Oh dear …
“Billions of dollars spent on two new nuclear reactors in South Carolina went up in smoke Monday when the owners nixed plans to finish them after years of delays and cost overruns, dealing a severe blow to the industry’s future.
South Carolina’s state-owned public utility has voted to stop construction on two billion-dollar nuclear reactors. The reactors were set to be among the first new nuclear reactors built in the U.S. in decades, but the vote by Santee Cooper’s board on Monday, July 31, 2017 likely ends their future.
The reactors were set to be among the first built in the U.S. in decades. While the decision will save customers billions in additional costs, customers of the two utilities — Santee Cooper and South Carolina Electric & Gas — may get little to nothing refunded of the billions they’ve already paid for the now-abandoned project.
“I’m disappointed today not just for Santee Cooper and its customers but for our country and the industry as a whole,” said Santee Cooper CEO Lonnie Carter. “If you really believe we need to reduce carbon, this was the way to do it.”
Energy demands are far less than the utility’s pre-Great Recession projections that factored into the initial decision to build.
But Monday’s decision may eventually result in the utility putting a coal-fired unit idled earlier this year back in operation. Another option for supplying power needs in the decades to come include building a natural gas unit.
“Absolutely, this pushes us back to more carbon, whether it’s natural gas or coal,” Carter said.
Santee Cooper’s board said the decision to end construction will save customers an estimated $7 billion. The utility had already spent about $5 billion for its 45 percent share of the project, and completing it would have cost an additional $8 billion, plus $3.4 billion in interest.
“I’m not celebrating,” said Tom Clements of Friends of the Earth, which has questioned the project from the outset. “This is a sad day for South Carolina. So much money has been wasted. Ratepayers are losers any way you take it.”
He said the group will work to “get to the bottom line of how this happened, who’s responsible” and what that means for customers.
Gov. Henry McMaster called for legislators to hold hearings to get customers’ questions answered.
The project has been shrouded in doubt since earlier this year, when primary contractor Westinghouse filed for bankruptcy protection.
The utilities have since determined the project likely wouldn’t have been finished until 2024. Under a timeline adopted in 2012, the first reactor was supposed to be operational earlier this year. Westinghouse hasn’t been forthright since, according to Santee Cooper.
South Carolina Electric & Gas, which owns 55 percent, announced its plans shortly after Santee Cooper’s unanimous vote. SCANA, SCE&G’s parent company, will seek approval from regulators Tuesday about their abandonment plans.
Under the approved Santee Cooper resolution, all work will end within six months. How quickly within that timeframe workers at the site will lose their jobs is uncertain.
About 5,000 people are employed at the site by contractors and subcontractors. SCE&G employs an additional 600 workers for the project, according to the utility.
The utilities announced last week that Westinghouse’s parent company, Toshiba Corp., agreed to jointly pay them $2.2 billion regardless of whether the reactors are ever completed.”
“Britain’s energy policy keeps picking losers
by Matt Ridley
The public have paid the price for years of missteps: it’s time to scrap Hinkley Point C and support the shale revolution
Shortly before parliament broke up this month, there was a debate on a Lords select committee report on electricity policy that was remarkable for its hard-hitting conclusions. The speakers, and signatories of the report, included a former Labour chancellor, Tory energy secretary, Tory Scottish secretary, cabinet secretary, ambassador to the European Union and Treasury permanent secretary, as well as a bishop, an economics professor, a Labour media tycoon and a Lib Dem who was shortlisted for governor of the Bank of England.
Genuine heavyweights, in short. They were in general agreement: energy policy is a mess, decarbonisation has been pursued at the expense of affordability and, in particular, the nuclear plant at Hinkley Point C in Somerset is an expensive disaster. Their report came out before the devastating National Audit Office report on Hinkley, which said the government had “locked consumers into a risky and expensive project [and] did not consider sufficiently the risks and costs to the consumer”.
Hinkley is but the worst example of a nationalised energy policy of picking losers. The diesel fiasco is another. The wind industry, with its hefty subsidies paid from the poor to the rich to produce unreliable power, is a third. The biomass mess (high carbon, high cost and environmental damage) is a fourth.
The liberalised energy markets introduced by Nigel Lawson in 1982, embraced by the Blair government and emulated across Europe, delivered both affordability and reliability. But they were abandoned and, in the words of the Lords committee, “a succession of policy interventions has led to the creation of a complex system of subsidies and government contracts at the expense of competition. Nobody has built a power station without some form of government guarantee since 2012.”
