October 21, 2013 at 3:52 pm | Permalink

      Who exactly did New Labour sell off our nuclear energy capability to? I seem to recall the energy market was privatised under a Conservative government.

      • Sebastian Weetabix
        Posted October 21, 2013 at 5:11 pm | Permalink

        Labour is absolutely culpable here. They sold Westinghouse (the reactor constructing part of BNFL) to Toshiba in 2006, ending 50 years of the industry here. A shocking act of vandalism that was detrimental to our future security.

      • libertarian
        Posted October 21, 2013 at 6:40 pm | Permalink

        The tories prepared the way for privatisation and closed the CEGB and formed 3 “private” companies Powergen, National Power and National Grid Company.

        It was Labour who sold those off to overseas companies

      • peter davies
        Posted October 22, 2013 at 11:10 am | Permalink

        I love it when uni comes on here – a lone apologist for lefties all over

  19. Leslie Singleton
    Posted October 21, 2013 at 10:17 am | Permalink

    We have enough coal for hundreds of years of intensive energy so our supply would be independent. Clean Coal technology is available (patently because Germany is building Coal Powered Stations) and we have all the infrastructure already in place to get the coal to the stations. Presumably the view of the people who, for ours sins, make these decisions is that Clean Call is too expensive, but how can that view be maintained in light of the enormous current price rises? That we should be so exposed to Gas prices that are out of our control and will in any event just inexorably go up as the rest of the world decides it needs more energy is a crime against British humanity.

    • Leslie Singleton
      Posted October 21, 2013 at 10:47 am | Permalink

      Sorry–Clean Coal of course

    • uanime5
      Posted October 21, 2013 at 3:54 pm | Permalink

      UK coal will only last for hundreds of years if it makes up a very small percentage of energy generated. If all our energy comes from coal it will last about 20 years.

      • Edward2
        Posted October 21, 2013 at 5:42 pm | Permalink

        But its a complete fantasy to think all our energy needs would ever come from coal.
        Therefore your 20 years comment is stupid Uni

        • uanime5
          Posted October 22, 2013 at 6:41 pm | Permalink

          My 20 years comment is very relevant as it allows us to calculate how long out coal supplies will last if we get various percentage from coal. For example if we get 50% from coal it will last 40 years and if we get 25% it will last 80 years.

          Of course if we get 25% from coal we’ll have to use something else for the other 75%.

          • Edward2
            Posted October 23, 2013 at 9:06 am | Permalink

            But its not going to happen Uni so your comments are pointless.
            And your dubious figures are based on just the reserves we have found up to now not on any that may well be discovered tomorrow.
            A process that has been going on for decades.
            Which is why people who have said we will run out of coal oil and gas in previous decades have been proved wrong.

      • libertarian
        Posted October 21, 2013 at 6:52 pm | Permalink

        Uanime5

        And there was me believing that you were the choir leader and fanboy in charge of Germany support. You do know how much of Germany’s ‘industrial might”of which you are so fond is based on coal and lignite power generation?

        There are 105 million tonnes of UK coal reserves underground.

        There is vastly more coal on the surface but in order to mine it it requires extensive planning permission. At the moment the uk imports 78% of its coal as its cheaper to import than it is to mine.

        Germany has 150 million tonnes of coal reserves. The Merkel government has agreed to close ALL Germany’s “black” coal mines by 2018 with the loss of 35,000 mining jobs ( hey uanime5 its good that the Germans have so much better employer/worker relations than us isn’t it? ).

        They will continue to mine lignite in Germany but import black coal from Russia and Poland.

        • uanime5
          Posted October 22, 2013 at 6:48 pm | Permalink

          Germany gets 46% of its energy from coal and 25% from renewable sources.

        • APL
          Posted October 22, 2013 at 9:30 pm | Permalink

          uanime5: “There are 105 million tonnes of UK coal reserves underground.”

          Well now, you won’t often hear me say this , but uanime5 may just be on to something.

          All the best ( easiest to extract – highest quality ) coal has been extracted over the previous two centuries.

      • Mark
        Posted October 22, 2013 at 1:02 am | Permalink

        I don’t think so. When I first came across the figures in the mid 1970s, our coal consumption was very much higher than today’s – about twice – and reserves were estimated at 300 years.

        • uanime5
          Posted October 22, 2013 at 6:49 pm | Permalink

          My figures were for generating all our energy from coal, rather than a percentage from coal. In addition the UK uses much more energy than in 1970.

