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on Feb 12, 15 • posted by rhoggett •

New Thinking: Last ditch bullying by Coalition Government to keep Hinkley on track

Last ditch bullying by Coalition Government to keep Hinkley on track

Catherine Mitchell, IGov Team, 12th February 2015

The UK is now ‘issuing threats’ to Austria that a series of retaliatory measures will be undertaken if Austria goes ahead with its legal challenge to the EU State Aid decision approving GB Government support for Hinkley point nuclear power plant. The Guardian reports the Austria Chancellor’s spokesman saying that this ‘is a kind of behaviour we don’t want to see among partners in the EU’. All of which points to the desperation that the Coalition is showing about supporting Hinkley.

That the Coalition has got themselves in this state is fundamentally because of their determination to put all its eggs in the one basket of new nuclear, and that basket is now careering down a mountain side. Once it finally comes to a halt we (Citizens? Society?) should know whether new nuclear build in GB is in anyway possible. In the meantime, however, despite the fact that the Coalition has shifted all investor risk except construction risk to UK consumers and tax payers, there are multiple boulders which that basket can bash into on its downward path. This is giving rise to greater and greater levels of uncertainty for the rest of the industry.

As highlighted above one of those boulders was the possibility that Austria will appeal the EU State Aid Decision (which allows GB to support nuclear power). Whether the Coalition’s bludgeoning efforts at diplomacy have made this more or less likely still has to be worked out. It is unclear how long the appeal would hold up the process but obviously long enough to warrant – in the eyes of the Coalition anyway – this type of response.

But there are other important boulders in the way as well. Areva’s latest financial statement last week shows its parlous position; and, as a result, as The Times recently reported, it appears that the Chinese investors want greater assurances that they will not pick up 40% of any cost fall outs if Areva goes under. France may well bail out Areva to the extent it ensures that Olkiluoto and Flamanville are finally finished but will they really want to do that for a new nuclear plant? And does GB really want to do this as well?

Because the Coalition keeps up the pretence that nuclear power plants are like any other source of generation, and because our electricity industry is privatised, the process of developing nuclear power at Hinkley ‘theoretically’ passed from DECC to EDF to build a financial consortium once the EU gave its permission of State Aid. The Coalition has recently been very quiet about Hinkley – certainly the plants urgency for them has dropped considerably once it became obvious that the nuclear plant build would not be started before the election. However, the cynical but sensible position on new nuclear build is that the Coalition will do all it takes to get a nuclear power plant ‘away’ – however economically, environmentally, technically and socially wrong that might appear to a disinterested and / or knowledgeable observer, such as Austria.

However, this is really not acceptable from the point of view of GB plc, and its citizens. Hinkley – whether it succeeds or fails – has always acted as a major road block for a sensible energy policy in GB. However, those investors who were squeezing around on the hard shoulder are finding it increasingly hard to move forward, or deciding that it is just too risky to do so. Saying that they have made a mistake is not something that Government’s do, particularly when opposition parties are ready to jump pre-election. However, the time really has come for the Coalition Government to join Labour in arguing for a new scrutiny of the Hinkley project, and also to show that it has a Plan B. GB energy policy is more or less standing still because of the recalcitrant (and now bullying behaviour) of the Government on this issue.

Much has changed since EMR was introduced in 2010 – falling renewable energy costs; cheaper system integration technologies; better energy system management understanding; the Fukishima tragedy and the subsequent pull-out of nuclear by Germany; the rise of shale gas in the US; the understanding of how much Hinkley will cost; the problems of other European new build nuclear power plants by Areva; the impacts of Austerity; the rise of ‘marginal’ political groups/voters and drive for a greater say on political issues, enabled by social media to name but a few issues.

The Coalition has done all it can to keep Hinkley going but the fact that it has been so difficult should be raising alarm bells rather than causing them to act in ever more alarming ways. Add in all these changing issues and really it is time to reassess new nuclear power in GB energy policy.