Have you heard about the terrific bat houses and hedgehog tunnels down at Hinkley Point in Somerset? Energy minister Andrea Leadsom has been to inspect them herself and raved about them last week to a select committee of MPs. They were evidence, she suggested, of the depth of commitment of French firm EDF to the £18bn nuclear power station due to be built on the site.

Well, maybe. Talk of bats and hedgehogs at least provided some relief from the familiar crop of Hinkley news. French economy minister Emmanuel Macron said he was “fully behind” the project but EDF’s unions confirmed that they weren’t. Jean-Luc Magnaval, secretary of EDF’s workers’ committee, told the BBC that the unions “have reservations about several aspects of the project: organisation, supply chain, installation and procurement”. That’s a long list.

Meanwhile, EDF Energy chief executive Vincent de Rivaz, appearing before the same committee as Leadsom, had to adopt a humbler tone than on his last outing two months ago. Then he had promised a final investment decision “very soon”; this time he wouldn’t speculate about a date.

This farce – which has been running since last October, when the final sign-off was due within weeks – could yet roll on and on. The UK government is disinclined to set a deadline: it’s a “commercial decision” for EDF.

Meanwhile, the current French government could have a radically different shape this time next year – there is a presidential election in 2017 and the incumbent, François Hollande, is the least popular leader in modern French history. French union opposition to Hinkley Point appears entrenched and the workers’ representatives have six seats on an 18-strong board.

In theory, management and government can proceed regardless; but to embark on an £18bn venture with a divided boardroom would invite trouble down the line. That is especially so when you remember EDF’s last finance director, Thomas Piquemal, resigned over concerns that Hinkley could threaten the company’s future.

The best thing the UK government could do at this point is to stop and consider whether the obstacles facing Hinkley are simply too big.

Nervousness in France is understandable. EDF’s two current attempts to built a European pressurised reactor – the model to be used at Hinkley – are agonising; one is four years late, the other nine years. And the financial arithmetic was always challenging. Hinkley could take 10 years to build, and the owners receive nothing during the construction phase; the cash only arrives when electricity starts to be generated. And, while the returns on capital under the 35-year contract are theoretically enormous, the penalties for failure to hit a 2029 deadline are stinging, and ratchet up.

That is why the UK government had to make the 35-year contract so generous – struck at almost three times today’s wholesale price. That contract now looks to belong to another era given the subsequent fall in the oil price, and thus energy costs. The only weak support holding Hinkley in place is its capacity to provide 7% of the UK’s electricity in a low-carbon fashion.

But there are other ways to meet the legally binding emissions targets. Offshore wind is expanding with no Hinkley-style fuss, and its costs are falling. More importantly for the UK’s requirement for secure baseload supplies, other builders are waiting to pursue projects that use different nuclear technology.

In theory, planning and appraisal can continue in parallel; in practice, confidence in the UK’s commitment to its new-nuclear programme will drain away.

There is not – yet – a crisis in UK energy policy because it is always possible to build a few gas-fired stations to avert an emergency. But the Hinkley show is becoming an embarrassment. The project is expensive, uses unproven technology and its builder is a disunited and over-borrowed company that requires constant financial assurances from an ever-changing cast of politicians.

The UK government should set EDF a deadline and be ready to enforce it. We can do better – much better – than Hinkley.”

A project to build a nuclear power station near Sellafield in Cumbria could begin generating electricity in 2025, a year earlier than the scheme proposed for Hinkley Point by EDF.

NuGen, a venture between Toshiba, of Japan, and France’s Engie — formerly GDF Suez — plans to have three reactors up and running within nine years. If the schedule is correct, NuGen would overtake EDF, which has repeatedly delayed plans for its £18 billion plant in Somerset. If built, the project would be the first nuclear plant in Britain since Sizewell B, which entered service in 1995.

NuGen plans three AP1000 pressurised water reactors at the site in Cumbria, using an established nuclear technology. The project could supply up to 3.8 gigawatts, about 7 per cent of UK electricity.

New nuclear power in the UK comes at a high price. Is it justified to pay such a high premium for low carbon electricity which is reliable and does not depend on the weather? Hinkley Point C, the first new nuclear power plant for decades which would generate 3,200 MW throughout the year (7 per cent of the UK’s demand), requires a price guarantee from the UK government for 35 years at £100.68/MWh in today’s money (£92.50/MWh in 2012 money). At the same time, the wholesale price for electricity is currently below £35/MWh.

Supporters of Hinkley Point C correctly argue that wind and solar produce variable amount of electricity whereas Hinkley Point would produce a steady baseload. Their argument for Hinkley Point C is that despite the higher cost, it is needed because cheaper forms of low carbon electricity generation are less reliable, and that other forms of baseload power (such as gas or coal) are less green. We analyse whether one could replicate the electricity generation of Hinkley Point C with a cheaper, equally low carbon combination of a) solar farms, b) wind farms, c) energy storage and d) backup gas generation at costs that would allow their deployment today.

