Keeping the lights on comes at a price

 

           It is good news that the government is taking some decisons to ensure more electricity generation capacity is built in the UK. The past decade saw the Labour government agree to various EU proposals, and add proposals of their own, which shut down plants. They did not take the  decisions to provide for their replacements, leaving us short of capacity from next winter.

         Emission controls and above all CO2 controls are leading to the closure of older coal, oil and gas plants. Age is leading to the closure of many of our existing nuclear plants. We do need decisions followed by investment in the replacements. The pipeline was empty  in 2010.

         I have no objection in principle to civil  nuclear power, and no objection in principle to foreign investment in our power production system. I do, however, want us to go for cheaper energy. I do want us to play to the strengths of the UK economy in our choices of new power stations, to maximise the economic benefits within the UK from the large investment programme we need.

          Some worry about our nuclear know how. The truth is Labour sold our nuclear industry to overseas interests sometime ago. The absence of new nuclear stations in the UK from the mid 1990s onwards meant the industry fell into disuse here at home. If you place no orders for almost twenty years you do lose a lot of expertise and modern design. This new deal could be a way for the UK to rebuild parts of its nuclear industry, and to benefit from French technology in an area where France has moved onwards whilst the UK has headed for the exit.

         Some worry about the price and the returns that The French and the Chinese will enjoy. Listening yesterday to the Secretary of State answering in the Commons, it sounds as if the draft contract does offer some benefits to UK consumers in the event of costs undershooting on the project. However, the guaranteed price at twice today’s wholesale market price, to come in in 2023 when they start generating power, is also indexed to general prices.  The overseas investors will enjoy some protections from political and other risks, and should be able to generate  a good return on the money they are putting up.

       I would like to see UK investors and companies coming forward to supply our future power needs. I also want to see more cheaper power in the future mix, which will come from gas fired stations. I will look at the way this could happen in a later posting.

 

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67 Comments

  1. lifelogic
    Posted October 22, 2013 at 5:50 am | Permalink

    Excellent article from Matt Ridley in the Time on this topic the other day.

    I assume you mean it starts generating in 2023. I am all in favour of nuclear but this is a very expensive deal. Fracking and the abolition of the C02 restrictions might mean energy prices are actually lower or similar in ten years to now. So we will be paying over double the true value.

    Without seeing the full contract and pricing mechanisms it is hard to judge but it looks to me to be far too expensive by about 70%. Still it is better than Wind and PV, which both need all subsidies to be stopped now, thus killing the totally bogus industry stone dead. Wind and PV energy cost even more and they are worth far, far less than gas energy, as they are not available on demand and storage of electricity is difficult and too expensive to be worthwhile.

    • lifelogic
      Posted October 22, 2013 at 5:56 am | Permalink

      Perhaps a deal just to import French nuclear electricity by cable as needed and keep our old coal and gas plants going would have been best combined with lots of facking, more gas storage capacity and stockpiling or mining of cheap coal.

      This some more jumpers, thermal undies and better insulation. Also kill the subsidies for silly electric cars until they get them working economically.

      • Mike Wilson
        Posted October 22, 2013 at 9:36 am | Permalink

        There will be no significant fracking in this country. You can’t frack in the middle of cities and the nimbys won’t let you frack in the country.

        We should abandon HS2 and get a consortium of our major contractors to build 10 new nuclear power stations over the next 15 years. We can, it seems, afford to borrow 120 billion a year to pay the likes of diversity co-ordinators. We should be borrowing to renew our infrastructure.

        • lifelogic
          Posted October 22, 2013 at 12:34 pm | Permalink

          There will be some fracking for sure in the UK. If not, we will just import other cheap gas where we can. Certainly HS2 should go as you say.

          • Hope
            Posted October 22, 2013 at 7:51 pm | Permalink

            And now the useless Major, Cameron advisor, steps with a windfall tax suggestion. He also keeps his EU fanatical dream alive by declaring a referendum should not be made law and people will vote to stay in….. Yeah yeah and the UK would be in the Euro if he had his way and the country would be broke. He is Labour’s dream for internal squabbling among Tories. He owes us all an apology for the vast amount of money he lost on black Wednesday as well as jobs, homes and business. He should have his title and pension taken away.

        • Hope
          Posted October 22, 2013 at 2:16 pm | Permalink

          The EU is against fracking and it so disappointing at the UK having are ached an agreement in principle,e now seeks permission from the EU for the deal to go ahead. What utter madness when energy is so important to the UK economic wellbeing, energy security, etc. A bureaucrat unelected by any citizen of the 27 EU countries decides what is best for the UK without regard to its citizens.

