Cost of Sizewell C, part 2

Part 1 was a qualitative summary of what the SZC deal looks like.  It isn't difficult to find more exact details - Mr W has provided several links & AI will yield more - though history suggests almost anything with a £ sign or a timeline will necessarily be a wild guess.  And even when apparently tied down contractually, EDF shamelessly just asks for more money / time whenever it feels like some, as the Hinkley Point experience amply demonstrates. 

We now turn to the questions posed in Pt 1.  

Why SZC's "identical design" won't cost less than HPC 

We've heard this story before: HPC would be a doddle, because Flamanville and Olkiluoto had blazed the trail for the EPR design.  But of course neither of those was remotely complete & commissioned before work started on HPC, so there was a distinct dearth of Lessons Learned from the outset.  Also, both had started development before Fukushima, so there were always going to be new considerations to contend with.  But EDF persisted with the "cookie-cutter = cost savings" promise: so now SZC will be even easier, even cheaper!  Nowadays, of course, with HPC being a complete fiasco in project management terms, they blame it on the UK regulators moving the goalposts / Covid / inflation etc etc.  Well, all those things to some degree[1]; but how about several outright, scandalous EDF failures along the way?  To give but one example: they failed to make an adequate geological survey of the HPC site, and thus missed systemic faulting in the bedrock.  Result: epic additional quantities of additional concrete being required for the foundations, and at least a year's delay.  There are several more examples of this kind which EDF - & HMG - find it convenient not to mention.  And it ain't gonna change: EDF is not remotely as competent an engineering concern as it ought to be, or as it claims, or as many would like to imagine.  

The other important factor to register is that the challenges for nuke projects on this scale are, in detail, very heavily site-specific.  It's not too much of an exaggeration to say that every big nuke is almost sui generis.  It's absolutely clear, for anyone following SZC in detail over the years as I have, that the Sizewell site poses a load of different engineering challenges that need to be addressed piecemeal.  And again, EDF has been doing this incompetently or, as many believe, deliberately skimpily so that it could keep down the early cost estimates and reveal the "unexpected problems" one by one over the years, thereby "excusing" the relentless increases in budget and timetable they'll drip-feed onto us.  To give just a few examples, of which 2 & 4 are outrageous:

1. HPC enjoys the benefit of an already-existing, conveniently close-at-hand dock for the import of very large items.  Sizewell does not.  SZB utilised a temporary jetty during construction: EDF has shilly-shallied about whether they need to do the same this time around.
2. Access to fresh water (needed in large quantities both during construction and in routine ops thereafter) hasn't been a big issue at HPC.  It's a massive issue in parched East Anglia, and the SZC plans approved by HMG (under the Tories) don't include a resolution of this issue.  (The Planning Inspectorate declined to approve the plans accordingly, but were over-ridden.)  We may be sure that whatever solution they come up with, it'll add significantly to the budget (or dumped onto general water bills!).
3. Faulted or not, there was at least bedrock close to the surface at HPC.  But just under half of the SZC footprint lies on a former marsh (a small river delta) with bedrock very far below surface level.  The piles that will need to be sunk will be very extensive and costly.
4. The coastline of Sufolk is subject to serious, constant, millennia-long erosion patterns - as eny fule kno.  Right now there is a shifting sandbar directly offshore Sizewell which has been protecting it for several years.  But it's on the move, and that protection won't last the 135 years (sic) that the site must cater for, such is the way decommissioning works for UK nukes [2].  So (a) the concrete platform on which SZC will be built, needs to be much higher than that of HPC: and likewise the sea wall.  Additionally, (b) there is a really obvious possibility of sea encroachment inland, on the north flank of the site (the marshy side - that old river inlet): the RSPB which manages that land reckons it'll happen within 50 years at most.  Experts have long told EDF they need an extension of the sea wall to the northern flank accordingly, as well as on the (east-facing) seaward side.  But only the latter is in the approved plans and the publicly-announced cost estimates.  Additionally, in the aforesaid 135-year timeframe, inundation of the whole area is inevitable, so a full operational plan is required for the contingency of the entire Sizewell site - SZA, B and C - operating in 'island' mode on its concrete plinth.  Again, this isn't in any published plan.  Diligent investigation by campaigners has recently revealed that EDF have known about this all along, and do in fact have unpublished "supplementary" plans for all of it.  But of course none of this features in any public "budgeting" or cost projections.
5. etc etc - I could go on.

Against all these cost-boosting special features of SZC, what are the much-vaunted cost savings we may expect from EDF?  Well, they sure ain't going into mass production for EPR reactor castings: they've vowed never to build another one after SZC.  Recently, EDF proudly announced - and the government proudly re-announced it - that they'd be re-using some rubble from a grubbed-up part of the SZA site, in the foundations of SZC.  Well pardon me if I'm less than bowled over by this astonishing feat of saving tax-payers' money.  

What else does all this leave us with?  Several things:

• As mentioned before, the government is clearly desperate (they know wind + solar + batteries won't suffice) which, coupled with the endless willingness to be bullied by the French[3], is a recipe for bad deals at the start of the piece and non-stop piss-taking by the French thereafter.  It's exactly what's happened with HPC, is still continuing with HPC, and has been happening thus far with SZC.  Why would it stop?
• Even if we reckon the SZC deals are struck and definitive now, think of the scope this cost-plus arrangement gives France to pass through, well, anything they think they can get away with onto the "Sizewell C" account!  Accountants are good at providing "alternatives" when it comes to cost allocation ...   Sizewell B costs;  general EDF engineering charges; "management fees" (much beloved of all "related-party" arrangements when one player pulls all the strings). etc etc.  Now EDF retains just 12.5% equity in SZC, so on any cost that would otherwise be for EDF's own account, but that its accountants reckon can be passed through the SZC books, EDF sees at least a seven-eighths reduction, or more: and that's if it's borne by the equity.  To the extent it's passed through on the cost base or the appalling overrun indemnity scheme, it could be anywhere up to a 100% reduction.   Moral hazard, or what?  
• One last thing: surely, you may say, there are audit rights for HMG to stop any such hanky-panky taking place?  Doubtless, this is true, in that the contracts presumably say so.  But here's the thing: when the astronomically-subsidised Drax was caught (by the BBC!) playing silly buggers with its fuels reporting, and was forced to admit to Ofgem and DESNZ that it didn't have adequate data to account for everything it was self-certifying, it got a rap over the knuckles (£25m penalty) but nothing more.  MPs clamoured for full audits to be conducted of everything before a penny more in subsidy was paid to Drax - we are talking billions, after all.  But at the Select Committee hearing, both DESNZ and Ofgem stated clearly that they had no resources to check everything Drax tells them in its self-certified reporting on its complex fuel-sourcing operation. 

