Saturday, 8 December 2012

The Farce that is Energy Policy

So the Energy Bill is published, the lights will stay on, everything's gonna be alright ... and then EDF announce they are "delaying" once again their decision on the first of their 'promised' 4 new UK nukes.

Well, there's a surprise.  The timing of the final investment decision for Hinckley C has been 'by the end of the year' annually since 2009: but each year-end comes and goes.  (I was present in the room when the man from EDF assured then-energy minister Charles Hendry to his face that 2011 was the absolute deadline for making the decision.)

Of course we've also recently had a positive development from the same bunch of wasters: they are extending the lives of 2 existing UK nukes - but everyone knew that anyway and it was already factored into the planners' forecasts.  Still, it must have given the EDF PR people an amusing hour or two of grid-planning:  better not announce the delay until after the Bill ... but the Bill keeps slipping, and we've a Contractor's option to decide on ... well, announce the extensions before the delay, in any case ...

Imagine the long faces at the next 'negotiating' session between EDF and DECC, where the size of their guaranteed price for Hinckley's electricity is being thrashed out.  Somehow, with much sucking on teeth, a Frenchman is going to find the courage to let it be understood that the price has just gone up...



rwendland said...

ND, do you have any idea how much DECC is estimating total CfD support costs (subsidy) for nuclear will be?

My back-of-envelope calculations make it that every EDF EPR reactor built will require around £900 million/year CfD support - or £3.6 billion-ish per year for the four EPR reactors the govt claims it would like EDF to build.

It looks to me like the Hitachi ABWRs Horizon want to build are very much cheaper. But we'd have to wait 3 or 4 years for them to get ONR assessment. I suspect the EDF EPR builds are toast, and the govt will pin its hopes on the Japanese ABWRs. Then we wil have, joy-oh-joy, updated Fukushima reactors in the UK!

Here are my sums:

1650 * 24 * 365.25 * 0.9 * (120-51) = £898 million

This assumes:

* CfD price of £120/MWh - as EDF was alluding to a few months ago
* Average ordinary wholesale price of £51/MWh (probably a bit out-of-date now)
* 1650 MWe reactor running sweetly at 90% Load Average

The £120/MWh does sound fairly close to the mark now that EDF have increased the Flamanville build cost estimate by a further euro 2.5bn, to euro 8.5bn (£7 bn). With Enel of Italy dropping its option on Flamanville, EDF need to find another billion of capital there - they will have fun trying to raise the capital if the UK builds do go ahead.

andrew said...

Nuke seems to provide about 15% of capacity

Between shale gas (10%) and my Bristol Boating lake (5-10%) that is covered.

I have always thought that the negatives of having a thing that can contaminate an area 100 miles in diameter on a relatively small island outweigh the positives. Never mind the cost (not competitive) and the long term storage issues (unknown but v.v.v. large cost). It only has to go wrong once for any reason.

Elby the Beserk said...

And the lights went out all over Europe...

Nick - were you aware of this scam?

Anonymous said...


What's not to like?

Plentiful resource [unlike U], cheap power [tick], far safer than U reactors [tick], technology - there are blueprints for reactors [tick], no plutonium produced [tick], half life decay of decades not millennia [tick]!

FFS, why won't they invest in Thorium reactors - the Chinese are racing ahead in development of Thorium reactors - why are the British [gov'] so weak headed?

In the meantime BGS says there are 300 trillion cubic metres of shale gas in the Bowland shales.

Plus 300 years of coal - ergo: tell EDF to do one.

Budgie said...

We have artificially deprived ourselves of a good power sources like coal because of the bogeyman of "carbon", caused by CAGW, caused by the proven to be bogus "hockeystick" graph.

Solar panels don't work at night, windmills only work intermittently thereby requiring permanent backup. Both therefore cost an arm and a leg. That leaves only Gas and Nuclear. Gas is not currently popular with the Greenies because of "carbon" and fracking.

At current prices (even £120/MWh) not having electricity is more expensive than having it.

So no wonder Jonny Foreigner wants to take us for a ride. Our dim government is hoist with its own petard. Oh joy.

Blue Eyes said...

My East Anglian "source" tells me that EDF were buttering up the locals in Sizewell recently.

Apparently the same team which got permission to build in Somerset are working to get permits on the East Coast.

Nick Drew said...

any idea how much DECC is estimating total CfD support costs (subsidy) for nuclear will be?

not really, Mr W - but most probably they don't expect any of it will be needed until well after 2020 - so the current cap of £7.6 bn can mostly go on wind

I had missed the ENEL angle - ta

Andrew - yes, nukes are part of the territroy Mr Taleb terms Extremistan

Elby - yes, I know about this one - and there's another similar scam involving the Renewable Heat Incentive (covered in the Eye a few months ago - 1309 if you have back-copies) - where you get a much bigger subsidy if you install (and then under-use, inefficiently) a bigger boiler than you need: the boiler companies are touting this scam - they get to sell a bigger unit, the buyer gets the extra £££ sub

it's all the bloody civil servants! they haven't an effing clue

and the same civil servants on the nuke price 'negotiation' Budgie - We Are Stuffed.

BE - these permits are more-or-less free options to EDF and the likes

Blue Eyes said...

Bugger, is there a subsidy available for new boilers? I have just ordered a new one without realising!

ND my nuclear industry insider seems to work extremely hard on getting these permits... or maybe the main effort is the planning permission. Not sure.

Nick Drew said...

BE - the RHI is for fairly big boilers - semi-industrial - not (as far as I know) domestic ones

but you should check out RHI anyway in case there is a domestic scheme as well

the securing of permits isn't really cost-free; indeed, quite a bit of engineering & other effort is required - but in the scale of things my point about them being 'free options' still stands

recall that E.on and RWE walked away from the Horizon nuke project earlier in the year - they had spent £150 million in pre-engineering and permits etc, but were quite willing to write that off

that's the price of a ticket in this industry

rwendland said...

ND the Enel press release is here. It says Enel will be repaid "613 million euros plus accrued interests" for its 12.5% stake - interesting that suggests, if there were no future installments, EDF valued an EPR at 4.9 billion euros when they cut the deal, though that could be distorted by the various side deals. EDF originally claimed it would cost 3.3 billion euros to build. Another article here.