And by massive costs – even during the planning stage.
By Gregory Brew, Oilprice.com:
The drama of Britain’s stalled nuclear facility at Hinkley Point C grew more Shakesperean this week, with the Chinese firm involved in its construction now under investigation in the United States for espionage.
It was announced on August 11 that the Chinese CGN firm and engineering advisor Szuhsiung Ho have been indicted on charges of industrial espionage in the United States. The charges relate to alleged attempts to steal nuclear secrets to aid the Chinese nuclear energy program.
The power plant at Hinkley Point, a joint UK-French-Chinese venture, has been at the center of an on-going debate in the UK over the future of the country’s energy infrastructure, its relations with China and its place in the world post-Brexit. It has also emerged as the first real test of Prime Minister Theresa May, who leads Britain in the aftermath of the vote to leave the EU last June. More broadly, the issue has drawn focus onto the expanding economic influence of China and the possible political consequences this might have world-wide.
Britain’s nuclear energy program supplies 21 percent of the country’s power and has been hyped by the country’s Conservative Party as a key component in the long-term plan to reduce carbon emissions. To pay for the plant, the previous government under David Cameron agreed to a subsidy program which would pass the cost of construction onto consumers, charging a premium for cheaper power.
The £18 billion project is projected to provide 25,000 jobs in its construction and 900 permanent positions once it is up and running. The huge facility could supply 7 percent of Britain’s projected energy needs over a 60-year timeframe. Given the current set-backs and that anticipated rate of construction, the plant would not begin generating energy in commercial quantities until 2025. Britain is in dire need of a long-term energy plan that conforms to the Paris Agreement on climate change, and its current infrastructure is dependent on coal-firing plants and older nuclear facilities scheduled for de-commissioning.
Critics have balked at the costs and the long construction time it will take to get the facility up and running. There are also safety concerns with the form of nuclear power to be deployed at Hinkley Point. And then there are the more nebulous political concerns. An uncertain future in Europe after the June Brexit vote means the British partnership with France might prove less attractive in the long term, and there remains a great deal of suspicion in Britain over the involvement of the CGN firm, and the concern that China will use its stake in the British power plant for strategic purposes.
In early August Prime Minister Theresa May requested more time to review the project, catching both French and Chinese firms by surprise. EDF, which has seen its earnings decline and is counting on the Hinkley Point project for its future plans, was placed in a more difficult position when the French government sided with labor unions and requested an additional review of the project. EDF is constructing the reactor to be used at Hinkley Point, a complex EPR-style reactor that is difficult to construct. Another EDF project at Flamanville is already years behind schedule.
EDF was attracted to the Hinkley Point project due to the high price it could charge: £92.50 per megawatt hour of electricity generated, roughly double the current market price.
CGN, meanwhile, condemned the delay and insisted that the decision marked a key turning point in UK-Chinese relations. CGN agreed to take on one-third of the costs, while EDF provided the remaining two-thirds and Britain the labor. The agreement had been part of a highly-publicized attempt by David Cameron’s government to attract Chinese investment in British infrastructure.
The Chinese have cited a “gentleman’s agreement” made with the Cameron government over two future nuclear facilities to be constructed in Essex once Hinkley Point is completed. There is therefore evidence that China hopes the facility will act as a launch-pad for other projects in England and elsewhere.
With Britain’s post-Brexit course uncertain, some experts have urged caution, warning that the decision to go ahead with Hinkley Point could make Britain more reliant on China for its energy and trade. These concerns are growing world-wide as China enhances its global position and attempts to gain influence through investment projects. Wary of Chinese influence, Australia recently followed Britain’s example and cancelled a £6 billion deal leasing its energy grid to Chinese investors, citing “national security” concerns.
Environmental and clean-energy advocates have been against the project, with some arguing that wind and solar power offer a more immediate, cheaper alternative to the power generated by Hinkley, at a fraction of the cost.
Dong Energy, the wind-farm developer which has committed to investing 6 billion in Britain, claims that new wind-farms could provide the same amount of energy as Hinkley at a lower cost. The Hornsea Project One, currently in development, would produce 1.2 GW of power from 170 turbines. While wind-farms produce energy near the £100 per MWH threshold, some in the industry have argued that costs will drop below £80 by the 2020s.
With political pressure mounting, it remains to be seen how May or the British government under her leadership will handle the debacle surrounding Hinkley. If the project were canceled it would be a further indication of how nuclear power is unlikely to provide the needed power to replace fossil fuels, a need which Great Britain in particular is vulnerable to, as its coal-fired and older nuclear power plants gradually shut down over the next decade. By Gregory Brew, Oilprice.com
The cancellation of Hinkley Point could crush EDF and the French nuclear industry – or is Britain’s move a Brexit negotiating ploy? Read… China Furious, French Energy Giant Desperate, as UK Stalls $24bn Nuclear Deal
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