          And today we read a person found guilty of two murders while serving a prison sentence for another cannot be allowed to be given a full life tariff because the ECHR says it is inhumane. The murders being committed when he was on day release! This is meant to be a Tory led government………

      • Bazman
        Posted October 23, 2013 at 6:03 am | Permalink

        So we buy electricity from France instead of generating ourselves? We can afford that huh? Like renting. Do fracking that is not the magic bullet you want it to be and inbetween wear more clothes? No subsidies for electric cars until they work. This is the point of the subsidy and subsidies in general except for nuclear. This is because it is so expensive and dangerous. French electricity is cheap and nuclear? No problem with the fusion fantasy subsidies that could be just be perpetual motion. Usual half baked fatalistic nonsense.

  2. Mike Stallard
    Posted October 22, 2013 at 6:23 am | Permalink

    A footnote.
    Someone – I honestly have forgotten where I saw this – suggested that by promising to freeze power prices when elected (a very, very popular thing to do I am afraid), Mr Miliband is cynically hoping that all the electricity companies will ensure that they put up prices very quickly to get over the “thinking period” of the price freeze.
    Guess when this price rise will happen? And guess who will get the blame for it too?

    • Timaction
      Posted October 22, 2013 at 10:43 am | Permalink

      Until we repatriate powers from the EU we cannot have a serious discussion on energy policy as we’re locked in to their ridiculous targets of 20% renewables by 2020, regardless of the economics i.e. windmills. Secondly the Europhile Milliband, supported by the LibCons gave us the Climate Change Act that gave us even more ridiculous targets and carbon floors etc. Remember that CO2 makes up 0.04% of the atmosphere!
      So lets not talk about any serious energy policy when our politicos have effectively stopped us producing reasonably priced energy.
      I could weep at the gross incompetence of our so called leaders in Parliament. Nothing will change until we have true patriots in charge who care about the Brits and not everyone else.

  3. colliemum
    Posted October 22, 2013 at 6:24 am | Permalink

    There simply is no point talking about power stations, nuclear or otherwise, as long as decisions to build them are immediately being talked and shouted down by the usual suspects – unless, of course, they’re the oh-so-wonderful ‘renewables’ …
    Also, given that we are neither manufacturing our own, from wind turbines to nuclear power station, because our engineering and technological education has been woeful for decades, it’s no wonder that we’re bleeding subsidies to foreign energy companies.
    It’s getting to the point that I believe the only way this country, from the HoC over the MSM and the chattering classes to all of us, will see a return to a less hysterical attitude to our power supply when there are brown-outs and black-outs in London, preferably during winter!
    Cheap energy is the driving force for innovation, for keeping people well and healthy.
    Isn’t it time Government took a very serious look at the burden placed on those living on less than the median income by energy bills now reaching £1500?
    Making energy expensive, and thus making people suffer, because of ideology is simply despicable.

  4. Richard1
    Posted October 22, 2013 at 6:27 am | Permalink

    If it is to be regarded as a success when the Government locks us in to 30 years or so of energy at twice the market rate I do not think we will have cheap energy any time soon. Whatever else one thinks of this project it doesn’t look like its been well negotiated.

  5. Eric
    Posted October 22, 2013 at 6:50 am | Permalink

    The plan is still subject to EU approval, is it not?

    • Denis Cooper
      Posted October 22, 2013 at 10:29 am | Permalink

      The fact that JR has not immediately replied to your question may indicate that he is not at present sure himself whether it would need EU approval … I’m not sure either, although I note in this 2009 Directive:

      http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32009L0071:EN:NOT

      “Whereas …

      … (9) Each Member State may decide on its energy mix in accordance with relevant national policies.”

      Reply I am busy! Yes, it needs state aids approval as it is a subsidy to the nuclear industry for these purposes.

  6. Anonymous
    Posted October 22, 2013 at 6:57 am | Permalink

    Our energy privatisations went well then.

    Here we are, bills rocketing, fleeced by means of deliberately confusing bills and being ‘rescued’ by nationalised French EDF and communist China.

    When everything is for sale should we be surprised when we eventually become a nation of bonded slaves and whores ?

    • Anonymous
      Posted October 22, 2013 at 11:57 am | Permalink

      How much did we spend on a dome, Olympic opening ceremonies and (about to) on HS2 ?

      This country is MAD !

      Stark raving MAD !

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

        Not as much as is being tipped down the drain on the Co2 religion!

      • lifelogic
        Posted October 23, 2013 at 6:14 am | Permalink

        Not the country, it is just the Labour, Libdumb, Modernist Conservative pro EU and quack energy recent governments and bureaucrats that are totally bonkers. The voters have little say and are constantly ratted on anyway post (or even pre with Cameron) election. Hence he failed to win.