Why do we imagine that with this new, multi-billion subsidy arrangement for another operation of enormous complexity, EDF won't be able to rely on the same shameless, shoulder-shrugging insouciance from DESNZ and Ofgem that Drax seems to enjoy.  Too big to fail - and too big to audit!  

What other reasons might there be for the charade?

There's a longstanding thesis, much peddled by the SPRU team at the U. of Sussex, that the unspoken motive for UK 'civil' nuclear policy is cross-subsidy for our military nuclear programmes.  This once seemed more of a conspiracy theory than it does now: read this, from Kier Starmer just last week - his "strategic steer to the nuclear industry".  

... Nuclear technology is vital to our country’s economic growth, energy security, and national defence. It delivers reliable, low-carbon electricity and supports our nuclear deterrent ... We are building on this legacy with clear commitments on the future of our nuclear deterrent, our submarine programmes, Sizewell C and the SMR programme. 

Surely, the only intended readership for this bellicose Starmerite "strategic steer" is one V.V. Putin.  I rather doubt L'il Volodya is quaking in his boots.

ND 

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[1] As blanket excuses go, Covid is particularly open to challenge.  Building works were never subject to lockdown, the reasoning being they are outdoors.  I know a great deal about another large construction project which was comfortably able to speed up its project schedule and reduce its costs during Covid, when (a) various restrictions arising from the need to work around nearby sites of regular employment were lifted, because these other sites were now shut down; and (b) labour costs came down because many construction-related trades found that much of their regular work dried up.  OK, maybe (a) doesn't apply so much in the middle of Somerset: I'm just saying "Covid" isn't a free pass on costs and schedules.   

[2] The way we decommission nukes in the UK involves taking away some of the radioactive stuff upon cessation of ops, then sheathing and just turning the keys on the rest of the site, walking away, waiting for cooling down & the half-life effect (venting into the atmosphere, BTW) to reduce the radiation enough for final clearance.  SZA is in that state right now; also HPA.  2160 is accepted by EDF as the relevant date for SZC.  There's no chance the Suffolk coastline stays as it is for that long: and some extreme scenarios suggest 2190 would be the date.

[3]  I mean, what else can they do to us?  Take even more of our money and do even more nothing about the small boats - check.  Be even more beastly to us over any attempt to engage in ordinary trade & diplomacy with the EU - check.  What favours are we buying when we give them everything they ask for on HPC and SZC, with fat cheques included? 

Sizewell C - what'll it cost us? (part 1)

Spoiler alert: nobody knows; and it's not clear anyone cares who has agency in the matter[1].  We've written about aspects of this any number of times - see the tabs below if you're interested.

Recap on Hinkley Point C:  granted a long and very flexible CfD (there's an extraordinarily lax backstop date for start-up, which the government glibly extended when EDF requested, so it can't be reliably built into system planning - which negates the supposedly vital aspect of "reliable baseload power" which is nukes' raison d'être) with a handsome, index-linked strike price.  It doesn't even compel EDF to build the thing at all ! The one aspect that might have been seen as in our favour is that EDF bears 100% of any hypothetical the absolutely inevitable monstrous cost overrun.  But even that is irrelevant because again, when asked, HMG just gives them more money.

SZC:  EDF nonetheless vowed never again to do another nuke on HPC terms (wonder why..?), requiring instead that they be shielded from almost all construction cost risk[2], but again with no meaningful timetable for completion; and that they be funded throughout construction, even if over-running[3].  They also demanded their ongoing costs be met via the electricity price after they (hypothetically) commission the damned thing - it'll be something like a CfD with a rolling cost assessment setting the strike price: though for some reason HMG et al are loathe to use the CfD / strike price nomenclature.  Oh, and EDF have successfully demanded hard cash - billions - upfront from HMG to fund "development work" prior to taking the decision to go ahead, even after having said it'll be the same design as HPC AND they'd been working on it for 10 years already.

This subsidy approach is being delivered via a variant on the Ratable Asset Base (RAB) approach, beloved of US utilities for decades, the Thames Tideway Tunnel, LHR T5 etc etc.  Bottom line, we all get to pay in installments, starting right now.  Remind me again, when will it start up?  Say after me: Nobody Knows and Nobody Cares. 

Why was this agreed?  The ostensible reasons are:  (a) the nuclear lobby has persuaded successive governments we must have more nukes;  and (b) "it's much cheaper this way" - a material portion of the total HPC cost is financing charges.  [Why can't French-government-owned EDF finance more cheaply than the UK government?  Very good question.  Always bear in mind, though, that for the French the Whole Point of HPC and SZC is as part of their grand strategy to get other nations to contribute to their humungous nuclear liabilities - see this post from 18 years ago.]  

Oh, and over & above this notional cost saving via lower financing costs (real enough, if you accept the premise), they also promise cost savings via the cookie-cutter effect, because SZC will be the same design as HPC.  We return later to this delightfully simple notion confected for simpleton politicians.

You can readily research for yourself that when the damn' thing inevitably overruns its "budget" (hah!) the taxpayer + billpayer combo picks up most of the tab.  So what, then, are the incentives on EDF to keep costs down?  Errr ...   Seriously, this is a massive and excellent question we'll return to next time.

Here's the thing: in having thus devised featherbedding that's comfortable enough for feeble, state-owned EDF to be willing to go ahead and build the thing, it's equally attractive for other investors, who are joining the fun and taking equity.  Centrica et al are anticipating low-risk, double-digit returns in return for stumping up their own capital.  [HMG is taking some equity: but why not all of it, HMG with its even-lower cost of capital and endless ability to dump costs on bill payers?  Another good question - to which the answer is presumably: they don't like it appearing on the Treasury's books.] 

Yes, folks, it all smacks of desperation.  And there's nothing you can't (/ won't) do when you're desperate and you can write cheques on other people's accounts.