Our analysis shows it is possible at a price of only £75/MWh, 25 per cent less than for Hinkley Point C. This would save Britain’s consumers £720 million per year (or £25 billion in today’s money over the 35 year contract term).

Transforming weather-dependent solar and wind into a stable generator is possible because the weather variations between wind turbines and solar panels largely cancel each other out. Any remaining variation is managed with energy storage (charging batteries when generation exceeds demand and vice versa) and with backup natural gas generators. Gas generators are the only technology emitting carbon dioxide, but as they are rarely used, the average carbon intensity is still 80 per cent lower than today’s average of electricity from the grid. At a carbon intensity of only 100gCO2/kWh our “renewable Hinkley Point” would meet the UK’s 2030 target already today. We also show a cost effective way to reduce the carbon intensity further.

The analysis shows that politicians and civil servants should not pick winners but rather create a level playing field between all different technologies. This will stimulate innovation and bring forward substantial cost savings to consumers. We encourage the Department of Energy and Climate Change (DECC) to negotiate with Green Hedge and other low carbon firms to put in place the contracts to deliver the same results as Hinkley Point but faster and cheaper.

The full report is available for free on the Green Hedge website (www.green-hedge.com) or by clicking on this download link. We invite feedback and comments (info@green-hedge.com).”

Deeper concerns about the future of the Somerset scheme were raised by the French energy minister, Ségolène Royal, who warned of the “colossal” cost, which EDF admitted could be £18bn or even £21bn.

Lord Howell of Guildford, George Osborne’s father-in-law, told the House of Lords that the Chinese were actively discussing a ‘plan B’ if the existing £21 billion plan fails.

Addressing a fellow peer, Lord Howell, the Conservative energy secretary under Margaret Thatcher, said: ‘Is my noble friend aware that the Chinese also have a plan B, which is to bypass EDF altogether and to build two smaller reactors on the Hinkley C site, and to do it rather quicker than the present Hinkley C plans?’

He later told The Times that he had previously had private meetings with Chinese delegations, and said: ‘This is the view of informed think tanks and a deduction of the way they must be thinking.’

His warning will put greater pressure on the Hinkley C project, which is planned to provide about seven per cent of the country’s electricity.
Yesterday, EDF announced a 16 per cent increase on the cost of the project since October, from £18 billion to £21 billion.

The French energy giant also admitted that the project would not be finished before 2027, which is a decade later than was originally proposed.

There have been repeated delays with designing and construction of the plant, which will take at least nine and a half years to build once it has been signed off. This is not now due to happen until September.

Lord Howell suggested that the second plan would involve building two smaller nuclear reactors at Hinkley Point ‘rather quicker’.

Senior intelligence and military figures warned that national security could be threatened by Chinese nuclear reactors after fears that technological ‘trapdoors or backdoors’ might be put into computer systems. This would allow China to bypass Britain’s security measures.

Lisa Nandy, the shadow energy secretary, told The Times: ‘If there is a secret Chinese plan B for Hinkley, ministers should tell us precisely what that is.

‘With uncertainty over both the timetable and the cost of this project, it is now imperative that the government offer reassurance that British jobs will be protected, costs on households will be kept under control and that binding pollution targets will not be put at risk.’

A Department of Energy spokesman said: ‘There is no proposal for the Chinese to build a reactor at Hinkley.’

Germany’s renewable energy mix was 33% last year and is expected to climb this year due to new wind power generation, as the country looks to convert to 100% renewable energy by 2050.

The figures come ahead of Wednesday’s AGM where investors will quiz management over their plans for the Hinkley Point nuclear plant in the UK.
EDF, 85% controlled by the French state, has struggled to find the cash for its 66.5% stake in the project.

In April it pushed a final decision on the £18bn plant back to September.
Chief financial officer Thomas Piquemal resigned in April following an internal disagreement over whether to press on with the controversial project.

However, EDF has outlined plans to raise €4bn, with up to €3bn provided by the French government.

Tough markets

Credit rating agencies are due to assess the group in the coming days and their verdict on its finances will determine how easy it will be for the group to raise cash.

Meanwhile, tough market conditions mean EDF is cutting costs and planning to sell €10bn in assets by 2020, including a stake in French power-grid operator RTE.

On Tuesday the new chief financial officer Xavier Girre, said the management was not considering spinning off any part of the group to raise money.
Its latest earnings report shows it has reduced its target for 2016 nuclear output to 408-412 terawatt-hour from 410-415.

The scaling down of its output reflects continuing problems at its Paluel nuclear facility in France where a steam generator collapsed during maintenance.

Sales fell 7% to €21.4bn in the first three months of the year, with sales in the UK down 9.8%.”