  7. Paul H
    Posted October 22, 2013 at 7:44 am | Permalink

    Your previous blog commented on “EU closing electricity plant” (presumably meant to say “plants”).

    I would like to know when we are going to get a government that stands up for those UK citizens who are too poor to keep themselves warm in the winter, and tells the EU its rules will have to wait until alternative plants come on line. Why does Cameron think it less important to stop older people to dying from hypothermia than to comply with dogma imposed by a bunch of unaccountable, overpaid, undertaxed bureaucrats and technocrats who will never have to worry from where their next meal is coming. It is a disgrace.

    • uanime5
      Posted October 22, 2013 at 12:55 pm | Permalink

      Under EU rules you can reopen these plants as long as they’re upgraded so they conform to EU standards. The UK failure to do this is not the fault of the EU.

      • stred
        Posted October 23, 2013 at 8:06 am | Permalink

        The plural of industrial plant is plant. Unlike vegetable plants. Or at least it used to be. There is a tendency for bureaucrats to alter spelling, or should it be spellings.

      • Denis Cooper
        Posted October 23, 2013 at 11:55 am | Permalink

        It could be that under my rules you would still be allowed to post comments as long as they were upgraded to conform to my standards, and your failure to do that would not be my fault.

        Lucky for you that our host is more generous that some might be …

  8. lifelogic
    Posted October 22, 2013 at 7:45 am | Permalink

    In short we need to banish the CO2 devil gas religion and just accept the simple fact that CO2 is a clean, harmless, plant food. that will increase crop production and might warm the climate very slightly to generally good effect anyway (if it does). CO2 will clearly go up regardless of what the UK does anyway. The likely good effects are less energy needed to heat properties, more food crop production, more precipitation in some dry areas and less extreme weather in general.

    There is some hope, wise souls in Liverpool have got rid of the equally absurd “bus lanes good” religion – Bus lanes were only very good for constricting the road, wasting 50% of road space and raising motorist mugging taxes and generating money for camera mugging engineers and coloured tarmac & sign companies. Which one assumes is why they gained such traction in the state sector group think.

    Then we adapt as needed if it gets hotter or colder. We can also spend the billions being wasted on the c02 religion on things that we know will save millions of lives now – anti malaria, basic health care, nutrition, clean water, inoculations, war prevention ……………

    • uanime5
      Posted October 22, 2013 at 12:56 pm | Permalink

      High CO2 aren’t increasing crop production, which is why crop yields are falling in Africa. It’s also causing more droughts, rather than more precipitation.

      • Edward2
        Posted October 22, 2013 at 6:00 pm | Permalink

        When you say crop yields figures are falling in Africa does that include Zimbabwe where a policy of taking white owned successful farms into what you would call “social ownership” has devastated agricultural output and led to starvation for many.
        Or is it that extra bit of CO2 in Zimbabwe that is to blame Uni?

      • lifelogic
        Posted October 22, 2013 at 9:27 pm | Permalink

        No they are not and almost certainly will not. The warmer the air the wetter it is likely to be. The more Co2 (up to a point that we are no ware near) the more plants will grow.

        • lifelogic
          Posted October 23, 2013 at 6:18 am | Permalink

          Crop yields are not falling I meant above – and more GM would hugely help too. Where they are falling it is wars and politics. More C02 and a little more warmth and precipitation are all positive factors for food production not negative.

  9. alan jutson
    Posted October 22, 2013 at 7:48 am | Permalink

    Yes amazing that we are prepared to give a good return to Foreign organisations for their financial investments, but keep our own citizens locked into poor returns with false rates of interest.

    I am not aware as to the amount the population has in savings in the uk, but if they were offered a good rate of return by the government to invest in such projects, then they may well have picked up a significant part of the finance here.

    Thus we have deprived our own population of a decent rate of interest on their savings (which would be spent here, would help the economy, and would secure our pwer for the future) but now we will pay more for foreign investment where the returns will go and be spent abroad.

    I have no idea, without seeing the detail, (which still has to be finalised according to press comment) if we will be paying a competitive rate for our power, but we do seem to be giving a guarantee that the eventual price will guarantee a “Reasonable profit”

    I suppose we are now paying the price for past delay on decisions.

    We now need to move on and build some further more basic power plants rather more rapidly.

    • Denis Cooper
      Posted October 22, 2013 at 10:14 am | Permalink

      “I am not aware as to the amount the population has in savings in the uk, but if they were offered a good rate of return by the government to invest in such projects, then they may well have picked up a significant part of the finance here.”

      http://uk.prweb.com/releases/2012/6/prweb9588409.htm

      “UK household savings now stand at £4,177 billion”

      That is a lot, on the face of it enough to fund the government’s annual budget deficit many times over, though it has to be remembered that a large chunk will already be invested in gilts via pension funds and insurance policies.