          • Edward2
            Posted October 23, 2013 at 9:09 am | Permalink

            Indeed your dubious reserves figures and the length of time they will last were based on coal providing 100% of our energy needs.
            Which is not going to happen…ever!

  20. Peter
    Posted October 21, 2013 at 11:05 am | Permalink

    I’m not celebrating.

    I’m afraid that this deal has only been made possible by the government guaranteeing the operators of this new plant a price for electricity that is +well+ over the market rate.

    As a result energy consumers will be paying well over the odds for decades to come. This is going to mean old people struggling to keep warm, and industry going elsewhere.

    It’s all the more frustrating in the light of several perfectly good power stations being shut down by EU rules recently, and the opportunities that cheap natural gas from fracking could have offered us.

  21. They Work For Us
    Posted October 21, 2013 at 11:10 am | Permalink

    It is funny how the wheel turns full circle. The University where I studied Applied Science in the mid 60’s had a relatively small but proud and effective Nuclear Dept. It had been formed to help produce the Nuclear Scientists that the UK lacked and its post graduate courses were well thought of and heavily subscribed. Interest in Nuclear Energy declined and the construction of “lots” of power reactors never materialised on the expected scale. Now the Govt. wants Universities to once again help produce the Nuclear Scientists that the UK lacks…………

    On a different but related tack, the UK in the 50’s and 60’s seemingly had a programme to build one of every type of nuclear reactor you could think ofgoing (AGR, SGHWR, DFR, Dragon etc). Only the AGR (Advanced Gas Reactor) made it to commercial power use. Does anyone ex UKAEA know what on earth possessed them to do this? No doubt this research programme and its legacy convinced Govt. that Nuclear Research was expensive and unproductive hence the lack of Nuclear Scientists now.

  22. Posted October 21, 2013 at 12:05 pm | Permalink

    There is a recent school of thought that points out that for a variety or reasons a network of much small nuclear power stations would be much more effective and a lot cheaper. The trouble is that Westminster is fixated by the dogma of the 60’s and 70’s that power supply must come from very big plant because of the input of coal or piped gas.

  23. Neil craig
    Posted October 21, 2013 at 12:25 pm | Permalink

    This is not a good day for the supporters of nuclear because the government have negotiated all their parasitism in place.

    The reactor will take 10 years to build. In China they are building them in 3. This means it has no effect on the previous politicians’ promises of electricity bills of £2,000 a year by 2020.

    It will cost £16 bn. An equivalent pair built by European firms in China is costing $7.5bn (£4.5 bn). http://nextbigfuture.com/2013/09/european-nuclear-reactors-are-three.html

    The difference in cost is entirely government regulatory parasitism. Thus so is the need for a price guarantee.

    But it allows the Luddites to scream “subsidy” (though they are on a sticky wicket in that they approve far greater subsidy on windmills).

    Also there is less to the eye on the price guarantee than appears – in 10 years prices will have increased about 40% so the guarantee is the equivalent of about £60. 60 years later, when it closes prices will have increased 8 fold so the “guarantee” will be equal to £12.

    This suggests the builders are working on the assumption that they will make back their money in 10 years and hoping that Miliband or some successor doesn’t break the contract before then (as Labour bankrupted BNFL by regulatory fiat and forced them to sell off Westinghouse, probably the world’s leading reactor builder, at a fire sale price to Japan). This distrust of government and the state parasitism obviously both push up prices beyond reason.

    There is no honest debate against the proposition that 90% of our electricity costs are state parasitism (the price differential mentioned above proves it again). Unfortunately there is no honest debate allowed on the subject in our state owned broadcaster or most of the obedient press.

    Because of the 1:1 correlation between gdp and energy use it is obvious that the recession is entirely the fault of the political class who make electricity 10 times more expensive than it should be. The 25,000 pensioners who die of fuel poverty every year are also on their consciences.

    I am quite sure the Chinese would have been willing to build on purely commercial terms if the government had agreed to remove their parasitism (or to pay them for it). It might be worth a question in the House on that.

    A bad day for Britain because state parasitism has been welded even more strongly in place.

    • M.A.N.
      Posted October 21, 2013 at 6:20 pm | Permalink

      A large percentage of the old labour cabinet are/were CND, (not so much the new PPE crowd ), and collectively hate nuclear. What a form of energy has to do with redistribution of wealth I don’t know, but many were ANTI probably for no other reason than it was part of thier ’cause’. Yet again decisions made for ideological reasons above anything else.

