Energy secretary says proposed new nuclear plant is ‘essential’
There is a “very good prospect” of a decision to build Britain’s first new nuclear plant finally being taken later this year, Amber Rudd, the energy secretary has said.
Despite mounting doubts about EDF’s proposed Hinkley Point power station, Ms Rudd told MPs on Tuesday she believed it was “essential” that the project go ahead.
Ms Rudd told MPs on the energy select committee: “We hope the decision will be made later on this year. We are very committed as a government to making sure that we build new nuclear and Hinkley Point will be the first of those.
“Old nuclear is coming off and I think we need as much investment as we can procure in order to support new nuclear.”
Protracted negotiations between EDF and Government over subsidies for Hinkley resulted in a headline deal in October 2013 but details are still being ironed out, while investments from Chinese nuclear partners are yet to be finalised and financial turmoil at reactor-maker Areva has caused further problems.
Ms Rudd said: “I haven’t got the scars of the past three to four years, or two and half years, as my permanent secretary may have in terms of taking forward that negotiation, but I have met the parties involved in the past 10 weeks and it looks to me like there is a very good prospect of it reaching a happy conclusion later this year.”
Image: Illustration of the proposed Hinkley Point C (EDF Energy)
EDF laid off hundreds of construction workers earlier this year as preparatory work at the Somerset site ground to a halt and Jonathan Reynolds, Labour’s shadow energy minister, wrote to Ms Rudd last month urging her to “admit the project will not proceed and inform Parliament what your alternative energy strategy will be”.
But Ms Rudd told MPs: “This is going to be the first new nuclear plant in over 20 years so it is essential to me that we succeed in it.”
A legal challenge from Austria to the EU’s state aid approval for Hinkley subsidies, while “very unwelcome”, was not expected to affect the final investment decision being taken later this year, she said.
Ms Rudd, who said value for money was her top priority in the department, rejected suggestions she was “secretly having regrets” about the subsidy terms agreed by the Coalition, which will see consumers on the hook to pay roughly double the current market price of power for 35 years.
Ms Rudd suggested the price was worth it because nuclear was reliable, unlike renewables. “We have to have secure base-load, so you should not be surprised that we are prepared to pay more for that in order to ensure nuclear is part of the mix. The requirement for nuclear is absolute,” she said.
However, future nuclear plants were expected to come in more cheaply, she said.
Lessons should be learned from problems with a French reactor that is very similar to one planned in the UK, says Britain’s nuclear safety regulator.
French regulators have been informed of “manufacturing anomalies” in components “particularly important for safety” at Flamanville 3 power plant, in Normandy.
The reactor is similar to one planned for Hinkley Point, in Somerset.
EDF Energy – involved in both projects – said a new series of tests was under way and it was working with regulators.
An investigation revealed potential weaknesses in the steel used to make a safety casing around the reactor at Flamanville, near Cherbourg.
Areva, which is building Flamanville 3 for EDF, says it is the first plant in the “new French reactor fleet”, and it includes Areva’s new EPR reactor.
The UK Office for Nuclear Regulation said it was aware of the French Nuclear Safety Authority’s concerns about the reactor and would continue to liaise with French authorities.
“The UK currently have no EPR reactors but expects that learning from Flamanville 3 will be taken into account in the manufacture of components intended for the planned new reactor at Hinkley Point C,” it said.
These safety issues in France could lead to even further delays in the construction and completion of the proposed £24.5bn Hinkley Point nuclear power plant.
It has already been delayed by months as the government negotiated a contract for EDF to supply electricity at a guaranteed price for 35 years.
The final decision on the project is expected in the coming months but is also delayed by Britain not having a fully functioning government – something which could be exacerbated if talks on forming a government drag on after the election.
These safety concerns in France are not expected to set the Hinkley Point project back too much but they may spook the Chinese companies set to invest in the project.
In a joint statement, Areva and EDF said new tests were under way on the “reactor vessel head and bottom”.
It said this followed initial tests which had shown “greater than average carbon content” – something French regulators said caused “lower than expected mechanical toughness” in the steel.
EDF and Areva added: “Teams are working to perform the additional tests as soon as possible, following approval by the French Nuclear Safety Authority on the test conditions, and to provide the safety authority with all the necessary information to demonstrate the safety and quality of the corresponding equipment.”
The components in question have not yet been fitted at Hinkley, but it would cost money and could delay the project if they had to be entirely re-made.
Source: BBC News
French energy group EDF has delayed an investment decision on a £16bn project to build two nuclear energy reactors in Hinkley Point, Somerset.
Last month, the firm said it expected to sign an agreement in March.
On Thursday, EDF’s chief executive said the company was in “the final phase of negotiations, but that phase can take a considerable amount of time”.
Plans to build two reactors at Hinkley Point are currently facing a potential legal challenge from Austria.