      The obvious vehicle for the government to tap into those personal savings of the population as a whole, rather than turning to institutional investors for large scale contributions, would be National Savings, or National Savings and Investments as Brown unnecessarily had it renamed.

      However the Labour government decided that it didn’t want to do that, and nor did it want to use National Savings to encourage the “savings culture” that it said we needed, and of course it didn’t want to use what was then and probably still is the largest retail network in the UK, the post office network.

      If you look at the NS & I annual report for 2011-12:

      http://www.official-documents.gov.uk/document/hc1213/hc00/0061/0061.pdf

      you’ll see that its mission statement is just:

      “To help reduce the cost to the taxpayer of government borrowing now and in the future”

      with nothing about encouraging a “savings culture”, but also:

      “For the first time since 2008-09, for 2011-12 HM Treasury had set us a positive Net Financing target of £2 billion (with a range of £2 billion either side).”

      So NS & I held about £100 billion of savings, for several years it was not allowed to increase that total, and even in 2011-12 it was only allowed to increase it by a paltry £4 billion.

      The days when the government thought it worthwhile to get schoolchildren into the habit of saving by buying National Savings stamps each week, sticking them in a book and then exchanging the full book for a certificate, are now long gone; the present reality is that if you’re not an institutional investor able to dispose of tens of millions at a time then basically the government is not interested in borrowing your money and giving you a good return.

      • alan jutson
        Posted October 23, 2013 at 6:00 pm | Permalink

        Dennis

        National Savings would I have thought be the answer but they scrapped index linked ones which did offer a chance of protecting savings.

        Could always do a Nuclear Bond !

        Beggars belief that with all this money in this Country at poor rates Government have not seen the benefit of using at for the benfit of both sides and keeping it all in the Country.

        They have too many closed eyes, ears, and minds in my view.
        Lack of original simple thought. !

    • stred
      Posted October 23, 2013 at 8:11 am | Permalink

      EDF borrws from RBS which borrows from UK taxpayers. At what rates of interest?

  10. Steve Cox
    Posted October 22, 2013 at 7:53 am | Permalink

    “it sounds as if the draft contract does offer some benefits to UK consumers in the event of costs undershooting on the project.”

    Ha! Some chance! And who pays when costs overshoot massively, as they inevitably will? Hinkley Point C will use the same technology as the Flamanville and Olkiuoto plants in France and Finland where there have been enormous cost increases and delays. Don’t forget either that the estimated cost increased by £2 billion simply during the past year of negotiations. What’s the current £16 billion estimate going to morph into by 2023 I wonder? Anyone hoping for cost undershoots is living in Lalaland.

  11. Denis Cooper
    Posted October 22, 2013 at 8:07 am | Permalink

    Hilarious item here:

    http://order-order.com/2013/10/22/what-ed-davey-used-to-say-about-nuclear-power/

    “Ed Davey has been cleaning up his website of any awkward things he might have said before he was Energy secretary. Like when he launched the LibDem energy policy in 2006, under the headline “Say No to Nuclear” … “

    • Bob
      Posted October 22, 2013 at 9:34 am | Permalink

      “A new generation of nuclear power stations will cost taxpayers and consumers tens of billions of pounds.

      In addition to posing safety and environmental risks, nuclear power will only be possible with vast taxpayer subsidies or a rigged market.

      It is an issue that crops up in my postbag time and time again. People don’t want nuclear…”

      Proof if you ever needed it that Davey is a LibDem.

      Say no more.

      • APL
        Posted October 22, 2013 at 4:20 pm | Permalink

        Bob: “Proof if you ever needed it that Davey is a LibDem.”

        I’d say about 60% of the Parliamentary Tory party are really to varying degree Lib-Dems or Labour.

        When the Liberals faced extinction in 1915, most of them moved either to the Tories or the Labour party.

        • lifelogic
          Posted October 23, 2013 at 6:25 am | Permalink

          1915 were they not still in power then? Hopefully never again after 2015, Miliband will be even worse buy it is a price we have to pay.

    • sjb
      Posted October 22, 2013 at 8:13 pm | Permalink
  12. Denis Cooper
    Posted October 22, 2013 at 8:17 am | Permalink

    “Some worry about our nuclear know how. The truth is Labour sold our nuclear industry to overseas interests sometime ago. The absence of new nuclear stations in the UK from the mid 1990s onwards meant the industry fell into disuse here at home. If you place no orders for almost twenty years you do lose a lot of expertise and modern design.”

    And that doesn’t just apply to nuclear expertise.