Coming next:  

• why SZC's "identical design" won't cost less than HPC
• what else does all this teach us?
• what other reasons might there be for the charade?

ND

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[1] Curiously enough, some of the people who care are (a) several of the rather diligent French authorities, and (b) the French unions.  They are ignored by the French government.

[2]  The HPC contract already substantially shields EDF from the risk of costs rising because of changing safety regs etc.  Obviously, the cost increases EDF wants to be protected against are those resulting from their own bad decisions, flawed engineering, poor project management etc - which have been legion at HPC. 

[3]  Most householders know you don't pay your builders up-front without stern performance conditions.  Of all the companies not to trust with this, EDF is up there with the dodgiest cowboys in the construction market, as all experience shows.  Never will the government be able to say "how could we have known..?"

Macron's Cunning Plan, parts 14 & 15

So as well as completing the stitch-up over Sizewell and Hinkley (as discussed here many, many times), there's Macron's new "one out, one in" plan for the small boats.

Let's see if I've got this right.

So for every illegal that arrives on these shore that we send straight back, we must grant asylum to a "genuine" one.

But as we know, many of these people keep setting out, over and over again, until they succeed.

So. on a ratchet basis, one single illegal can be 'recycled' endlessly, to offload as many "genuines" from France as they are quickly able to turn him around for another crossing .. .. ?

Oh come on, Starmer can't be that stupid .. can he?  Please?

ND

Sizewell: another win for French nuclear blackmail

Among the large numbers bandied around by Rachel Reeves was of course well over £10bn of UK money for Sizewell C: and FID is yet to be taken!  Exactly whether this dosh is envisaged as outright cash (as has been the case with the billions already gifted to EDF, even before FID), or dumped straight onto electricity bills, or a combination, I have not yet discerned.  

It's still outrageous - at best a humongous leap of faith, the beneficiary of which is a French concern (and indeed the French state) that has proven itself many, many times over to be unworthy of trust in such matters.  In return for what?  A plant that, even on the most ambitious and optimistic assumptions, could not be generating electricity before the next-Parliament-but-two, and in the meantime will have cost all of us a great deal of non-returnable money.  Who said politicians' horizons extend only as far as the next election at best, and the next headline at worst?

Well of course none of this is to be taken at face value.  They are already pitching for headlines reading "thousands of jobs", although as we know, the hi-tech jobs involved will without doubt be squarely located in France.  The sop of a bit of civil engineering for UK firms - and not even 100% of that, if Hinkley Point C is any guide, which of course it is explicitly meant to be!  If Keynesianism is the guiding theory, you could get a great deal more for your money on vastly more useful civil engineering projects that might actually make some kind of economic return decades sooner than SZC ever could.  Just keeping the money in the UK would be a start. 

And of course there are other short-term considerations, the giveaway being Mr Frog who, on the exact subject of demanding more money for both SZC and HPC (for which, contractually, EDF has sole responsibility) recently stated: "We [UK + France] need to stick together on many subjects - on Ukraine, on all dimensions of our relationship".  We may be sure he really means "cooperation on Small Boats", the carrot of which which the French continually dangle, and then promptly withdraw a couple of weeks later.  Oh, and we must pay for that "cooperation", too.  Such an easy game.

Why are successive UK PMs and Chancellors such soft touches?  Blair, Brown, Cameron, Osborne, May, Hammond, Johnson, Starmer, Reeves ... it's only been Sunak who has ever demurred, and then without any meaningful force.  The rest have all danced to EDF's protracted, staccato jig.  I despair.

ND

Trump's team & the remarkable tale of the M10 tank

While Trump is stomping the world making desperate attempts to sate his Deal Lust at whatever cost to plausibility, partnerships, policy or prestige, business goes on in the vastness of the US government: and it seems possible not all of his appointees are complete dickheads.  I give you the youthful Army Secretary Dan Driscoll (wiki doesn't seem to know quite how old he is).

The M10 'Booker'.  Of no use to man nor beast

Upon taking office this chap has noticed that the M10 Booker program - a tank? an assault gun? an "armored infantry support vehicle"? - is, in any event, a costly dud.  And rather than soldier on regardless, as in many a similar circumstance over the decades, he has simply scrapped it, boldly and wisely stating that he ain't gonna fall for the Sunk Cost Fallacy.  

What a man! 

The soundness of his decision-making is of course compounded many-fold by the war in Ukraine, which signals as clearly as anything could that the weapons and doctrinal paradigms of the 20th Century are badly in need of 100% overhaul, not to say wholesale discarding.  In the race to do this effectively, every dollar spent on badly-procured, intrinsically obsolete stuff like the M10 is a dollar wasted, that could have been spent much better on something so completely different, it makes the head spin. 

In another excellent move, the US Army is not going to replace its 150,000 lumbering Humvees like-for-like.  For infantry purposes they are going instead for this - at a fraction of the cost.  

The Mad Max vibe obviously represents the future: see also the Russians abandoning the use of APCs for assault use - they get instantly malleted by Ukrainian drones - in favour of motorbikes on weaving courses to traverse the open fields between tree-lines.

I do feel sorry for the descendants of the two Booker families being commemorated.  Hopefully, they can take faint cheer from the wisdom of Driscoll's action.

Anyhow: to encounter a politician who properly understands the Sunk Cost Fallacy is a rare event, much to be applauded.  (Maybe there are other such people in Team Trump ..?)  As a matter of urgency, can Driscoll take Ed Miliband aside, please?  Hinkley Point, Sizewell, government-financed hydrogen projects etc etc, this means you.

ND 

EDF and its nukes: "we're sh*t, and we know we are'

As so frequently stated hereabouts since forever (since 2007, to be precise), the whole point of French energy policy is to have someone else pay for France's humungous nuclear decommissioning liabilities. 

Now they'd like "negotiations" over Hinkley Point C and Sizewell C to be merged into one big financing deal.  Well, well.  

First of all, what "negotiations" are needed over HPC, pray?  We already have a definitive financing deal: a binding contract that clearly has EDF on the hook for the stonking cost overruns.  (Its alternative is to walk away: such is that inane deal, struck by the dickhead Osborne and signed by the fragrant May, that EDF is under no obligation to finish the thing at all.)  Do contracts signed by the French mean anything?  Silly question.

