The Summer 2016 UK Political and Constitutional Crisis

[Ed Anger]

There is a perfectly logical reason for not going ahead with the power station. By the time it is finished Bake Off will no longer be on television and thus the station will not be needed 

I like that baking show. 

[Zanza]

In the UK, where ageing coal power stations are closing faster than the government expected, ministers showed their support in 2013 by agreeing to pay £92.50 for every megawatt-hour of electricity Hinkley Point produces. The current wholesale price is around £40.

https://next.ft.com/content/7b972efc-54d5-11e6-befd-2fc0c26b3c60

Doesn't seem to make a lot of economic sense. Are there other zero carbon power generation possibilities that don't cost twice the wholesale price and don't leave huge follow on costs once the nuclear power plant is decomissioned?

[The Brain]

Huge costs after decommission?

[Richard Hakluyt]

It is baseload power rather than intermittent. There is also a lot of windpower being commissioned, so the nuclear power station will be instead of gas-powered stations.

Does look pricey though.

[Zanza]

Huge costs after decommission?

Yes.

[The Brain]

Huge costs after decommission?

Yes.

What exactly are we talking about? Honest question.

[Zanza]

Demolition costs. Typically takes 10-15 years and costs hundreds of millions if not billions of Euro.

[The Brain]

Demolition costs. Typically takes 10-15 years and costs hundreds of millions if not billions of Euro.

Demolition costs after decommissioning of a nuclear power plant? I don't follow.

[Zanza]

Demolition costs. Typically takes 10-15 years and costs hundreds of millions if not billions of Euro.

Demolition costs after decommissioning of a nuclear power plant? I don't follow.

http://lmgtfy.com/?q=Demolition+costs+after+decommissioning+of+a+nuclear+power+plant


And particularly for Britain:
http://www.telegraph.co.uk/finance/newsbysector/energy/10921309/Britains-nuclear-clean-up-bill-soars-to-110bn.html

[The Brain]

Demolition costs. Typically takes 10-15 years and costs hundreds of millions if not billions of Euro.

Demolition costs after decommissioning of a nuclear power plant? I don't follow.

http://lmgtfy.com/?q=Demolition+costs+after+decommissioning+of+a+nuclear+power+plant


And particularly for Britain:
http://www.telegraph.co.uk/finance/newsbysector/energy/10921309/Britains-nuclear-clean-up-bill-soars-to-110bn.html

After decommissioning there's nothing left to demolish.

[Zanza]

Ok, whatever.

[The Brain]

In the West you typically cannot build and operate an NPP (or other nuclear facility) without setting aside funds for future decommissioning (and at least in Sweden handling and final deposit of nuclear waste from the facility). Funds typically come from revenue generated by the facility. If decommissioning didn't include demolishing then there would be a step for which no funds had been set aside, but that is not the case.

Obviously the estimate of decommissioning costs is just that, an estimate, since decommissioning typically takes place decades after the facility begins operation. The estimate is updated regularly (for instance annually), so that additional funds can be set aside if necessary. There is an uncertainty in all this, estimates can prove wrong, but the principle is reasonably sound.

The Sellafield site of course dates back to a simpler time, and has seen both military and civilian use. It is pretty different from an NPP.

[The Minsky Moment]

More to the point: EPR has experienced huge overruns and delays in every construction project.  The design is being reconceived.  EDF is functionally insolvent and it is not clear to what extent they can or will commit to the project.  Under these circumstances, it is hard to imagine a different decision on Hinckley Point.

[Sheilbh]

Yep. There's lots of economic reasons it's a dodgy deal (hence the CFO of EDF resigning in protest over it last year). In addition the last government and this one were both of the opinion that the key decisions didn't actually need to be made until this autumn so I suspect part of this was an attempt by EDF to bounce a new administration into committing.

However apparently a key point was the Chinese role, which Theresa May's new chief of staff has written about:
http://www.conservativehome.com/thecolumnists/2015/10/nick-timothy-the-government-is-selling-our-national-security-to-china.html

[Sheilbh]

On Hinkley Point, the EDF boss knew the new government wanted to review the project but didn't inform the board

Exclusive: EDF boss knew Britain planned to delay $24 billion nuclear deal
PARIS | BY GEERT DE CLERCQ, MICHEL ROSE AND BENJAMIN MALLET

EDF (EDF.PA) Chief Executive Jean-Bernard Levy knew the British government wanted to take more time to review the Hinkley Point nuclear contract before the French utility's board voted to approve the investment, he said in a letter to top executives.

Board members at their meeting on July 28 were not informed that Britain planned to delay its decision on the $24 billion project to build the power plant in England, according to several sources with direct knowledge of the proceedings.

The board narrowly approved the project but hours later the government of new British Prime Minister Theresa May - which had been expected to sign contracts on July 29 - instead said it wanted to give the plans further consideration. It postponed its final decision until early autumn.

In comments to reporters at French state-controlled EDF's first-half earnings release on July 29, Levy - who is also chairman of the board - had said he had not been aware at the time of the board meeting that the British government wanted more time to review the contract.

In a letter emailed to EDF's executive committee late on Tuesday this week, and reviewed by Reuters, Levy said that when he called the board meeting on July 21, he had done so with the go-ahead of the French state, which "had warned us that in light of her very recent arrival, the new British prime minister had asked for 'a few days' before deciding on the project".

Levy said that late on July 27, the night before the board meeting, he had been informed that May wanted "a bit more time, without calling into question the project, and without specifying the date when the contract could be signed".

He added that EDF cancelled a contract signing ceremony planned for July 29 in Somerset, south-west England, and that the Chinese energy minister - who had been invited to attend the ceremony - had cancelled his plane ticket at the last minute.

"When the board voted, on the afternoon of July 28, we (management) therefore knew that the ceremony would not take place the next day," Levy wrote.

CRITICISM

EDF along with its Chinese partner China General Nuclear, which holds a one third stake in the project, are responsible for the $24 billion project's construction costs, while Britain would pay a minimum price for the power generated by the plant for 35 years.

On the day of the board's vote, one board member resigned, saying the project was too financially risky and would crimp EDF's ability to invest in renewables. EDF's unions say the project is too big and jeopardises the firm's survival. EDF's finance chief resigned over the project earlier this year.

The board approved EDF's investment by 10 votes to seven on July 28, but sources with direct knowledge of proceedings told Reuters that some of the board members who had opposed the plan now felt that Levy and the government had withheld essential information that could have changed the outcome of the vote.

The sources declined to be named as board proceedings and discussions are confidential.

The French state owns 85 percent of EDF and sets its industrial strategy.

A senior French government source told Reuters that Levy had been informed by both the French presidency and the industry ministry that the British government was not going to sign in the 24 hours after the EDF board meeting.

But he added that Levy was not aware of the fact that London would delay the Hinkley Point decision till the autumn.

It is unclear whether the state's main representatives on the board - Martin Vial, head of the state holding company APE, and Christian Masset, foreign ministry secretary-general - knew that Britain planned to delay its decision.

APE and Vial declined to comment. Masset did not respond to requests for comment.

The British decision to review the Hinkley Point project came little more than a month after Britons voted to leave the EU in a referendum that forced the resignation of Prime Minister David Cameron - whose administration gave the initial go-ahead to the project in 2013 - and the accession of May.

The Brexit vote, the resulting economic uncertainty and the change of leadership threw doubt on the future of major British infrastructure projects, including Hinkley Point.

($1 = 0.7491 pounds)

(Additional reporting by Jean-Baptiste Vey; Writing by Geert De Clercq; Editing by Pravin Char)