All three parties share the blame. Labour’s Climate Change Act of 2008 made Britain the only country with mandatory decarbonisation targets, a crony-capitalist’s dream. The Lib Dems who ran the energy department for five years, Chris Huhne and Ed Davey, negotiated the disastrous Hinkley contract. The Tories reviewed the decision in 2016, by which time it was clear we had managed the unique feat of finding a technology that was untested yet already obsolete. They decided to go ahead anyway, missing the chance to blame the other parties for it. As the energy analyst Peter Atherton put it, the three parties “have managed to design possibly the most expensive programme for delivering nuclear power we could have come up with”.
The chief Lib Dem mistake was to ignore the shale gas and oil revolutions under way in America and assume that fossil fuel prices would rise from already high levels. By 2011, influenced by peak-oil nonsense and lobbied by professors of “sustainability”, the department of energy and climate change was projecting that the oil price would be between $97 and $126 per barrel in 2017. Today it is about $50 a barrel, roughly half the lowest of the 2011 projections. Gas prices were expected to be about 76p per therm by now, whereas they are actually about half that: 37p.
The shale revolution is gathering pace all the time. Britain has very promising shales and could prosper and cut emissions if it joins in, so let us hope the first wells about to be drilled in Lancashire by Cuadrilla, against the determined opposition of wealthy, middle-class protesters, prove successful. (No, I don’t have a commercial interest in shale.)
American industry pays about half as much for its electricity as we do
This forecasting mistake is behind much of the rising cost of Hinkley. In 2015 the whole-life cost of its power was expected to be £14 billion. Now it is £50 billion. Because consumers are on the hook to pay the difference between the wholesale price of electricity and the “strike price” for Hinkley, we must hope that the project is badly delayed, because that way our children will at least spend fewer years paying inflated electricity prices.
These bad forecasts, widely criticised at the time, make all strike prices horribly expensive, for onshore and offshore wind and solar as well. Lib Dem ministers kept saying at the time that subsidies for renewables and Hinkley would protect the consumer against “volatile” gas prices. Yes, they have done so: by guaranteeing high prices. Oh for a little downward volatility!
Britain’s industrial and commercial users now have some of the highest electricity prices in the developed world, which find their way to households in cost of living and a downward pressure on wages. American industry pays about half as much for its electricity as we do, and everyone benefits. Energy prices are not just any consumer price: they determine the prosperity of the entire economy.
It is just possible some new arrangement could be salvaged
Well, no use crying over spilt future money. What are we to do? Here is where it could get interesting. Almost nobody wants Hinkley to go ahead, apart from the contractors who get to build it. EDF and Areva, the French owner and developer, are in trouble over the only two comparable reactors in Europe. The one at Flamanville is still to start working, many years behind schedule. The French unions want Hinkley cancelled. Lord Howell of Guildford, the former energy secretary, wisely pointed out in the Lords that the key player is China, a partner in the project. Rather than cost, the government’s excuse for revisiting Hinkley last year was partly worries about security. This was a silly worry and bad diplomacy. However, it is not clear China wants to go ahead, and subtle negotiation could tease this out. The great prize for China was regulatory approval through Britain’s gold-standard “generic design assessment” process, which could unlock foreign markets and give a green light for a Chinese-built reactor at Bradwell in Essex.
But Lord Howell says the Chinese increasingly realise that the Hinkley design is a dead end, as costs escalate and delays grow. And they know that the future for nuclear power must lie in smaller, modular units, mass-manufactured like cars rather than assembled from scratch like Egyptian pyramids. Their “Nimble Dragon” design could slot into both the Hinkley and Bradwell sites, perhaps beside the larger Hualong design.
Cancellation would cost some £20 billion. But if the initiative comes from Beijing it is just possible that some new arrangement could be salvaged from the certain wreckage of the EDF scheme, without seriously damaging both livelihoods and our relations with China.”
Not looking like a good idea …
“Earnings at energy giant EDF have plummeted by a fifth in the first half of this year due to ongoing woes in its French fleet of nuclear reactors and lower profits from those in the UK.
The French state-backed group behind the UK’s first new nuclear plant in a generation, Hinkley Point C, has suffered a major setback to its domestic reactors, some of which have been closed for safety checks since October.
French nuclear power output fell by 3.9pc from the first half of last year to 197.2TWh in the six months to June 30, the group said. Despite a 4.2pc rise in UK EDF’s nuclear generation to 32.2TWh, the fleet of reactors were still a drain on earnings due to the weaker market price for electricity.