Second, why would we buy a second nuke - of the very same design - from the same imbeciles who clearly acknowledge they can't finish the first, under a different deal structure where we are on the hook for the inevitable overruns?

Is there any point in telling Starmer and Miliband to grow a pair - maybe just one pair between the two of them?  EDF are shit project managers; and successive governments have been shit negotiators.  Each deserves the other.

ND 

UK nuclear madness

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.

Hinkley project: completely out of control

I think we all know the basic history of the Hinkley Point C nuclear power project here: initially talked of by EDF as being absolutely necessary for the UK power system by no later than 2017, they are now so far behind schedule they've even sought (and been granted, by the Tories) a waiver on the back-stop start-up date of 2035.  Taking the piss, or what?

They always plead changes in regulations** / covid / inflation / phase of the moon or whatever, but it's hard to obscure the facts of their basic incompetence, as manifest in, well, every one of their wretched EPR projects.  I could elaborate.  Now, it seems, they're passing round the hat for another £4bn.  Under the terms of the CfD, they pick up the tab for project over-runs - the only good thing about that contract.  Personally, I suspect the extra £5bn just granted them "for Sizewell C" - even before it reaches FID, FFS! - is also really a cash-bung to keep going with Hinkley.  Sizewell, you see, isn't going to be developed on the CfD model, it'll be 'rate-based' (to use the American term), i.e. nothing effectively reining back the costs: Taxpayer Will Pay.

I know nukes have their advocates, but surely that's only theoretical, wishing for hypothetical nukes that don't exist?  Or, someone will tell me we could have a S.Korean one that actually works.  Or indeed three, for the same price.

You just know it's also bound up with French 'cooperation' over the boat people.  Ah, diplomacy.  Thank Heaven the FCO is so good at what it does, eh?

ND

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**The CfD for Hinkley electricity indemnifies EDF against "unforeseeable" changes in regulation. 

CCS: George Monbiot is (broadly) right, for once

Well, right in the essentials (here) if not on some details, and of course his overall red-green framing.

Our George is a funny fellow, often the butt of humour even on his 'own side'.  Never met the bloke but I take him to be an honest person; thinking, writing & acting in good faith by his own lights.  Open to changing his mind in the face of such facts as come to his notice (notwithstanding some major blindspots).  Not to be sneezed at in a world full of grifters, charlatans and idle bastards. 

The CCS thing is pretty remarkable - the sheer scale of government commitment.  As he points out, the £22bn is just Treasury cash for 'investment': there'll be more costs on top.  He highlights the extra for anything related specifically to hydrogen: I'd add the costly CfDs related to ongoing 'commercial' CCS ops as currently structured, that will find their way onto our electricity bills - all of this is additional.

We've yet to see the full horror of the hydrogen plans and the budget & bills for that; and of course there is a big decision pending on Drax.  All in all, worst case is a 4Q 2024 which marks the transition from the (relatively) Low-Hanging Fruit[1] phase of 'decarbonisation / NZ', to the Seriously Expensive phase.  Starting to make the Hinkley Point C nuke look almost moderate by contrast.  Green opposition to this heavily 'industrialist' policy will be growing and growing.  Subsidy-farming industrialists love it to the same extent.[2]

I hope HMG is leaving itself several off-ramps in all this scheming.  Wishful thinking, I know: teams of expensive lawyers on the industry side will be making sure they can't wriggle off any of the contractual hooks that'll be involved.  

ND 

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[1] I seem to recall a bloke at university called Low-hanging Fruit.  I won't explain

[2] I've always worked in honest-to-God make-your-own-way non-subsidised companies: had no idea about subsidy-farming etc.  Then I had some business with the revered ICI, doyen of blue-chip British industry, whose attitude was "why do an honest day's work, when you can lobby government instead?".  Made me feel ill   

UK Nukes, part 3: FFS, why?

OK, so HMG is hell-bent on Sizewell C, to the extent that they are kissing the Frenchman's arse to get it done.  Since last week's announcement there has only been bad news from France, on Flamanville and the operations of the existing French fleet.  This follows upon well over a decade of nothing but bad news on the EPRs; so why SZC will be any better, no man can tell.  If ministers had half a wit, but were still that determined to go ahead, they'd be striking a much harder bargain than appears to be the case - and experience tells us the actual bargain will be even worse than anything that's ever made public prior to the inevitable public inquiry that will follow when everything goes pear-shaped.   (For a modest fee, I offer to act as commercial consultant in the matter.) 

Even if were to be concluded on intelligent commercial terms, literally nobody would dare hazard a guess as to when this chunky bit of capacity would come on line.  That's pretty dreadful for long-term planning in a perilously-balanced sector of crucial national importance; and gives the lie to the "only nukes deliver predictable baseload electricity at scale" line, which is about all EDF has to offer.

The question therefore arises: why in the name of Hell is HMG so bent on SZC?

Here are three answers:

1. Keynesian job creation.   That's the explanation I have always favoured.  You can see the attraction of HPC, for example: a project creating thousands of fairly decent civil engineering jobs (albeit the workforce holed up in portakabin hotels in the middle of Zummerset is not a particularly happy body of men) that drags on for year after year, being paid for by the French & Chinese, at their ultimate risk.  RAB-financed SZC, though, looks to be under-written by HMG and paid for concurrently on electricity bills - a rather different equation.
2. Support for the UK nuclear deterrent.  They bang on about this at great length at SPRU (Sussex University), essentially suggesting that the civil nuke programme is tacitly subsidising the military.  Maybe: it's not something I've ever studied: and I'm instinctively suspicious of deep-state conspiracy theories.  But the logic is obvious enough: you can take a look for yourself.  
3. A new one:  getting HMG off the legal hook.  So I now add this 3rd explanation: HMG can use SZC as something rather concrete** they can adduce in front of the judge as evidence they are actually doing something - however crass.  I've written here before about the stupidity of legislating for targets like Net Zero 2050 by making them "legally binding".  It simply invites court actions by the Green Blob, and indeed the courts gratify it by entertaining them, and sometimes finding in their favour.  Just last week, the High Court agreed that HMG's NZ2050 strategy was too woolly and has given it a few months to sort it out (plus costs for the Blob).  This is of course bloody ridiculous, but what does anyone expect?