    In fact it doesn’t even apply just to science and engineering, it also applies to government:
    as MPs have supinely agreed to hand over more and more of our government to Brussels since 1972, they have lost increasingly lost whatever expertise they ever had in the good government of our country; indeed it can be asked why some people put themselves up for election to Parliament when they don’t actually want to control the government of the country beyond the loyal implementation of whatever orders come from the EU.

  13. Brian Tomkinson
    Posted October 22, 2013 at 8:18 am | Permalink

    Why did you not refer to the need for EU approval still being necessary for this project to proceed? Another example of how little control our government really has.
    As for your comment that “the draft contract does offer some benefits to UK consumers in the event of costs undershooting on the project” I should like to know what that means in that very unlikely eventuality. More likely is a cost overshoot but you don’t tell us anything at all about that or its effects on consumers, who, it seems, are regarded by you politicians as an unlimited source of cash which you can dip into at will.

  14. peter davies
    Posted October 22, 2013 at 8:22 am | Permalink

    I haven’t read the details but I understand the investors are putting up the build money then charging double the market rate for the energy produced. It is expensive but what else can be expected when a country goes from being a world leader in Nuclear Energy to not having a capability at all?

    Maybe some Labour supporters can answer this one.

    At the end of the day the cost for this station build comes out at £16Bn – if I was making decisions in Govt I would say scrap the borrowed money provision for HS2 and use that to build 3 new N Power Stations – doing something useful and creating thousands of high quality jobs which would also help rebuild the industry in the process.

    That would give them 5 or £6 Bn if they still feel they need it to upgrade trains to double decker and heighten bridges and cabling to cater for the capacity that they say is the driver for HS2.

    With the other 2 stations already in the pipeline (Wylfa B and Gloucester) that would give you a total of 6 brand new N Power plants in the next decade or so. If the assumption that each on pumps out 7 GW is correct that is 42GW from N Power (the UK currently is using 40GW) – any spare capacity should come from fracked gas or coal with carbon capture technology and we need to stop pissing money away on new wind turbines now.

    To make a political point it seems to me that as a country there must be something seriously wrong with us to vote for politicians who are utterly inept and incompetent – you say “the planned pipeline was empty in 2010” – what on earth were these people doing? Too busy briefing against each other and acting like school playground kids and pandering to the equally inept EU no doubt.

    Maybe Mr Milliband can answer given that he was Energy Secretary for a time – he goes on TV whining about the PM being on the side of the Energy companies in a school playground fashion, is that the best he can do? Can he explain why the pipeline was allowed to go empty for which we are now paying the price?

    Did he honestly believe that plastering the UK with wind turbines was going to secure our energy needs for the future? – its really windy outside at the moment and we are still only getting 3.25 GW (someone told me my figure of 3500 turbines was in fact 5,000) so that makes the stats look even worse.

    The Tory attack dogs should be wiping the floor with these people and explaining (I’m not sure that the mass public understand) that big power infrastructure has to be provisioned and planned years in advance – not simply left for a decade or so in the hope a magic wand will come along.

    A political party which has wrecked the banking system, flooded a country with uncontrolled immigration, saddled us with huge off and on book debts, spent way beyond what was sustainable and let our energy industry go to ruin clearly shows that it is NOT electable – and shouldn’t be allowed anywhere near power – simple as.

    Socialism at its best.

    • Mike Wilson
      Posted October 22, 2013 at 9:41 am | Permalink

      @Peter Davies A political party which has wrecked the banking system, flooded a country with uncontrolled immigration, saddled us with huge off and on book debts, spent way beyond what was sustainable and let our energy industry go to ruin clearly shows that it is NOT electable – and shouldn’t be allowed anywhere near power – simple as.

      And, yet, they will win in 2015. What does that say about the Tories? And our political system?

  15. lojolondon
    Posted October 22, 2013 at 8:30 am | Permalink

    John, we would like to see the government cancel the £70 Billion HS2, and spend £50 Billion on building our own nuclear plant. The other £20 Billion can go into paying back the debt. Simples!

  16. oldtimer
    Posted October 22, 2013 at 8:54 am | Permalink

    The announced investment in nuclear energy is necessary. But the terms attached to it are a measure of the failure of successive UK governments either to produce a cogent energy policy or to ensure a competitive energy market. Allister Heath of CityAM has some scathing, and well justified, remarks to make about the world of cosy corporatism that marks the UK energy market. That and the the addiction of the political class to the view that CO2 is harmful, which reulted in the Climate Change Act, has resulted in rapidly increasing energy prices (courtesy of DECC) with no end in sight.

    Quite why successive governments think they can forecast technological developments and price levels thirty to fourty years into the future has never been explained. They are taking us all for fools.