    • Mark
      Posted October 22, 2013 at 1:04 am | Permalink

      Excellent research and post.

    • uanime5
      Posted October 22, 2013 at 6:56 pm | Permalink

      While a nuclear reactor may take 3 years to build a nuclear power plant takes 10 years because a reactor is just one part of it (specifically the part that boils water).

      The cost of a nuclear reactors is lower in China because the labour and material costs are lower. Also a nuclear reactor isn’t the same thing as a nuclear power plant so it’s idiotic to compare their costs.

      You’ve failed to provide any evidence for your claim that “state parasitism” exists or that it has any effect on the cost of energy. You also failed to provide any evidence for your GDP and energy correlation.

      • stred
        Posted October 23, 2013 at 10:45 am | Permalink

        The build times given for Chinese and American small nuclear power stations include the whole plant and not just the hot bit. The cost figures given by the World Nuclear Power Assn also claim to include decommisioning.

  24. Bryan
    Posted October 21, 2013 at 1:46 pm | Permalink

    We certainly need generating plants to provide our future energy, and being late is better than never. Pity then that the green-eye brigades are killing the opportunity being afforded by shale gas.

    I have recently read that our energy minister has vowed to clamp down on land based wind power applications as they ‘spoil’ the landscape (hurrah) but has at the same time said that more investment(?) will be put into offshore wind farms and that the UK has as many offshore wind farms as the rest of the World combined.

    He clearly thinks this is a positive thing. Hmmmm!

    Just maybe the rest of the World understands that they are an expensive, unreliable, waste of time and money.

    Pity the Government has this blind spot.

    • Mark
      Posted October 22, 2013 at 1:07 am | Permalink

      Offshore wind is guaranteed £155/MWh, compared with £92.50 (but with inflation escalator) for this deal, and £95/MWh for onshore wind.

    • peter davies
      Posted October 22, 2013 at 11:18 am | Permalink

      At least by focusing on offshore wind they give somewhere for the fish to hide and make these areas out of bounds to the huge EU fishing trawlers that are allowed to rape our seas

    • uanime5
      Posted October 22, 2013 at 6:58 pm | Permalink

      Given that the companies that are going to be fracking the shale gas are saying that it won’t reduce energy bills it’s not much of an opportunity.

  25. Gina Dean
    Posted October 21, 2013 at 3:56 pm | Permalink

    I do hope that when the contract is put together that it is air tight, if there is an overrun in building the plant that there is clauses in it so that the cost is Bourne by the Chinese and EDF with a lot of penalties. The goverment is not very good at ensuring we do not get stung.

    • sjb
      Posted October 22, 2013 at 8:00 am | Permalink

      Yesterday’s announcement gives the impression it is a done deal but apparently EDF are not expected to make a final decision until July 2014.

  26. uanime5
    Posted October 21, 2013 at 3:58 pm | Permalink

    These power plants are being closed either because they produce more sulphur dioxide and nitrogen oxides than allowed under the Large Combustion Plants Directive (coal and gas power plants), or because they have reached the end of their life expectancy (nuclear plants). Neither of which are due to their carbon dioxide levels.

    • outsider
      Posted October 21, 2013 at 6:09 pm | Permalink

      Correct, uanime5. However, it is because the CO2 is being taxed more heavily that the mainly German owners, for whom these plants are peripheral, have calculated that it is not economic to invest in them to meet the pollution rules.

  27. Peter Stroud
    Posted October 21, 2013 at 4:15 pm | Permalink

    John Redwood

    We know that decarbonising our power generation is massively costly, and will continue to be massively expensive. Some of us also believe that establishment’s climate science: i.e., originating with the UN IPCC, is by no means settled. But the UK and the EU in general are using this science to force through taxpayer subsidised, so called, renewable power generation. Yet we are told that Germany has found its renewables so expensive and unreliable that they are now building coal fired power stations. Would it be possible for you to ask the Energy & Climate Change Secretary why he is closing down such stations in the UK? Also why are hundreds of thousands of pounds being wasted converting the generator at Drax to burn imported wood?

    Reply To comply with EU Directives – I have raised this issue before with Ministers, as this site has chronicled.

    • Bryan
      Posted October 21, 2013 at 9:12 pm | Permalink

      Then why do we not ignore EU directives as Germany must be doing, and France often does?