What do readers think?  What other explanations might there be?  Is anyone convinced by SPRU's military hypothesis?  

Over to you.

ND  

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** and I do mean concrete - unbelievable amounts of the stuff, even more than at HPC: 40% of the new plot they'll be building on at the northern end of the site is bog, with very poor and deep underlying bedrock.   EDF screwed up the geology at Hinkley, so the scope for real and very costly nonsense at SZC is huge. 

New nukes in the UK - part 2

So EDF won't (and, by itself, can't: it's bankrupt) take construction risk on nukes any more (Part 1).  But it needs to parlay its supposed expertise into anything that can defray its appalling future liabilities and monetise its sunk costs - at other nations' expense.  Hence, its relentless pressure on HMG, (a) to proceed with Sizewell C, and (b) do so on a completely different financial footing to that of Hinkley Point C.  Oh, and (c) HMG must put its hand in its pocket right away to fund the ongoing engineering, because "EDF has almost run out of money".  And HMG has agreed.

The new finance basis will be "Ratable Asset Base", whereby approved developments call on guaranteed periodic payments from, well, taxpayers ultimately**, during the construction phase.  The logic is, this reduces risk to the point where cheap institutional finance will swing in, attracted by the state-backed cash-flow stream.  By "reducing the cost of capital significantly" vs the "commercial" margin EDF claims it needs to charge in return for taking construction and cash-flow risk on (e.g.) HPC, the overall cost - which was always to be borne by UK bill-payers anyway, if over many more decades - is brought down by a noticeable amount.  In capital intensive sectors, attracting the least-cost capital has always been vital (true).  As a throwaway line it is added that RAB is how loads of big infrastructure projects are financed in the UK and elsewhere (true): and of course almost the whole of the US utility sector has been built on this basis (also true).  How heartening!

Heartening for the French, maybe, but open to many heavyweight challenges.

• EDF, having just been re-nationalised, is now essentially the French state, which can raise money (almost) as cheaply as any western nation.  If they are so strategically keen on SZC, let 'em get on with it.  They already have a put option for the project, complete with UK-guaranteed electricity price.
• Yes, RAB is used in big infra projects.  The difference is, those are traditionally based on conventional technology, proven construction methods, and low strategic risk.  SZC?  Pull the other one: it comes from a stable with truly appalling previous in these matters.  To trust them to get their act together on this one, in the face of all history, is some kind of madness.  RAB as 'conventionally' practised is not at all suitable for nukes: ask the Americans, who've tried it.
• In particular, tax-payers are open to the following scenario (as HMG freely admits).  SZC construction gets underway, and taxpayers make regular payments, year by year.  For the first N years, the work is all civil engineering anyway (HPC is still in the civils phase, five years after commencement), and the construction risks are moderate (though by no means nil) - so the chances are, the payments will properly fall due, more or less.   After several billions of this and a monstrous scar inflicted on the East Anglian countryside + precarious heritage coastline, EDF says that's it, we're stuck - we need a lot more £££, in order to finish the project.++  HMG says 'no'.  EDF declares its project affiliate bust, and says, maintenant mes braves, whatchagonnado?  There is no answer to this question, short of having the French government guarantee construction which, naturellement, it refuses to do: that's the whole point!  So the UK taxpayer bears the ultimate risks of construction, delay and budget overrun, as part of its exposure to (it bears repeating) an organisation that is legendary for its grotesque, world-scale failures in all these regards.  
• It's not at all clear big institutional money is looking for the kind of home represented by SZC.  Nuclear risk lies at the heart of this, despite attempts to dress up the financial proposition as just another annuity stream.  In particular, everyone knows the Big Contract between HMG and EDF will be secret.  So the institutions will also ask for secret protections - and they won't take their sharpest pencils to the rates they charge, either - if indeed they are interested at all. 

This is just the headlines of the RAB stuff:  I'm not even talking about the massive strategic issues of (e.g.) China having a 20% stake that needs squaring away; and whether a large chunk of deeply uncertain nuclear capacity commencing probably 10 / 11 / 12 years from now (who'll ever have a firm handle on that?) can contribute meaningfully to a national electricity requirement which places an ever greater premium on reliability, flexibility, and certainty in both these vital dimensions.   Still less am I addressing the plethora of SZC- and East Anglia-specific environmental issues involved, which themselves are multi-dimensional and acute.

And yet, HMG ploughs on regardless.  As we said at the end of Part 1:  FFS, why?   Some suggestions towards an answer in Part 3 ...

ND

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** I say 'ultimately taxpayers' but in the first instance it will probably be electricity bill-payers.  Not a huge amount of difference, in practice. 

++ Ample proof of EDF's approach to contractual obligations comes very recently from this FT revelation: 

EDF is in negotiations with the British government over penalty clauses in [the] agreement struck in 2013 to finance the building of [HPC]. The subsidy deal guarantees EDF a price [for] electricity it produces for the first 35 years of its life ... Penalty clauses ... reduce the 35-year term if Hinkey is not generating electricity by May 2029 [by] one year of guaranteed payments for every year of delay up to 2033. If the delays extended beyond that date the government has the option to terminate the subsidy contract. EDF ... has repeatedly pushed back its completion date while costs have spiralled. In the latest setback, EDF warned ... that the first of Hinkley’s two reactors would not be completed until June 2027 .... [and] the company cautioned that there was the possibility of a further 15-month delay to September 2028, adding that date could slip again ...