The slump in its two core markets wiped more than 20pc from its underlying earnings before interest, tax, debt and amortisation to €7bn (£6.3bn) but the group has assured investors that it remains on track to meet its guidance of between €13.7bn to €14.3bn for the year.
Jean-Bernard Lévy, EDF’s chairman and chief executive, underlined the “unfavourable market context” but said the group’s move towards renewable energy was accelerating.
The roll-out of subsidised renewables in the last decade has effectively driven the wholesale price of power down, cutting revenue for existing nuclear power plants, which sell their electricity into the market.
The decline in income highlights the need for a guaranteed set price for the new Hinkley Point plant in order to recover its eye-watering costs.
Earlier this month EDF confirmed that the cost of developing Hinkley had gone from £18bn to £19.6bn but was quick to point out that this would not be borne by customers because of the fixed price of £92.50 per megawatt-hour already agreed with the Government.
However, the declining wholesale market price means the top-up payment needed to meet this set price, which is paid by consumers, has spiralled to £50bn over the lifetime of the project from the £6bn bill estimated in 2013.”
“Tories urged to look at onshore windfarms which can be built as cheaply as gas plants and deliver the same power for half the cost of Hinkley Point, says Arup.
Onshore windfarms could be built in the UK for the same cost as new gas power stations and would be nearly half as expensive as the Hinkley Point C nuclear plant, according to a leading engineering consultant.
Arup found that the technology has become so cheap that developers could deliver turbines for a guaranteed price of power so low that it would be effectively subsidy-free in terms of the impact on household energy bills.
France’s EDF was awarded a contract for difference – a top-up payment – of £92.50 per megawatt hour over 35 years for Hinkley’s power, or around twice the wholesale price of electricity.
By contrast, Arup’s report found that windfarms could be delivered for a maximum of £50-55 per MWh across 15 years.
ScottishPower, which commissioned the analysis, hopes to persuade the government to reconsider its stance on onshore windfarms, which the Conservatives effectively blocked in 2015 by banning them from competing for subsidies and imposing new planning hurdles.
Keith Anderson, the firm’s chief operating officer, told the Guardian that onshore wind could help the UK meet its climate targets, was proven in terms of being easy to deliver, and was now “phenomenally competitive” on price.
“If you want to control the cost of energy, and deliver energy to consumers and to businesses across the UK at the most competitive price, why would you not want to use this technology? This report demonstrates it’s at the leading edge of efficiency,” he said.
The big six energy firm believes that with a cap on top-up payments so close to the wholesale price, onshore windfarms would be effectively subsidy-free – but the guaranteed price would be enough to de-risk projects and win the investment case for them.
“What we are asking for is a mechanism that underpins the investment risk,” said Anderson.
The group believes that any political sting for Tory MPs concerned about public opposition to turbines in English shires would be removed because such a low guaranteed price would see only the windiest sites coming in cheap enough – which means windfarms in Scotland.
“You put these projects in the right place, you will get the correct level of resource out of them to keep the costs down and you will get public acceptance of people liking them,” Anderson said, citing the example of the company’s huge Whitelee windfarm near Glasgow.
Dr Robert Gross, director of the centre for energy policy and technology at Imperial College, said: “Onshore wind has been coming in at remarkably low prices internationally, so a contract for difference price of around £50-60 per MWh looks perfectly feasible for a good location in the UK, one of the windiest countries in Europe. …”
“UK households could pay £50bn to France’s state-owned energy company to prop up Hinkley nuclear plant”
Well, at least it’s not just Devon and Somerset, though Owl suspects we will be paying far more than pur fair share:
“UK households could pay £50bn for the new Hinkley Point C nuclear plant in Somerset, new government figures reveal. That number is more than eight times greater than the National Audit Office’s initial 2013 estimate that a public investment of £6bn would be required.
The spiralling costs are due to the terms of the Government’s agreement with EDF, the French state-owned electricity company, which is building the plant in conjunction with China General Nuclear Power.
That deal guarantees EDF a £92.50 “strike price” for every megawatt hour of electricity that the new plant generates, a figure that critics have said is far too high. …”
French government orders EDF to close 17 nuclear plants – to reduce France’ s dependence on nuclear energy
“A row has broken out in Paris after the French-state-backed group building Britain’s new nuclear plant was ordered to scale down its production of atomic energy in France.
Nicolas Hulot, the minister for ecological change, said that Eléctricité de France (EDF) would have to close up to 17 reactors over the next eight years under a government plan to reduce the country’s dependence on nuclear power.
His announcement unnerved investors and EDF’s share price fell almost 2 per cent to €8.57 in afternoon trading in Paris, its lowest value since May. …”