Wednesday 9 March 2016

Energy Policy Goes Mainstream!

Guardian cartoon: detail.  (c) Steve Bell
It is not every day of the week that an energy topic becomes the subject of a major cartoonist's big OpEd piece  -  but today the great Steve Bell runs with Hinkley Point!

Yes, his Hinkley Point white elephant, lumbering and puffing as it is under George Osborne as jockey, nevertheless represents a "dead cert to win Grand National" as it powers ahead of the more worthy nags in the well-bent race.  Yes indeed, the fix is in.

But not to everyone's satisfaction evidently, as EDF's finance director Thomas Piquemal resigns in disgust at the stupidity of it all.  The EDF unions are pretty unhappy about it, too - they know EDF will need to sell down and slim down if it is to raise the dosh for its share of the Somerset monster, at the same time as completing the EPRs it's already started, rescuing Areva, and extending + decommissioning its vast French fleet.  Bon courage with all that, mes braves.

The French and UK governments would like it to be known that this doesn't change anything.  Indeed, they allow their whisperers to intimate that M.Piquemal was a hindrance they are glad to be shot of.  The City will be the judge of that.

The statement from Dave's mouthpiece - "President Hollande said himself on Thursday afternoon that it has the full support of the French Government" - was a bit loaded, I thought.  But Hollande is an ideal candidate for the opprobrium that may be about to follow, as and when reality bites home.

But, actually, it may never do so.  You really can suspend the law of gravity - for so long as you are willing to throw money at it.  Given the start-up date has already slipped 8 (that's eight) years - now 2025 and counting - Hinkley's electricity output doesn't feature directly in anyone's thinking.  So the primary ongoing costs of this endless farting-around are lawyers' fees and reputational damage.  Eventually, I suppose, the Chinese will get pretty pissed off at being associated with this shower, at which point any attraction of Hinkley for 'Genius' Osborne evaporates.



Jan said...

I predict it's not going to happen.

david morris said...

Also a relevant post today on Gaia Fawkes

Ed Davey : has there been a more egregious pol since Lloyd George (My Noble Lord Fumblebum excepted) ?

Electro-Kevin said...

Off topic but I thought this was worth bringing here:

Remember, not only did you and I contribute to our Pension, our employer did, too. It totalled 15% of your income before taxes.
If you averaged only £15,000 over your working life, that’s close to £220,500.
Read that again. Did you see anywhere that the Government paid in one single penny ?
We are talking about the money you and your employer put in a Government bank to ensure that you and I would have a retirement pension from the money we put in, it was not money that the Government had any right to spend elsewhere.
Now they’ve started to call the money we paid in an ‘entitlement’ when we reach the age to take it back.
If you calculate the future invested value of £2500 per year (yours & your employer’s contribution) at a simple 5% interest (that’s less than what the govt. pays on the money that it borrows from overseas), after 49 years of working you’d have £892,919.98.

If you took out only 3% per year, you’d receive £26,787.60 per year and it would last better than 30 years (that means until you’re 95 if you retire at age 65) and that’s with no interest paid on that final amount on deposit !
If you bought an annuity with the money and it paid 4% per year, you’d have a lifetime income of £1976.40 per month.


Where did our money go ???

Nick Drew said...

Kev, when a govt really needs big £££ they always go for the pensions, one way or another

back in '08-09 the portuguese 'nationalised' private pensions

ultimately, Sir Humphrey knows how to seize back government debt, National Savings etc in return for 'Consols' (invented in 1752) - it may be a few years ago now (last ones were issued by one W.S.Churchill in he 1920's), but the folk-memory still exists in the Civil Service we may be sure

CityUnslicker said...

Hinkley will be approved now so that it can later safely be presented as a 'cut' by a new PM/Govt in 2020.

Nothing real will have been done by then anyway.

Electro-Kevin said...

Government pensions exempted, of course, Nick.

hovis said...

@E-K's O/T: "less than what the govt. pays on the money that it borrows."

The question is why does the Government borrow from private institutions and pay a rate on interest on this when it grants the very power of money creation to those every same private institutions? This is ever more pertinent as the war on cash is stepped up and most money in circulation is private bank credit. Until you sort out the money system all else is frippery.
Bring back the Bradbury pound.

James Higham said...

You really can suspend the law of gravity - for so long as you are willing to throw money at it.


rwendland said...

I like the recent anti-lobbyist salvo:

"No legally binding [EDF-China] contract ...

The French energy company has found it has taken longer than expected to do due diligence on state-owned CGNPC’s ability to make its £6bn contribution to the Somerset power scheme.

The complexity of the issue is hard to imagine. There are dozens of different legal agreements and literally thousands of pages,” said one nuclear industry source. The source added that the agreements also apply to projects at Sizewell and Bradwell."

This is common knowledge among those who follow this closely, but I've not seen this so clearly in the MSM before. Also little mentioned is that under Ed Davey's deal EDF gets no UK money until it can get the much delayed Flamanville EPR working.

The lawyers are clearly the winners in the £2 billion of spending on the project so far! And it looks like the politicians will be jockeying not to take the blame.

Nick Drew said...

KPMG have done handsomely out of this, too. Working for both HMG and EDF. Of course I'm sure they have put in place a watertight *ahem* chinese wall (!!)

nice wrk if you can get it, eh?

Anonymous said...

Just how hard can building a boiler be? More precisely, what is the breakdown of costs - how much goes on Suits and Wigs, how much on concrete and ironmongery, how much on computers to stop it going bang, how much on regulators to declare this bolt is OK, that bolt is not. Cannot help feeling the basic job is not that hard, just made to look hard. As they say in France, that's all very well in practice, but what about the theory.

rwendland said...

ND, yep, the Big Four never miss a fee-earning opportunity! KPMG this time is it.

To be fair, some of the £2 billion already spent has gone on engineering. Areva was contracted to build some components in advance a few years ago: "At the current stage, forgings are already being manufactured and several hundred [Areva] engineers are working
on the [Hinkley] project."

There's the rub for France plc. It is hugely logical to wait for the first EPR to be actually operating before making the Hinkley FID, and also to use the New-EPR design to be ready 2020-ish, but Areva needs work ASAP to stem redundancies and keep a work-flow.

rwendland said...

Roger, building EPR pressure vessels is bleeding edge technology - largest nuclear pressure vessels in the world. For the first EPR, Japan had the only forge large enough to make it (and they did a good job). The more recent ones build in France have carbon density flaws in them - which caused part of the build delays, especially the 2 EPRs being built in China.