New nukes in the UK: Sizewell, RAB etc (part 1)

For well over fifteen years here we've periodically asserted that France has a critical strategic objective of getting other nations, not least the UK, to pay for its monstrous nuclear liabilities.   As soon as EDF came away with Osborne/May's outrageously generous gold-plated deal for Hinkley Point C, they started lobbying for the next one, Sizewell C (CGI above); and - significantly - that this should be on a different contractual basis.  To remind ourselves of the salient details of HPC, bad and good:

• there is no HPC completion date!  In fact, EDF isn't obliged, contractually, to build it at all!  
• ... but if they don't, all the ever-increasing sunk costs are for the account of the project (80% EDF, 20% the Chinese)
• any problems encountered along the way that are down to HMG, and most specifically any more-than-trivial changes in nuke-related regulations, are for the account of HMG (even if, for example, another nuke accident happens somewhere in the world that inevitably means every government everywhere will insist on a new type of widget being fitted on all nukes everywhere).  In other words, EDF - arguably the world's leading nuke institution - refuses to accept fundamental nuke-risk
• the electricity sales contract strike-price (technically a CfD) of £92.50/MWh, was base-year 2012, indexed to inflation (it is now well over £100).  At the time that was some three times higher than prevailing wholesale baseload electricity, although obviously it looks a lot better right now, as our good friend Mr Wendland noted BTL the other day
• the HPC deal gave EDF a put option on SZC at £89.50 (indexed) (which would then apply to them both); said (by EDF) to be a good deal at the time, since "of course" SZC would be cheaper to build than HPC, being able to call on all the HPC experience and the established construction labour force etc.
• any problems encountered along the way that are NOT down to HMG are for the project's account
• certain very mild contractual disadvantages (I won't call them penalties because they are trivial) kick in if EDF isn't finished by 2029; and the whole contract is cancelled in they aren't finished by 2035.   This for a plant that EDF told us in 2008 would be operational by Xmas 2017! 

But, pleased though they were to get this deal inked in 2016, this wasn't good enough for EDF - a company that is technically bankrupt, although as a recently fully-re-nationalised French state entity, this might not be as fatal as it would be for most companies being relied upon to undertake huge and critical enterprises.  Why not good enough?  Because EDF retains HPC construction risk, and is only remunerated (if at all ..! - see 2035 above) via electricity sales in due course, albeit at a price underwritten by HMG.

Construction risk?  Well, needless to say, at HPC there have been many problems along the way.  Obviously Covid wasn't expected - although hey, any firm undertaking projects with a construction period of more than a decade, and a lifespan of maybe a century, had better reckon on Shit Happening, no?  But Brexit happened before the contract was signed, so no sympathy there.  And likewise no sympathy for the many purely technical and design cock-ups perpetrated by EDF and its (mainly French) major contractors, e.g. getting the geology wrong on the bedrock at Hinkley, FFS.  So costs have been steady rising, and timetables steadily slipping.  Oh yes, there's construction risk aplenty.

So what about SZC?  Surely, as we've been assured by EDF ad nauseam, just as HPC was going to be a breeze, because of the prior experience obtained with EPRs at Flamanville (France) and Olkiluoto (Finland), so SZC in its turn would be an absolute shoe-in.  Hah!  All three European pre-SZC EPR projects have been fiascos; and the two EPRs built in China, apparently much more efficiently and on time / on budget, are in trouble already: one is shut down and the other on limited running, due to unresolved problems that the French nuke authorities are very troubled by.

And aside from the entire history of EPRs, there are SZC-specific reasons to believe it'll be more costly than HPC.  I won't bore you with the details, but every site is always different and SZC will bring all manner of new challenges, some of them pretty fundamental.  Nothing that engineers can't solve, mind - at a cost ...

SO.  We can easily see why EDF refuses to bear construction risk at SZC.  They are "even more bankrupt" today than they were in 2016.  In the next post we'll look at how HMG proposes to steam ahead with SZC anyway - and we'll ask the obvious question:  FFS, why?

ND 

The Hinkley Point TV Drama

Did anyone see the extravagent airtime awarded by the Beeb to EDF's PR department in its Hinkley Point "documentary"?   Obviously we've been here before with the Beeb's "Powering Britain" (Energy is Big and Sexy) series: but that was fairly spread among a group of different assets that have "truly-massive-engineering / nice-photography-on-a-sunny-day" TV appeal.  But this one is all for EDF.

How much did EDF have to pay them?

Only three more episodes to marvel at.   Given that there's nothing yet to see at Hinkley except vast civil engineering, it's just "Watching Concrete Dry".  A prime comedy slot.

ND

Nuclear ain't free, either: EDF in Big Trouble

One of our recent visitors queried my offhand comment that EDF was in Big Trouble (BTL on the "Negative Prices" piece).

Easy:  EDF is essentially a price-taker, but its costs are by no means all sunk - see CU's piece on oil price and comments thereupon.  OK, EDF has some short-term hedges in place (forward sales at fixed prices, in their case) but the very large bulk of its very long future outlook is naked exposure to the market price of power, which ain't gonna be healthy.  (EDF's outlook has to be long - the longest of any European energy producer - because it amortises its stuff over many decades at a very low discount rate.  Only holders of pure, essential infrastructure like National Grid could contemplate longer outlooks and lower discounts.)

The traditional model of most power generators in competitive markets is built not on absolute prices (naked exposure), but spreads - the differences between e.g. electricity and coal prices ("dark spread") or electricity and gas ("spark spread").  They are margin businesses: buy fuel, sell electricity - when profitable.  (Large-scale hydro power is much more complex, economically, but need not detain us here.)  Market prices will be set by something approximating the marginal plant on the system at a given point in time.

Then along come wind and solar, with their sunk costs and near-Zero short-run marginal cost - no fuel!  They would be price-takers, too, were it not for the massive subsidies they traditionally received.  Increasingly, however, they do trash the market price for everyone else (see "negative prices" as before) - that's zero-marginal-cost-plus-sunk-capital-cost for you.  

Here's the thing.  For some purposes - specifically, political and PR purposes - nukes have enjoyed billing themselves as having "zero marginal cost", too.  "Electricity too cheap to meter" in the words of the old slogan.  But it's bollocks.  They have monstrous ongoing costs to cover, of which the cost of fuel is broadly irrelevant.  It's maintenance, safety, plant life-extension and, crucially, decommissioning that loom large in their low-discount future perspectives.  And for EDF these things are (a) vast, and - the most important point - (b) not even remotely fully funded.  If they were fully funded they could be viewed as sunk.  But they ain't - not even close.

So ultra-low electricity prices are catastrophic for EDF and, in turn, for the French state.  Yes folks, EDF is Too Big To Fail. The French are obliged to essay the biggest can-kicking exercise in Europe.  Longtime readers of this blog will know that shortly after we started up I opined (in 2007) that French policy was all about getting other people (the EU, the UK ...) to pay for EDF's astronomic decommissioning bill.  Everything that's happened since has reinforced the point. 

That very much includes the suicidal madness that is Hinkley Point C, one of the primary reasons Osborne, and May in her turn, deserve eternal opprobrium.  The scale of UK subvention that we've committed to over 35 years, to buy the output of this plant at truly ludicrous prices will put a serious dent in our economy.  Ultimately, May is excused through weakness of intellect and will. 

