Always remember what we said here a very long time ago: the whole point of France's nuclear policy is to get other nations to underwrite their astronomical nuclear liabilities.
This is precisely à propos of Mr W's prompting BTL here (he'll kindly correct any details that need correcting) ...
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The Hinkley Point C / Sizewell C story so far:
When EDF (together with Centrica & later still the Chinese) acquired the old British Energy in 2008, they were immediately set on building more of their EPR design of nukes in the UK: HPC was nominated to be the first. Recall that until after the 2005 GE, Blair was set against a nuke revival which he'd believed to be electoral anathema: but various voices** persuaded him it was a Good Idea. EnSec at the time was of course ... Ed Miliband. EDF had the effrontery to announce an HPC start-up date of 2017, and that it wouldn't require a penny-piece of subsidy - the latter line being official government policy up to and including the awful Chris Huhne (remember him?)
Next milestone event was Fukushima 2011 which, to be fair, was outright force majeure and caused significant mods to be made to the design of the structure in which the EPR reactor would be housed. OK, so the costs went up as a consequence. But that was the last externality that EDF can truly be excused of: covid might just also creep in to the reckoning, but not inflation, their other bleat.
During the regime of Ed Davey - to be fair, egged on by that git George Osborne - suddenly EDF was going to get subsidised. We have written about the awful HPC CfD contract many times here. It has only one saving grace, on paper at least: project cost overruns are solely for the account of EDF / the Chinese (who've now buggered off) / Centrica. But given the outrageous one-way changes subsequently made to the CfD in EDF's favour, at EDF's demand, even this is of little comfort. The project overruns are horrendous; and we know EDF will hold a gun to HMG's head for outright cash subventions at some point. (Personally I suspect this has already happened, disguised as SZC payments, see below.)
To repeat: once the Fukushima design changes were made, everything subsequently is down to EDF's monstrous incompetence. EDF hints that UK regulators have kept tinkering unreasonably with new design demands, but remember: the CfD states that unless a new regulation could have reasonably been foreseen by EDF, the latter is indemnified against extra costs arising. So we can put 'costly regulatory tinkering' out of our minds.
Fast-forward to SZC
EDF, of course, realised even before the ink was on the CfD (which they only signed because they thought Brexit would scupper the project altogether) that they couldn't carry out SZC on the terms explicitly for SZC itself that are actually contained in the HPC contract (i.e. for SZC as a put-option for EDF). So they carefully played a lobbying game resulting in Boris agreeing to finance SZC on a US-style 'rate base' footing (i.e. underwritten directly by taxpayers) - and then, got HMG to stump up hard cash: a billion here, a couple more there ... now the cash commitment has hit £11 bn of taxpayer money, rather than the usual 'stick it all on the electricity bill'. AND - amazingly - although EDF has yet to take FID on SZC, the new reactor is already under construction in France, paid for by us. FFS ! Talk about "too big to fail" ...
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So now we loop back to the very first line of this post. Also, we should stew in the details of how badly in trouble HPC is, and how cash-strapped and liability-riddled EDF is in general; how much HMG needs French cooperation on the Boats issue; and the perennial suspicion the whole civil nuclear programme is there to underpin the military nukes ... and you have a recipe for an ongoing haemorrhage of taxpayers' cash that starts to look seriously injurious. And in the middle of this, Miliband thinks he can get electricity bills down!
An appalling tale - egregious even by the standards of HMG cockups and nuclear age skullduggery. I have nothing against nukes in principle: but in practice they just never add up. If we wanted an SZC, let it be remembered that by far our best-performing nuke has been SZB. We should have 'simply' (hah!) built an updated SZB.
ND
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** including one G.Brown, brother of whom worked for, errrr, EDF
General - if you follow the tags, you'll find loads more C@W posts on these topics.
20 comments:
That's all very well in practice Mr Drew, but what about the That's all very well in practice Mr Drew, but what about the theory? (Traditional French riposte).
Forget the €50Bn, small change, the price of a nuke plant by the time the Brits have dithered long and hard. They have the installed base and the 'expertise' and of course the decommissioning liabilities. If you want a nuke station where do you go now the Chinese are out of favour with the cousins.
As said, nukes are not really viable economically unless you consider the ploot to be worth having. The design cycle is too long and the cost too high to reap any notions of incremental improvement or competitive advantage. Except they do keep going when the wind don't blow and the sun don't shine and you are fussy about carbon. Burn oil or gas or uranium, it's messy whichever way. Solar and windfarm have their own set of problems.