The company’s comments came as it reported net income rose by 5.2% last year to 3.7bn euros (£2.4bn), as output at its nuclear plants beat forecasts.
However, profits in the UK were down 25% due to unplanned closures at two of its stations.
The firm had to shut down its Heysham 1 station in Morecambe and its Hartlepool unit in August for boiler inspections.
Analysis: John Moylan, BBC industry correspondent
When will EDF make the decision to invest in Britain’s first new nuclear power plant in a generation?
A “final investment decision” (FID) had been expected by the end of 2014. That was delayed until the end of the first quarter 2015. Now that deadline seems unlikely.
EDF hopes to conclude talks with its proposed stakeholders – including two state-owned Chinese nuclear firms – by the end of March.
But with an election pending it’s likely a FID will be put off until May/June at the earliest. Some have speculated it could be pushed back until the autumn.
That must all raise serious questions over EDF’s plan to be generating power from Hinkley Point C by the end of 2023.
Austria, which opposes nuclear energy, has challenged the subsidy deal between the UK and EDF.
The challenge threatens to stall investment plans and been met with retaliation from UK Prime Minister David Cameron.
Chief executive Jean-Bernard Levy said talks between EDF’s partners, French nuclear group Areva and the UK government were continuing.
He said: “We are in the final phase of negotiations, but that phase can take a considerable amount of time, depending on the number of problems left to resolve.
“There is no other project on the agenda.”
EDF, 84.5%-owned by the French state, is the world’s biggest operator of nuclear plants.
Source; bbc news
Small manufacturers in the Black Country are set to benefit from specialist support to access the UK’s rapidly developing £60bn civil nuclear new build programme and significant opportunities in decommissioning.
Inside the new vertical turning and milling lathe at the Nuclear Advanced Manufacturing Research Centre
The Manufacturing Advisory Service has joined forces with the Nuclear Advanced Manufacturing Research Centre to roll-out Fit for Nuclear (F4N), which lets companies measure their capabilities against industry standards and helps them bridge gaps to meet requirements.
Backed by top tier partners including Areva and EDF Energy, the initiative offers business improvements that will identify strategy, implement new processes, secure necessary accreditations and provide supplier matching opportunities.
It also offers participating SMEs the chance to apply for match funding for business improvement or R&D projects.
Lorraine Holmes, area director of MAS, said: “There is great potential for advanced manufacturing SMEs to build business in the civil nuclear sector. Following approval for Hinkley Point in the South West, we can expect these opportunities to increase in new build, as well as in decommissioning and existing station maintenance. We recognise they need help to understand the nature of the opportunities that are opening up and to prepare for them.”
She added: “Working side by side with the Nuclear AMRC, we are widening access to F4N and ensuring more smaller manufacturers in the Black Country receive expert on-the-ground support and funding to take advantage of this multi-bullion pound market.”
To date, around 150 companies have completed the online Fit for Nuclear assessment, with the majority receiving ongoing support and development from the Nuclear AMRC team.
Funding from the Government’s RGF Sharing in Growth programme and bringing in MAS has opened the initiative to another 300 SMEs across England, with the focus on engaging the wider manufacturing supply chain, including control and instrumentation, electrical and other sub-contractors.
F4N participants can also take advantage of the Nuclear AMRC’s Nuclear Connections initiative, which helps link manufacturers to specific supply opportunities from the industry’s top tiers.
This is based on a detailed understanding of the production capabilities of individual companies and matching these to current and upcoming tenders, including the Nuclear Decommissioning Authority’s estate.
“At little or no cost to the participating company, F4N can deliver real business value regardless of your current nuclear sector knowledge or experience,” added Martin Ride, an experienced purchasing manager with Rolls-Royce, now working as supply chain consultant at the Nuclear AMRC.
“This is one of the easiest and most straightforward sector-based programmes to access, participate in, and get incredible value from, and which can lead to increased opportunities.”
Source: Express and Star
The European Commission said Britain had agreed to “modify significantly” the financing for the project, reducing the burden on British taxpayers.
In total 16 commissioners voted in favour of the project, just ahead of the 15 votes needed for approval.
EDF Energy is due to build the plant, the first in the UK in almost 20 years.
The Commission had been examining whether the funding for the project broke state aid rules.
However, it said the changes agreed by the British authorities would cut the subsidy by more than £1bn, meaning that state aid would remain “proportionate to the objective pursued, avoiding any undue distortions of competition”.
The Commission said these changes made meant gains generated by the project would be better shared with UK consumers.
It estimated the project would now cost £24.5bn to build. The updated figure, much higher than the government and EDF’s original £16bn forecast, includes the impact of inflation as well as interest costs for the 10 year construction period.