But Osborne?  Osborne seemed to believe in an ever increasing electricity market price (the only conceivable rationale for HPC).  He is a cretin, and how he managed to come by a reputation for political genius is one of those enduring mysteries.

What's to be done?  Well for one thing, don't let's repeat the entire disaster by paying EDF to build Sizewell C! (which was firmly in the pre-covid political calendar, hopefully now on ice).  And for HPC?  We mave have to resort to the Semtex option ...

ND

Nuclear Winter

I am on record as musing that there will be no more nukes built in the UK - including, just to make it interesting, Hinkley Point C.  News that Moorside has fallen by the way (*until someone else steps into Toshiba's shoes*, yeah, right) is clearly grist to that mill.  

However, the government's arithmetic on electrification of just about everything forces them down the nuclear road.  So all attention will now be on what they will come up with for the remaining "prospects" (Wylfa, Sizewell, Bradwell) by way of a financial package.  The counter to my negative hypothesis is of course that with enough government money you can indeed suspend the laws of gravity - for a time. 

But one has to suppose the developers will insist it is up-front money next time.  Which brings us back to Hinkley.  EDF has certainly been beavering away - the civil engineering is moving along purposefully.  But, famously, although the French screwed a handsome electricity price out of George Osborne, they don't get to trouser it until the beast is up and running.  And never mind all that dredging, earthmoving and concrete: construction of the Hinkley reactors is nowhere near being started. 

Hinkley Point C: mud, concrete, but not much else

In short, the sunk costs of Hinkley, whilst by now probably a couple of billion (they'd sunk nearly one billion before they started any work at all) would not be ruinous for EDF if they decided it wasn't worth the candle.  Obviously, Plan B would be to steam round to our resolute Prime Minister and demand some cash, threatening that Plan C would be to walk away: seeing how *helpful* she was back in 2016, when Hollande wagged his finger at her.

Still, it's not clear this would succeed a second time, not least because unless they get motoring, the chance to browbeat May could disappear forever.

ND

Financing Nukes: A Big Fork in the Road

First of all, apols for lack of posting but it really is the busy season for transactions just now ("*despite, errrr, Brex...*").

Meanwhile, back in never-neverland: the various parties lined up to satisfy the government's cravings for new nuclear power plants have pretty much reached consensus that even the dreadful Hinkley deal won't be good enough for them in future.  Doubtless the developers coordinate carefully behind the scenes; and from each of the individual bilateral negotiating tables comes the word that unless the government is prepared to take more project risk, no kind of CfD deal alone (even of the one-sided EDF-Hinkley kind, see plentiful C@W comment on the Hinkley tag below) will suffice to get the show on the road.   The actors concerned in the respective red corners are of course EDF itself, considering Sizewell C (its next putative UK nuke project) and various Japanese and Korean players.  In the blue corner is always the utterly useless HMG, whose negotiating prowess was amply illustrated by the Hinkley debacle (not to mention Bre...), and whose leader, Mrs May, has the resolve of an indecisive blob of jelly.

Partly this situation comes about because the developers have spotted a soft touch, of course.  But it's not to be ruled out that a genuine issue lurks, namely that the whole history of nukes (and ever-tightening nuclear safety regulation) may fairly imply that commercial enterprises will never be the right kind of entity to undertake their development.  What's needed, this logic concludes, is an investor with the lowest-possible cost of capital, i.e. an AA-or-above government.  Also, guaranteeing the revenue stream alone (à la Hinkley, although the redacted parts of that deal guarantee even more) is not enough.  In particular, it's development risk the commercial players don't fancy.

Folowing this to its conclusion, some (and not just the vested interests, nor even those who believe all power plants should be state-owned) are now arguing that while the market model is ideal for optimising the day-to-day running of an energy network, it doesn't work for actually building the system.  It's not too hard to agree this in respect of the 'natural monopoly' aspects of the infrastructure (and almost everyone does).  But many of us felt we had reached a workable and indeed proven model for leaving the market to build new generating plant.   

Even we free-marketeers would need to accept a couple of qualifiers.   The trivial one is that the capital costs of renewables will need to fall yet further before anyone will routinely build them without subsidy.  True; but even such purely political programmes are greatly improved by auctioning the subsidies, making the whole thing at least semi-privatised, semi-market based, semi-efficient. 

The second major qualifier is this.  The longest-forward period that capacity markets operate tends to be 4 years, and likewise the tenor of forwards in commodities.  That should suffice to get (e.g.) gas-fired plants off the ground in good order on a market basis: construction takes 2-3 years and there are always inventories of shovel-ready projects; and companies can genuinely be expected to take their own views on commodity prices.

This still means that big, essentially one-off projects like nukes of >1 MW with lead-times that are way more than 4 years, are highly implausible candidates to be built on a purely commercial basis.  maybe one day small modular nukes will fit the 4-year bill, but not yetawhile.  So if, for maybe even compelling reasons of long-term planning and environmental politics, someone wants nukes, the best you'll get in the direction of competitive market dynamics is to auction the subsidies you are willing to give.

But when someone says, that alone doesn't cater adequately for development / construction risk, which must be borne at least in part by nation-states, they are steering us towards the traditional disaster-zone of governments needing to procure projects on a cost-plus basis.  Has there ever been a truly successful multi-billion, cost-plus, government procurement exercise in energy, defence, IT ..? 

But: the May government, like its Cameron / Brown / Blair predecessors, seems hell-bent on new nukes - so we are fairly likely to see a new model contract coming into existence in the coming months, to tackle some interesting and, I believe, genuine 'practical academic issues' around finance and risk, (as well as different types of practicalities on the commercial and strategic fronts).  I'm not sure any of us are particularly confident of the May adminstration's capabilities in any of these regards.  Time will tell; and it might be interesting.     

* * * * * *

Of course, all this entirely begs the question of whether anyone should build nukes...

ND

Nuclear Spring?

This week promises to be quite interesting on the nukes front.  We are promised announcements (belated) on the government's Small Modular Reactor programme, and things have been looking up a bit on the Big Nukes front, too. 