For an over-mature European country France is not in too bad a state and up to now has been able to administer the place with brainpower. The as-delivered result from the French elite schools has been pretty good compared with the as-delivered result from the UK elite schools. They even give a free skipass to over 75s.
Sure, EDF may look a bit mad but when you have dithered and dragged your feet so long and never had a plan you don't get a lot of choice when you run out of options.
This and numerous other policies. If you wanted to destroy a country and its civilisation you could not do better than this.
Noting the drought in parts of Europe, including France, earlier in the year, and the probability of that being repeated, surely bolting a nuclear-powered desalination plant and selling the water to them during the droughts for the cost of leccy to generate it, plus some extra, would be karma?
I mean, EDF were worried about not having enough water to keep their nukes cooled, were we to supply it in the future, at a floor price determined by their own demands of what we pay for their electricity, surely nothing more French than being hoisted by their own petard?
Split the water in to hydrogen too, and sell the green hydrogen to the Germans.
Park a electric arc steel foundry next to it.
Surely there are plenty of things we can do with any excess generation to offset costs.
And maybe look into reusing the waste into new fuel, rather than treating it just as waste. Recycling being green and all that.
The Angry Bootneck on YouTube about Southport. Truly shocking - the father was accused of genocide in Rwanda and defended and allowed to remain in the UK by...
The only quibble I’d have is, when talking about the “cost” of nuclear power, yes, you can take the strike price and say “oh, that’s way too high, what about competitors such as natural gas?” or “but what about decommissioning costs?”. And this is all very valid.
Since we’re doing whataboutery, what about how you price supply risk and energy security? If LNG cargos dry up, for whatever reason, I’ll tell you for nothing what the price per kWh of that nuclear electricity will be. Somewhere near the moon, that’s where. Yes, of course, a serious LNG squeeze is vanishingly unlikely. At least in the foreseeable future.
But Hinckley Point C has an economic life of 50 years. Will there even be natural gas in any commercially available quantity by then?
Clive
(1) know what you mean, and we've often discussed the age-old dilemma: how much inefficiency are you prepared to accept in return for self-sufficiency? There's no single piece of indisputable quantified analysis you can reach for, or even aspire to. (Not least, the input assumptions change when the circumstances change)
(2) But HPC has no start-up date! (SZC even less so) What kind of an asset is it, for your notional energy-security planning exercise?
Natgas? For all intents and purposes, will never run out, per se. Vastly more gas under the ground than oil (which also will never run out). There is, however, an interesting question as to how low demand could go before we hit a tipping-point on the ability to maintain the vast natgas infrastructure upon which it depends. Worldwide - not such an issue. UK - in theory, if Miliband manages to electrify stuff on the scale he intends (ho ho), we could reach such a point on a localised basis.
(BTW, you might be too optimistic on your LNG assumption, hahah!)
Yes ND, you’re right about oil (or gas) never, to all practical purposes, going to run out. I’m in my mid-fifties and I’ve been hearing since I was old enough to understand what was being said they’re “running out”. No, they’re not — as the US proves every day of the week.
And yes, Hinckley Point C is currently not an asset, but a monumental liability. One day it will be of economic benefit. One day…
I have come into £220k recently and put it into 4.8% savings accounts. Santander/Shawbrook. I'm petrified at what Labour is going to do to the £ and our economy. Inflation is my biggest concern, the destruction of the £ and tax too.
Any ideas what to do with such money ?
I probably need to keep £100k of it in cash.
Any ideas ?
Thanks in anticipation.
I'd probably buy a 3-bed semi somewhere oop North (only place you can find them at that price) and take the 12% hit on someone decent managing the rent.
It looks as if HMGs of every complexion base their policy on house prices uber alles.
But then you don't have 100k in your pocket, otoh you have £800 a month in your pocket after the agents taken their dib.
I posted a week or so ago the Canadian nuke company who claim their reactor burns long-life nuclear waste, the stuff we stick in cans while we wait for a "geologically stable repository" where the neighbours don't mind it next door.
Knowing our rulers, we'll just about have totally converted to wind and solar, covering the landscape with Chinese panels and Chinese turbines, when the Chinese perfect these molten salt waste-eaters and will sell them to us - for a hefty price.
