Thursday 21 June 2012

The Russians Are Coming ... and the Chinese

When you have a dysfunctional energy policy - HMG, this means you - regular investors will stay away.  So then who can you get to build the nuclear power stations you've decided you need ?

Why, the Chinese !  They've got lots of money, and their safety standards are ... errr, ... their standards are well known.

And when gas-fired power plants are really under the cosh, because the electricity market is being trashed by subsidised wind-farms and your crazy 'market reforms', who will want to step in and buy them ?

Why, the Russians !

We debate foreign ownership periodically around these parts and of course I'm on the side of letting 'em buy the assets if they want to pay over the odds. And of course several of you are not.  But as I said on Sackerson's estimable blog in connection with the Chinese buying farms in New Zealand, unless the Peoples Liberation Army moves into the cowshed I am not sure what the problem is.

The key, surely, is that the assets in question should be regulated to our standards in every respect; and that we can be sure the PLA isn't metaphorically taking up residence.  In the case of a nuke, I have my doubts even on the former. Right now the government is so desperate to get nukes built, it is bending over backwards and being royally shafted by EDF on the financial front.  I wouldn't put it past them to be 'flexible' on safety standards either.

As regards Gazprom buying Sutton Bridge, well, you've read me many a time saying that Gazprom has never paid cash for anything (hence they'll never buy Centrica, as is regularly touted) - they always find some sucker to pony up the capital for them via an 'asset swap' or some such delusion.  This being the case, and since the seller is another big energy company (EDF again !) I could quite imagine a deal might be do-able here.  

Gazprom's UK marketing + energy-trading empire GMT has grown hugely in the past 3 years, and conducts day-to-day business in a fairly conventional manner.  It probably fancies itself making good use of a CCGT plant like Sutton Bridge (though it might like to check out the load factors on gas-fired plants in the UK over the past 9 months, see 3rd para above.  Actually, why I am helping them avoid overpaying for an asset ?  Because I don't like EDF, that's why.)

Might frighten the horses, though ... and the occupants of the cowshed.



rwendland said...

Russians may not be limited to gas plants. They are thinking about getting their latest nuclear plants certified in the UK:

Rosatom Intends to Certify VVER in Great Britain and USA

"... In particular, it is planned ‘within the following five years’ to go through the standard procedure of the Generic Design Assessment (GDA) and “obtain all the necessary permissions for constructing VVER in the United Kingdom"

The VVER actually looks like an OK-ish design, unrelated to the Chernobyl RBMK reactor.

China is no surprise. After the EPR building shambles in Finland and France, China has turned out to be the lead builder of both Western designs, the AP1000 and EPR. They desperately didn't want to be leading builder for the EPR, but looks like they've overtaken France twice while building their own design!

Jan said...

Personally I would rather be as self-sufficient as possible at an individual level and at the UK-wide level. Otherwise you are at the mercy of the "owners".

So I would rather own my own house than rent; grow my own food; have my own water/energy supply (well or spring in the garden solar/geothermal etc etc)and at a countrywide level it would be better to be as self-sufficient as possible in growing food, energy supply etc which includes ownership of the method of production.

Budgie said...

Jan is correct.

There are certain other people who sneer at nationalism which they ostensibly regard as merely a figment of the Daily Mail's navel-gazing imagination. Having made that error they compound it with the belief that if they don't believe it's real, then it isn't real.

They then compound that error with the belief that hence Jonny Foreigner will look after us and not himself first. It is a world view cultured by the BBC, the Grauniad and their power-lusting upper middle class fellow travellers who rule over us. It is a quaint British, mainly English, view, and complete tosh with it.

Nick Drew said...

Mr W - thanks as ever for the link + info: could be interesting if they progress these applications to the next stage

Jan - know what you mean but actually we live by trade, have done for a very long time and must continue toy do so if we wnat a good lifestyle

and though we can debate what is the optimal degree of self-sufficiency, since it can never be 100% we absolutely must create and defend reliable trading structures

Budgie - I knew the truce between us wouldn't last for long

rwendland said...

ND, I don't suppose Rosatom is alone in watching the UK nuclear subsidy outcome. If we give enough subsidy to entice EDF to build bleeding edge uneconomic EPRs, and we have an open and fair market, then there are large profits to be had by nuc suppliers with a fairly economic design. I hope BERR are thinking about this - this seems to be a huge problem with our not-really-subsidy subsidies. At least the US Nuclear Power 2010 Program open subsidies are capped to the first N new nucs, not that they can find many takers in the US.

I see the European Commission antitrust investigation has freed Siemens of its non-compete obligation against Areva. So the old planned Siemens-Rosatom deal to sell VVERs could be warmed up again, though nuclear phase-out in Germany takes the shine off. Rosatom would need to find a western partner. I wonder if Rolls Royce would be up for that? The Check CEZ Group has built VVERs, but I wonder if they are big enough for a serious Western push by Rosatom.

Nick Drew said...

then there are large profits to be had by nuc suppliers with a fairly economic design

Mr W - I am not clear that a CfD price negotiated with EDF is then automatically available to other nuke developers, but am open to be shown that it will be so

Tim W definitely made a mistake when he wrote (in the Telegraph) that at least 'the CfD price' was the same for all, so the most economic technologies would win out, to the benefit of the port consumer

in fact, the CfD's are to be priced to meet the costs of specific projects, under the ludicrous 'level playing-field' / Man In Whitehall Knows Best concepts; and of course it's been 'decided' (by our good friend Budgie and others) that nukes are necessary

rwendland said...

ND Thanks for the info that CfDs are to be individually priced to meet the costs of specific projects - I hadn't realised that. I guess I should read the BERR doc cover to cover sometime!

Individually priced CfDs doesn't sound EU competition policy friendly, but I suppose BERR have worked it so it passes muster.