      • Denis Cooper
        Posted October 22, 2013 at 10:50 am | Permalink

        Because we value the rule of law, and Parliament has not yet summoned up the patriotism and the self-respect to pass legislation making it legal in our national law for ministers to ignore EU laws.

        An attempt was made in 2006, and a string of senior Tories voted for it, including the present Attorney General Dominic Grieve.

        Division No 239 on May 16th 2006 here:

        http://www.publications.parliament.uk/pa/cm200506/cmhansrd/vo060516/debtext/60516-0017.htm

        But that opposition attempt to assert the sovereignty of Parliament was in May 2006; by March 2008 Cameron had shifted his position, as indeed had Dominic Grieve.

      • peter davies
        Posted October 22, 2013 at 11:20 am | Permalink

        We have “Yes Minister” civil servants and politicians

      • uanime5
        Posted October 22, 2013 at 7:00 pm | Permalink

        Given that Germany is getting 25% of its energy from renewables and France gets 77% of its power from nuclear it seems that both are complying with this directive.

  28. outsider
    Posted October 21, 2013 at 6:03 pm | Permalink

    Dear Mr Redwood,
    You were right to reserve your judgment for the details. But these are not reassuring. British people have been (quite legitimately) held over a barrel by monopolies controlled by the French and Chinese states because we have been failed by the short-termism and incompetence of successive UK governments.

    The Major government abandoned the chain of new nuclear power stations that were supposed to flow from Sizewell B in order to flog Nuclear Electric (renamed British Energy) for some temporary relief to the budget deficit. As I recall, the scheme was devised by a member of the present Cabinet who was temporarily out of Parliament and working for an investment bank, but no matter.

    Mr Brown rescued British Energy from bankruptcy ( which was brought about by the Labour government’s Enron-inspired regulatory changes) by pushing most of its future decommissioning costs on to taxpayers in exchange for a roughly one third stake. He then sold that stake along with the company in 2009 to the 85 per cent state-owned Electricite de France in order to keep within his borrowing rules while at the same time retaining the inflation-linked liabilities. By then, the need for new atomic power stations to meet our EU/Climate Change obligations must have been clear both to Mr Brown and to the Conservative opposition, which sat on its hands.

    How much better off would taxpayers now be if both Conservatives and Labour had agreed long-term on an 85 per cent – or even 30 per cent – owned British Energy/Nuclear Electric?

    Because short-termist governments have made us prisoners, we are now paying a high ransom. The guaranteed minimum price of £89.50 to £92.50 is claimed to be 50 per cent above current wholesale prices ( I have not been able to check). And that is in real terms, because the strike price is index-linked, albeit thankfully to CPI rather than RPI. And those figures are in 2012 money so today’s base range is actually about £92 to £95 per megawatt hour. And EDF/China Nuclear can pass through into this guaranteed price any rise in various other costs including transmission costs, which seem already to be rising strongly from their 2012 base.

    The base cost of £16 billion for a twin station seems to include a lot of overheads for the new EPR reactor. The cost of the French pilot project at Flamanville has risen from an original E 3.3 billion to E8.5 billion due to all sorts of one-off teething troubles on the new design. But the UK plant is being priced at more than 10 per cent over double that cost even though there should be some economies in building a twin plant.

    Sadly, we are now beggars and therefore cannot be choosers. But how dare Mr Davey tells us this will cut consumers’ bills. What alternatives has he presumed and what does this tells us about the rest of your government’s energy programme?

    • stred
      Posted October 22, 2013 at 8:52 pm | Permalink

      JR. Could you question ministers about whether they were aware that we are paying 2x+10% over the cost of Flamainville, despite the facts that EDF have ironed out faults and are at roll out stage?

  29. Bazman
    Posted October 21, 2013 at 7:25 pm | Permalink

    The increasing costs of energy and the sustained attacks on middle class living and working conditions will see many of them actually having to live in her utility rooms or laundry rooms as they are sometime called using the heat from their washing/drying machines and boilers as normal heating like they do with their Aga’s. (words left out ed) Often Electric Aga’s! Electric Aga? Always amuses me! Are they cheap to run? I suppose they are? LOL! LED lighting uses so little power darling! Reality is catching up with them and they know it. A few miserable OAP’s promoting the cause are just that. Ram it.