  17. Sue Jameson
    Posted October 22, 2013 at 9:29 am | Permalink

    As electricity costs rise, fuel poverty will kill vastly more than nuclear accidents are ever likely to. That is the real disaster, made all the worse by the fact that it is largely the result of deliberate ploys to increase the price of nuclear plants.

    “The huge construction cost of the Hinkley Point plant sees the so-called “strike price”, over which EDF and Britain have wrangled for more than a year, set at £92.50 per megawatt-hour. That is the sale price of the electricity from the plant, working out at more than twice current market levels, agreed between government and the plant owners in order to guarantee a return to investors.

    Thus, government policy seems to be directed first at ensuring lucrative investment opportunities for foreign investors, which the China National Nuclear Corporation and China General Nuclear Power Corporation, which will be minority shareholders in the project

    Speaking to the BBC, Dr Paul Dorfman, from the Energy Institute at University College London, says: “what it equates to actually is a subsidy and the coalition said they would never subsidise nuclear”. Effectively, it is a subsidy of between £800 million to £1 billion a year that UK electricity user will be putting into the deep pockets of Chinese and French government-owned corporations.”

    Going back to March 2004, we saw a study carried out by PB Power for the Royal Academy of Engineering. It reported the then current cost per MWh at £23 nuclear fission plant, making it comparable with gas generation (CCGT) at £22 and coal-fired pulverised-fuel (PF) steam plant at £25.

    In less than ten years, therefore, we have had a four-fold increase in cost, bringing nuclear to a level comparable with onshore wind, losing most if not all of the comparative cost advantage, and making it vastly more expensive than coal-fired generation.

    Furthermore, since Hinkley Point is expected to provide as much as five percent of national consumption, the high price of its power will have a significant effect on the overall price of domestic electricity.

    What is very far from clear, though, are the exact reasons why nuclear has increased in price so much. Nevertheless, in what is clearly a rigged market, the most likely culprit is the regulatory ratchet.

    By increasing the time taken to approve schemes, and by adding to design and construction costs, regulation is reckoned to be enough to have caused the massive hike. And much of the regulation has been promoted by Green activists, the aim being to price nuclear power out of business”.

  18. Mike Wilson
    Posted October 22, 2013 at 9:31 am | Permalink

    Mr. Redwood – you wrote: ‘They did not take the decisions to provide for their replacements, leaving us short of capacity from next winter.’

    And yet the government of which you are a part has just shut Didcot. No responsible government would have done that. They would have said ‘tough!’ to the EU and kept Didcot and other power stations that are scheduled to be shut down working until our capacity is secure.

    There will be a lot of angry people if we find ourselves sitting in the dark and cold – and you can bet Labour will be shouting ‘we wouldn’t have shut them down’ – and people will believe them.

    And another thing – why can’t we provide the money ourselves. Heaven knows I think the government takes too much of our money and spends much of it on daft things – but decent infrastructure is the ONE thing the government most definitely should fund. It is pathetic. We can’t even build our own power stations any more.

    Government (yours and others) is a shambles in this country.

    Reply I am not a memger of this Coalition government. I have urged them to keep open some of our older stations pending the construction of replacement plant.

    • Mike Wilson
      Posted October 22, 2013 at 9:47 am | Permalink

      Reply to reply? You are not a member of this Coalition government? I don’t understand. You are not a Conservative MP? The Conservative Party is not in a coalition government with the Lib Dems. Just because you are not a minister does not mean you are not part of the government. Of course you are. If you didn’t vote with the government the government could not pass legislation.

      ‘Urging’ your colleagues is one thing. Going on national television whenever you get the chance to state that it is reckless to close older power stations down before new ones are on stream – and that the government of which you are a member is WRONG – might put a bit of pressure on them. Do you have no mechanism where you can get a group of MPs – from all parties – to put pressure on the government when they are taking stupid decisions?

      Reply I would be happy to put my view about power stations across again on tv as well as on this site. That requires an invite from the media. I have expressed it before on the media.
      Yes of course groups of MPs put pressure on the government – did you not see us do that over a possible war against Syria?

      • Mike Wilson
        Posted October 22, 2013 at 11:08 am | Permalink

        Reply to reply: But issues like the opposition to military action against Syria was brought before parliament for a vote. It was easy to say ‘no’.

        Surely it is not so easy to say ‘our energy policy is misguided – stupid even – and we need to change it.’

        Which is why people such as your good self need to shout it from the rooftops, garner support, and MAKE your leaders listen to you. Your government’s energy policy is incoherent.

      • miami.mode
        Posted October 22, 2013 at 12:31 pm | Permalink

        According to Wikipedia Didcot was closed to conform withthe Large Combustion Plant Directive issued by (you’ve guessed it) the EU.