And remember - if you thought American tourists were bad, you've not encountered Chinese tourists en masse. Yanks are angels by comparison, and generous angels too.
ND> We should have 'simply' (hah!) built an updated SZB.
I know you speak in jest, but that is an oh so Gen II idea - get with the programme, only expensive Gen III post 9-11 reactors will do now. ie hardened to be safer and in particular take an airplane crashing into it.
Though ironically the EPR2 that EDF is redesigning to be easier to build in future in France and elsewhere is abandoning that troublesome double skin dome designed to take a big airplane hit. Oddly the EPR v1 design bid for SZC is not something the French would want to build in France anymore, and is only good enough for the Brits who stupidly are willing to finance the cost overruns using the the new RAB (leccy bill payer in advance) financing model.
Other thing, SZB didn't turn out to be economic anyway. EDF only makes money from it because its capital cost was largely written off when the CEGB reactors were sold to EDF. Actually rather like the 1970/80s French reactors that supposedly make such cheap leccy - somehow the French govt wrote off much of the capital costs (or used ridiculously low interest rates) when modern day EDF was formed.
SZB leccy had been expected to cost 3.5p/kWh in 1995 , but it turned out to cost an uneconomic 6p/kWh at 8% discount rate in 2000, which inflation adjusted is £128/MWh in 2023 - by amazing coincidence almost exactly the CfD price for HPC leccy had HPC been working in 2023 as promised.
Northvolt files for bankruptcy
https://www.cnbc.com/2024/11/22/northvolt-files-for-bankruptcy-in-setback-to-europes-ev-ambitions.html
https://www.theguardian.com/commentisfree/2024/nov/22/jaguar-new-branding-cars-donald-trump
“Hats off to Jaguar’s ‘inclusive’ new branding: now people of all backgrounds won’t buy its cars”
https://www.telegraph.co.uk/business/2024/11/22/jaguar-boss-says-criticism-advert-hatred-intolerance/
“Jaguar boss says criticism of new advert is ‘vile hatred and intolerance’”
You could put some of it away in a SIPP - at least the returns there will be tax-free until you take it out. Inside the SIPP you can buy some mixture of equity, bond, property and precious metal funds and investment trusts which hopefully will keep pace with inflation at least. Companies like AJ Bell have favourite funds with different levels of perceived riskiness that you can choose from.
I presume you've maxed out your cash ISA already this year - the limit is £20k per year. For the rest you may get a better return buying short dated low coupon gilts, because that will be mostly a capital gain and not interest payment, and CGT Is not charged on gilts. Your 4.8% from Santander is income and you will probably have to pay tax on it, although how much depends on your tax situation.
Jaguar getting a bit of flak, but any car advert will tell you 'buy an XYZ and you will be young and fancy-free and zoom
through exotic locations with attractive people like you'. Never anything about the car or the price.
John Redwood has a piece in which price points of £40k to £70k for a Jag are mentioned. Very unlikely, the new Gin & Jag
set are likely to fork over about £100k if and when one materialises. Which leaves in the air the awkward questions
where and when and who?
All a far cry from that post war era of electricity too cheap to meter and happy smiling Ovaltineys.
Yes, but the Jag advert has a Premier League striker-alike giving the bad eye to some poor Scottish or Northumbrian sheep farmer whose flock is in the road. Surprised he didn't flash a couple of gang signs.
There may be a lot of nuclear nonsense, but green nonsense is pretty impressive.
https://www.yahoo.com/tech/china-makes-history-installation-record-040000803.html
"Renewable energy creates jobs, too. It's more labor-intensive than other energy sources, so it provides jobs for people worldwide. In 2016, over 100,000 people worked in wind energy alone. When you add that to those who work in solar, hydroelectric, and geothermal energy, the jobs outnumber those made available by conventional energy"
I thought the Industrial Revolution, and indeed the preceding Agricultural Revolution, was about producing more per head, not less? If, for every megawatt, renewable energy employs more people than say nuclear, it's surely a retrograde step?
Thank you for your investment tips.
There's a wonderful fake advert for pre-owned Aston Martins, featuring an impossibly leggy model in not very much clothing.
"OK, you're not the first, but do you really care?"
https://www.aston-martin.com/2013/02/24/ad-for-used-aston-martins-fake-or-real/
check out the BMW ad - not even fake!
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