    • Denis Cooper
      Posted October 22, 2013 at 10:37 am | Permalink

      Actually we already use the heat from our drying machine as normal heating; the dehumidifier does that job; when running it extracts the moisture and releases heat into the house, rather than chucking the heat outside along with the moisture as a normal tumble dryer does.

  30. Mike Wilson
    Posted October 21, 2013 at 7:36 pm | Permalink

    I can’t begin to understand why these things cost so much. I have stood on the beach at Dungeness and had a good look at the nuclear power station. And at Hinkley too when, inadvertently, we booked a camping site near there (without realising it was there) a few years ago.

    I used to work in construction. I have worked on some serious projects – like the Thames Barrier. That cost half a billion. How on earth can a nuclear power station cost 16 thousand, million pounds?

  31. Lindsay McDougall
    Posted October 21, 2013 at 11:52 pm | Permalink

    Financially, the deal won’t be brilliant. A French state corporation is not going to subsidise nuclear energy for the British. What we have to do is to keep our commitment to use gas and shale gas as cheap sources of energy and part of the mix until climate change is both proven and known to be detrimental. A sensible UK will use a mix of energy sources for at least the next 20 years. And it really is high time that we had a procedure for the safe disposal of fission waste.

  32. Robert George
    Posted October 22, 2013 at 2:06 am | Permalink

    Berkeley Nuclear Power Station was UK’s first commercial station. It opened in 1963. It closed in 1989 after 26 years service, and is still undergoing de-commisssioning 24 years later – yes 24 years.

    You will not find a single nuclear engineer who will advise you to cease monitoring the reactors for at least 300 years with permanent staffing the whole time. The true cost of nuclear power only bites after the facility is closed down – factor that fact into the calculation Mr Redwood.

    • Neil Craig
      Posted October 22, 2013 at 11:06 am | Permalink

      Rubbish.
      You will not find a single nuclear engineer who will advise you we should continue monitoring the Shippingport nuclear site.

      This was the first ever decommissioning and was done at a cost of £59 million. This was before the state parasites got their hands on the process and started pushing up the prices.

      Which is also the answer to Mike Wilson’s question about how these plants can cost so many more times the actual engineering cost.

      An even cheaper way of decommissioning is simply to build a new reactor beside the old one, seal it off and leave it standing for 50 years. Because they are in the same security zone there is no cost in stopping people going there. After 50 years the reactor radiation will be down to safe levels and can be demolished in the normal way.

      This contradicts all the most solemn promises of the “environmentalists” who claim such reactors remain radioactive for “hundreds of thousands of years” but I hope nobody is going to suggest that there are any circumstances whatsoever under which the most solemn promise of such people, & politicians, should be treated as in any slightest way honest.

      Radioactive material is radioactive in direct proportion to its half life – it cannot be otherwise. So obviously highly radioactive waste automatically has a short half life.

      Those who say otherwise must, by definition, be wholly corrupt liars promoting a false scare to get government money – that obviously includes most of our political class & every beeboid.

    • M.A.N.
      Posted October 22, 2013 at 11:50 am | Permalink

      Another story for another day but the costs for nuclear decommissioning are kept ‘off the books’ as well…

  33. Mark B
    Posted October 22, 2013 at 12:05 pm | Permalink

    John Redwood MP said;
    ” . . . .EU closing electricity plant without effective replacements . . . . ”

    I do not think so. Energy policy is a EU Competence.

    http://www.environmentguru.com/pages/elements/element.aspx?id=1375710

    I do so hope in your deliberations that you see fit to discuss the EU dimension in all this.

    • Denis Cooper
      Posted October 23, 2013 at 12:32 pm | Permalink

      Thanks to the Treaty of Lisbon, imposed on us without a referendum by Brown acting on behalf of Merkel, and swallowed whole by Cameron on November 4th 2009 with the pathetic excuse that it no longer existed as a treaty anyway, “energy” is now a “shared competence”, which actually means that the EU will decide how much power it will share with member states.

      Your link refers only to approval for state aid, the kind of thing that also applied to UK government plans to subsidise post offices, it having long been the view of the eurocrats that our postal services are in fact their EU postal services not ours.

  34. Posted July 8, 2014 at 5:53 pm | Permalink

    –A core group of consumers (17%) are “extremely interested” or “very interested” in a voluntary prepay option offered by their local utility. For most service industries, this level of interest would signal the need to support prepay products and channels. Another 25% of consumers indicated that they were “interested” or “somewhat interested,” signaling that there is room for growth, once utility prepay options enter the market.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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