        The owners were not prepared to make alterations to the plant to allow generation to continue and I think that due to a period of very cheap coal they used up their allocation of 20,000 hours two and a half years earlier than was necessary.

        We’ve all become EUnuchs.

      • cosmic
        Posted October 22, 2013 at 12:35 pm | Permalink

        There’s a difference between being a member of the government and a member of the party allowed to form a government. Ministers form the government.

        JR is not a minister, so therefore is not a member of the government.

      • Duyfken
        Posted October 22, 2013 at 12:53 pm | Permalink

        But is not Mike Wilson correct in challenging your assertion of “I am not a memger [sic] of this Coalition government”?

        Reply No, I am not a member of this government.

    • Brian Tomkinson
      Posted October 22, 2013 at 10:42 am | Permalink

      Reply to reply,
      ” JR: I have urged them to keep open some of our older stations pending the construction of replacement plant.”
      Their response was to ignore you as they always do. Why you keep supporting a party which is pursuing policies with which you disagree is beyond me. Please don’t roll out the old excuse of coalition – remember it was your leader that wanted and ensured there was a coalition and you support him.

  19. ian wragg
    Posted October 22, 2013 at 10:41 am | Permalink

    John,
    Off topic but very important. In todays Business Telegraph, French academic says Euro should be scrapped to save the European project.
    Continuing this fiasco he writes will eventually resort to violence within the EU as we cannot keep waking up to the heartache which is the Euro. Tell me how will “call me Dave” react to this and his ever more federal approach to governing of late.

  20. yulwaymartyn
    Posted October 22, 2013 at 10:47 am | Permalink

    Life seems to get stranger by the day.

    On the day that the French and Chinese put up 16 billion pounds to fund UK nuclear power stations following years of neglect I am informed that my London home has apparently increased in value by £120,000 in one month.

    It is also the the day that I book a London hotel for a friend for £220 for a night without breakfast and its also the day that I book a comparable hotel in Berlin for my family for £73 per night with breakfast and it is also the day that the glazier who repaired one of our windows tells me that he has just purchased a two bedroom apartment in Alicante for £45000 in cash.

    Profound? Not really. Disconcerting? Not sure. Strange? Maybe.

  21. Sebastian Weetabix
    Posted October 22, 2013 at 11:05 am | Permalink

    Mr. Redwood, I found your comment about costs undershooting absolutely hilarious. There has never been a single example of a cost undershoot on building a nuclear power plant anywhere in the world; and this EDF design is especially problematic in that regard. The real question is, what happens in the (certain) event of a cost over-run?

    I started off being concerned about the excessively high strike price, but on overnight consideration I have become more relaxed. In this country we no longer have a single political party that believes in sound money. After years of QE and increasing the money supply the price will be trivial by the time the plant opens in 2030, 7 years late and £10 billion over budget. Unless the strike price has an inflation lock-in in the contract?

  22. Alan Wheatley
    Posted October 22, 2013 at 11:14 am | Permalink

    Uranium reactors for power generation is likely a technology that is time expired. While the generation of electricity is green, the production of the uranium fuel is far from green, nor is it readily available in the long term.

    So the smart move could be to let France handle this reactor as a stop-gap measure while the UK moves to the future.

    It seems to me thorium reactors offer a much better basis for long-term power generation at lower cost, with plentiful availability of the raw materials and with lower operating risks and much less long term waste fuel storage problems. The government are already funding work in the this area, but we never hear anything about it. If we are going to reinvest in nuclear, and I think we should, then we should look to new technologies rather than slog on with the old stuff.

    However, I do not hold out much hope for government (any government) making sensible long-term strategic decisions that involves understanding technology. Just look at the enthusiasm for HS2.

  23. Mark B
    Posted October 22, 2013 at 12:14 pm | Permalink

    The problem with projects of this size is just that, SIZE ! It becomes too big to fail. Companies know this. I argue that they will get to a stage when the project is say, 2/3rds complete but need another tranche of cast to complete it. The Government can hardly now say no.

    Lets all face it. Due to inept politicians of all sides, from Bankers’ too Energy firms, they have us right where they want us.

    The political class in my view have yet again shown me that they are not the right people to make these decisions.

  24. Leslie Singleton
    Posted October 22, 2013 at 12:35 pm | Permalink

    As the Torygraph very correctly puts it, “simply astonishing”, is, whichever way you look at it, unfortunately so very very accurate. Most astonishing to me is that we do not simply announce that all Power Stations (of all types) currently scheduled to close in the next few years will be given an additional life of say 10 years which would work wonders. I cannot come close to believing that that would involve significant risk and even if it would it would be a risk worth taking. For my money this is close to a National Emergency and in my opinion one solitary peep against from anybody in the EU should result in our unilateral exit that very day.