We've looked at SMRs before.  The potential is certainly there, on paper - before the prospect is dashed by the NIMBY reaction, city by city, where they need to be installed in order to secure one of the primary benefits (= highly efficient district heating).  Still, Blair thought the British Public wouldn't stand for any type of nuclear revival back in 2005, and forbad any mention of it before the GE of that year.  Plenty of people, including hereabouts, bitterly resent the Hinkley deal - but mostly on economic grounds (and warm traditional feelings towards the French, of course).  It doesn't seem to be a vote-loser, though.  But that maybe because it is on a brownfield site in a remote Somerset field ...

Needless to say, the would-be developers just want public money to get started.  They'll probably get a bit, actually.

On that large-nuke front, the players who were making UK waves five years ago have more or less melted into the background (excepting EDF, of course) and, unsurprisingly, Centrica would like to be out altogether.  But the government seems to have found replacements for them - Chinese and Koreans - with revived interest in the Horizon and NuGen projects.  On paper (again) you could argue there is still 18 GW of capacity under consideration - that figure includes Hinkley, which is not actually being built yet, they are simply being rather flamboyant in their preliminary civil engineering (the photo they always show is just the concrete-mixing plant).

A week from now we may have a clearer picture.

ND 

May's Brexit Weakness, Corbyn's Strength

Some very interesting developments at the Brexit negotiations farce.

As we knew all along, the October Hostage Deadline will come and then go.  Well, who was ever going to sign up for "whatever amount you say it is, Monsieur Barnier" in order to move forward?  So now, according to the well-briefed Graun (which has faithfully taken dictée from its euro-source):

European Union leaders seek to publicly talk up [May's] efforts in the Brexit negotiations because they fear that the prime minister’s domestic weakness will leave her unable to make vital concessions on Britain’s divorce bill ... The member states are acutely aware that the prime minister needs to come out of the summit with her dignity intact if she is to get her cabinet and party to accept concessions on the divorce bill ... the instability of the British government makes it vital for them to soften the blow for the prime minister, who will need to take the political risk of further major concessions on the financial settlement in the weeks to come ... EU’s collective hope and expectation is for a deal in December, but diplomats insisted this need not be the end of the road. “If not, no one will be ready to throw in the towel, but we will be ready to think of another milestone, another threshold of time to move on.”

How charmingly considerate of them.   Another milestone, another threshold of time.  Another hostage deadline.

It's certainly true May is a hopelessly weak negotiator, as the awful Hinkley incident showed everyone all too clearly last summer.  If, in a funny sort of way, this actually parlays into a bit of a dynamic with the euro-wallahs, well, that's where we are anyway.  Perhaps ... perhaps they don't much like the thought of McDonnell either.  Why would they? - he's really hostile to the Lisbon Treaty, much more than (for example) I am.

Which brings us to the other development, which is that Corbyn is on euro-manoeuvres.  Well of course he is - or rather, the euros are on divide-and-rule manoeuvres.  Of course.

In principle there's a prize for them here, but (equally, in principle) a problem.  Nothing could be neater for them to arm Corbyn for a struggle that might end in (e.g.) a big enough revolt in the Commons for Brexit to founder.  The trouble is, Corbyn (or more cogently, McDonnell) wants the freedom to nationalise / selectively ban cheap immigrant labour / ignore property laws etc etc.  So the gameplan has always looked like: let the Tories do all the heavy lifting, and sweep to power in 2022 with a working majority and no EC / ECJ to worry about.  Five years to dismantle the armed forces / security services / NATO etc etc ... what joy!

So - no deal to be done between Corbyn and the EC?  Unfortunately, this is where Drew's 4th Law of Politics cuts in:  The lines of logistic in politics are short.  Nothing could be easier than to tell Jezza the Jejune over lunch that he can have his nationalisations and selective migration ban, in return for engineering a Commons defeat in coordination with a couple of pre-planned one-twos at the negotiating table.  Nothing in writing, mon cher Jérôme - but that's the way things are done, we know you'll understand.  Of course, we'll be asking you to join the Euro-defence force, and hand over GCHQ to us - but you never really wanted to get involved with all that stuff anyway, did you?  So much safer with us ... oh, and your seat on the Security Council, such an anachronism ...  yes that's right, you could raise taxes as high as you like!

Yep, that can happen in 20 minutes.  Doesn't mean they like him.  Doesn't mean they'll deliver on a word of it!  But it can happen.

ND

Scope for Mischief Here

A document I would very much like to read is the baleful Hinkley Point contract awarded to EDF.  We've seen about 90% of it (as far as one can tell), and that was quite bad enough - but the really juicy stuff was redacted.

There is however someone who has a full copy (or perhaps full-er ...)  - in the European Commission!**

UK calls on EU to prevent leaks of sensitive information after Brexit: Demand for continued protection on departure highlights growing mistrust between London and Brussels 

We may get to see this document after all !

ND 
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** they had to approve it, for reasons of 'state aid' 

Nuclear Fallout for Macron - And Us

Longtime readers will be familiar with my decade-long refrain that the French badly need
other countries to dig them out of their nuclear morass.  Their fleet of nukes (across France and, let it be remembered, the UK) is the biggest in the free world: they are ageing badly:  they have not been making anything like adequate provision for decommissioning:  their chosen strategy of extending the lives of the monsters is equally unaffordable:  intelligent frogs (and readers of this blog) have seen this coming for a long time.  

Their solution will centre on blackmailing their neighbours into contributing to a nuclear version of the CAP.  Brexit muddies the waters a bit for them; but they have other plans for the UK's role in all this - the exorbitant but government-underwritten Hinkley Point electricity price, plus the local blackmail of what's to happen to EDF's 8 existing reactors in this country. And, lest we forget, we are frequently** downwind of France ...

Enter the shiny new socialist technocrat Macron, who knows all this as well as anyone.  His official plan is to cut French nuclear capacity from 75% of their total generation to 50% by 2025; and his newly-appointed energy minister, one Nicolas Hulot, is a prominent anti-nuclear Green.  They can't afford that plan, either - and sensible people know that, too.  Rumours of a push-back by EDF are already flying.

Fun and games ahead.  A shame we don't have the leadership to make the best of our hand.  I first concluded May was going to prove useless when she rolled over on Hinkley in the face of threats from Hollande, and nothing we've seen since really changes that.

ND

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** Mark W says: sometimes, but not frequently