Analysis: Chris Morris, BBC News, Brussels
This is the first time that the European Commission has approved significant state aid for a new nuclear power plant – and as such, it is a big step forward for the European nuclear industry.
The decision will serve as a precedent for other countries, such as Poland and the Czech Republic, that want to know how much public money they can offer to companies as they look to expand their nuclear industries.
But the legal fight over the funding for Hinkley Point C is almost certainly not over. The European Court of Justice will be asked for an opinion.
Austria says the Commission’s decision is supported by neither economic nor ecological sense.
And other member states are concerned that it flies in the face of the EU’s stated aim of promoting renewable energy sources, such as wind and solar.
Profit share deal
The government had already agreed that French firm EDF will be paid a so-called “strike price” of £92.50 for every megawatt hour of energy Hinkley C generates. This is almost twice the current wholesale cost of electricity, but this was a deliberate attempt by the government to compensate for the high cost of building the plant.
However, the Commission said that if EDF’s overall profits exceeded the rate estimated at the time it was awarded the contract, any gains would be shared with the public.
It said it had also defined a second, higher threshold above which the public would be given more than half of the gains, through lowering the cost of the “strike price”.
“An increase in the profit rate of only one percentage point, for example, will generate savings of more than £1.2bn,” it said.
It said this agreement would now last for the entire lifetime of the project – an estimated 60 years.
“These modifications will also achieve significant savings for UK taxpayers. On this basis and after a thorough investigation, the Commission can now conclude that the support is compatible with EU state aid rules,” said Commission Vice-President Joaquin Almunia.
The two reactors planned for Hinkley, which will provide power for about 60 years, are a key part of the coalition’s drive to shift the UK away from fossil fuels towards low-carbon power.
The nuclear power station is expected to begin operating in 2023.
The government estimated last year that with new nuclear power – including Hinkley – the average energy bill in 2030 will be £77 lower than it would have been without the new plants.
The decision was controversial, with green critics believing that the government should have offered subsidies to renewable energy sources, such as wind and solar energy.
Austria, which strongly supports green energy, has threatened to take the European Commission to the European Court of Justice to protest against the decision.
“There is absolutely no legal, moral or environmental justification for turning taxes into guaranteed profits for a nuclear power company whose only legacy will be a pile of radioactive waste,” said Greenpeace’s EU legal adviser, Andrea Carta.
However, Lord Hutton of Furness, chairman of the Nuclear Industry Association, said the Commission’s approval was “an important step”.
“This will set in train an important time for the nuclear sector in the UK as new build projects get under way to replace the current ageing generation. It also gives certainty to other European countries looking at the UK system of contracts for difference as a mechanism to secure their own supply.”
Source: BBC News
Plans to build Britain’s first new nuclear plant in a generation at Hinkley Point in Somerset are likely to gain EU state aid approval within weeks, according to reports.
The European Commission has been examining the proposed £16bn project since December amid concerns the UK has offered developer EDF Energy excessively generous subsidies.
UK energy consumers could pay the French company and its partners as much as £17.6bn in subsidies over a 30-year period, under the terms of the Government’s deal, the EC said in January. It warned this could be unnecessary and may constitute illegal state aid.
But after months of deliberation regulators are now set to approve the project, Reuters reported, citing several unnamed sources.
An approval would come in the context of heightened fears over Europe’s energy security in the wake of the Ukraine crisis and Russian threats to cut off gas supplies to Europe.
“We can expect some resolution (approval) in the next couple of weeks. The intention is to move forward,” said one of the sources.
Joaquin Almunia, the outgoing EU Competition Commissioner, is expected to make a recommendation to his colleagues ahead of a formal decision.
However, Reuters also reported sources saying that while the recommendation would be positive, it would come with “a number of conditions”, and that regulators were still awaiting further information from the UK before taking their decision.
EDF and the Government have been locked in talks to try to thrash out key details of the funding arrangements in time for Mr Almunia to take a ruling before he steps down at the end of October.
Headline subsidy terms were agreed to much fanfare last October but EDF and the Treasury remained in negotiations over the summer over the details of a £10bn loan guarantee.
An investment decision on the project, once targeted for December 2012, has been repeatedly delayed.
Failure to gain state aid approval from Mr Almunia would see approval further delayed until well into next year when a new Commission is in place.
If the details are resolved and state aid approval is granted, EDF will still need to finalise deals with Chinese state-backed nuclear firms who are expected to take significant stakes in the project, before taking a final investment decision.
Under the subsidy deal, EDF and its partners in the project will be guaranteed a price of £92.50 – twice the current market price of electricity – for each megawatt-hour of power that the reactors generate over a 35-year period.
The UK argues that the project would not take place without the subsidies and fears that if Hinkley does not go ahead it will destroy investor confidence, resulting in “a complete lack of investment in new nuclear plants”.