  25. cosmic
    Posted October 22, 2013 at 12:48 pm | Permalink

    Energy policy is long term and although the Labour Party is undoubtedly largely culpable for the mess we find ourselves in, however, the Conservatives have hardly been blameless, – “The greenest government ever”.

    This is a very poor deal for Britain and the British consumer, however, in view of the mess we find ourselves in, and the extent to which the climate change mania still holds sway, it’s probably the best that can be done.

    Don’t forget that it takes a long time to build a nuclear power station, probably 15 years. We really need to throw off the obsession with renewables and CO2 emissions.

  26. uanime5
    Posted October 22, 2013 at 1:02 pm | Permalink

    Unsure how the UK will get cheap power when we’re agreeing to pay twice the market rates and will end up paying if anything goes wrong. Especially if all other companies will build these nuclear power plants will want the same deal.

    • stred
      Posted October 23, 2013 at 11:02 am | Permalink

      Well spotted! Any other big energy provider will want the same price. They will be like double glazing companies fleecing rich gullible old ladies.

  27. Neil craig
    Posted October 22, 2013 at 1:10 pm | Permalink

    Yesterday I posted a negative opinion of this alleviated only by believing that the price the state is guaranteeing the people will pay was fixed and thus, after a few decades would be irrelevant. Clearly that was optimistic. I regret I regularly err in being optimistic about the level of incompetence, dishonesty and kleptocracy of our ruling class.

    John’s new post today says

    “However, the guaranteed price at twice today’s wholesale market price, to come in in 2023 when they start generating power, is also indexed to general prices.”

    I don’t know if this means the indexing starts in 2010, in which case we are stuck with paying the equivalent of £60 (accounting for inflation) forever, or tomorrow in which case it is the equivalent of £92 forever.

    In either case an abysmal “deal” at least for the people, designed to hide the amount of government parasitism (about 90% of total cost) going on.

  28. Denis Cooper
    Posted October 22, 2013 at 1:42 pm | Permalink

    Off-topic:

    http://www.openeurope.org.uk/Article/Page/en/LIVE?id=14167&page=PressReleases

    “Top 100 EU regulations cost the UK economy £27.4 billion a year – and costs outweigh benefits in a quarter of cases”

  29. Atlas
    Posted October 22, 2013 at 2:06 pm | Permalink

    ‘Strike price’ index-linked eh? So we really are being taken to the cleaners.

  30. nTropywins
    Posted October 22, 2013 at 4:15 pm | Permalink

    John

    if you get a chance this is well worth a read

    http://www.dieterhelm.co.uk/sites/default/files/Labour’s%20energy%20policies%20FINAL.pdf

    kind regards

  31. zorro
    Posted October 22, 2013 at 4:53 pm | Permalink

    This is a case where they could have justified the use of QE to fund infrastructure spending. It would have led to new sources of energy, jobs, training and (re)gaining some industrial knowledge and practice. I would be interested what the long term price would really be when factoring in the inflated energy prices against the likely future market price.

    I’m not sure of the negotiation history of this project, but I suspect that the brief was to ensure that they got someone on noard to build it quickly and not worry to much about the pricing mechanism.

    zorro

  32. Bazman
    Posted October 22, 2013 at 5:36 pm | Permalink

    We should get our own nuclear technology going Fagin instead of paying someone else to do it. Don’t tell us about state industry when we have a communist China and a socialist France building this one. Four of the big six are largely owned by Germany France and Spain too. The whole of industry is being sold of and then like employment agencies selling the labour or services back to us at massively increased cost. This is pretty expensive dogma for the UK.

  33. sm
    Posted October 22, 2013 at 10:43 pm | Permalink

    £15 bn for 3.2 GW.

    Paid by a levy on all consumer bills, that’s competition.

    If it was funded directly by QE maybe , but this appears to be just a bung to another corporate EU interest.

    What dark deals were negotiated behind the scenes to ensure this subsidy gets EU approval. Would this involve a trade off and what could it be?

    I would prefer wind, tidal gas and coal to this and they do not take 10 years to build.

    We could even build them domestically and service them ourselves paid for directly by QE. The reduction in imported fuels will offset the printing effect on the sterling created. It would boost our marine industries and probably employ a lot more people.

    A massive hostage to fortune and a strategic failure point, if it were to become delayed or used to used by foreign governments to strategically blackmail or twist our arms in the future.

    Don’t like it one bit.

  34. Lindsay McDougall
    Posted October 24, 2013 at 12:31 am | Permalink

    We need to get some new cheap energy capacity fairly quickly. Taking coal fired stations out of mothballs is a backward step, for emergencies only. For the next 10 years, we need to use gas and shale gas, which have a medium carbon foot print, not a high one.

  • 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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