But let’s not ignore the other industrial drama involving vast sums, thousands of jobs and a key plank of government strategy. Yes, it’s Hinkley Point, where the UK’s energy policy for the 2020s rests on the premise that French state-backed outfit EDF really will build a £18bn nuclear station in Somerset that will open in 2025 to supply 7% of our electricity.

This bet is looking weaker with every passing week. In the latest instalment, a group of EDF engineers have written a paper arguing that 2027 is the earliest “realistic” opening date. Meanwhile, EDF’s board has not been able to bring its rebellious unions to heel. As we report, Christian Taxil, an employee board member representing the CFE-CGC union, has called for the project to be postponed.

EDF can – and did – dismiss these tales as fluff. The engineers’ paper was not taken to the board, the company argues, and unions’ opposition to Hinkley is long-standing.

The UK government, on the other hand, cannot afford to be so blasé. EDF’s ability to give a final thumbs-up on Hinkley rests on the French government’s willingness to refinance the company. French ministers may not be so relaxed about the latest outbreak of dissent in EDF’s ranks. Come May, the latest “deadline” for a final investment decision, nobody can be truly confident about what will happen.

If the result is abandonment, the UK government cannot plead it wasn’t warned. Hinkley’s chief obstacle has always been simple and formidable – the fact that its European pressurised reactor design is unproven and similar projects in Normandy and Finland are years behind schedule. It would not be surprising if the project expires from exhaustion.

The key requirement for the UK is to have a plan B. The good news is that it should not be difficult to design an alternative energy strategy to meet the capacity crunch in the 2020s; it could be more gas-fired stations, or smaller and proven nuclear reactors. The bad news is that there little to suggest ministers are on the job.”

The paper, circulated among top executives, said that the “realistic service date was 2027” due to the size of the project, continuing design modifications to the European Pressurised Reactor system and the “very low” competency of French supplier Areva in making some of the large components.
The white paper also made the case for a “new EPR”, calling on the company to redesign the current reactor technology to make it smaller, cheaper to build and less complicated.

A timely start-up at Hinkley Point, which will provide 7 per cent of UK electricity, is critical because the government has set 2025 as the date by which the last of Britain’s coal-fired power stations is due to close.
EDF said in a statement last night that it would stick to the planned timetable. “The date for the first operation of Hinkley Point C has not changed. It will be in 2025,” it said.

But experts say any slippage in that timetable was likely to mean having to pay companies to keep older plants running or even build more short-term, highly polluting diesel power.

EDF has been beset by internal tensions over Hinkley Point, with chief financial officer Thomas Piquemal resigning this month over concerns that the project could threaten the company’s future.

Critics have raised concerns over the £18bn cost, given EDF’s stretched balance sheet. Two other projects in France and Finland using the same EPR technology are both severely delayed and billions over budget.

The unsigned white paper was written after Mr Piquemal’s resignation by a group of senior engineers and other dissidents, according to people with knowledge of the document. The company plans to make the final investment decision on the project at a board meeting on May 11.

Doubts grow over hitting the zero-carbon target

According to existing plans, 2025 is to be a pivotal moment in the history of British energy. The problem is that while the closure of coal power plants is accelerating, the prospect of Hinkley Point opening by 2025 appears to be receding.

In the paper, the EDF engineers called for a joint “Franco-British project” to commission four to six “optimised EPRs” by the end of the decade that could be operational between 2028 and 2031.

One person with knowledge of the company likened the current EPR to the Concorde supersonic airliner, a technical marvel but a commercial failure. The new EPR would be “more like an Airbus”, the comparatively simple but successful passenger aircraft.

The paper also addresses wider fears that the Hinkley project will in any case not be completed by 2025 and might suffer years of construction delays.
One person on the EDF board who had read the white paper said: “Few believe that we can build this [Hinkley Point] by 2025 any more.”

Another person close to the group said that 2025 was set to remain the official target, but the final decision could incorporate a margin for error because even with a two-year delay the project would still be profitable.
Three people close to the company said that CGN, EDF’s Chinese partner for Hinkley, also feared possible delays, attempting to insert a clause so it would take on a lower financial risk if there were a large problem.
Nuclear options

Engineers believe 4-6 smaller, simpler power plants could become operational as early as 2028, only a year later than the backstop date for Hinkley. UK ministers should consider this option.

In the case of a £5bn cost overrun, despite EDF having a 66.5 per cent stake in the project, EDF would be liable for 80 per cent of the additional costs, according to a document sent by the EDF finance department to the board’s audit committee in January.

That figure could be subject to change as the final investment decision has not been made. EDF declined to comment on the number.

The Hinkley project is still likely to go ahead as planned. Three out of the four EDF unions with board seats are against the project in its current form, as well as at least one independent board member.

The newspaper cites a note by former chief financial officer Thomas Piquemal to the EDF board’s audit committee regarding the 18 billion pound project.

The notes says in the case of five-billion-euro cost overrun, EDF would have to finance 80 percent of it, despite having a 66.5 percent stake in the project.

In case of a six-month delay, state-controlled EDF would have to refund several hundred million euros of CGN’s initial investment.

If the Austrian government is successful in its complaint to the European Commission over what it regards as illegal state aid for the project, EDF would have to pay CGN 1.6 billion euros.

The newspaper also reported that CGN has a bigger say in the governance of the Hinkley Point project, including veto rights on any dividend payments, accounting, budget and board member pay. EDF was not available for immediate comment.”

… This is a dreadful agreement for the nation,” said Prof Catherine Mitchell, an energy policy expert at the University of Exeter. “The government is already paying a high price, index-linked for an incredibly long 35 years. This should be more than sufficient for a professional, business contract.

“The £22bn ‘poison pill’ effectively reduces the risk to zero for EDF and its backers, which is great for them. But from an outside perspective, it smacks of desperation.”

“There could be so many reasons over 35 years that you would want to close the plant,” she said, including rising costs, changes to the UK’s energy system or loss of public confidence. …

…Former Conservative energy secretary Lord Howell has criticised the Hinkley dealas “one of the worst deals ever” for British consumers and industry and has protested against “endless government guarantees for risk-free returns to the investors”.

Tom Burke at thinktank E3G, a former special adviser to three Conservative environment secretaries, said: “Why would a Conservative government want to buy 35 years of electricity ahead of time? They are supposed to believe in the market. But they have tied themselves in knots and now it is too embarrassing to untie it.”

The UK government argues that new nuclear power is essential to provide large amounts of reliable, low-carbon energy.

But Mitchell said: “Energy economics are changing rapidly and so the momentum is towards decentralised, smart and flexible energy systems. It is moving away from large, inflexible power plants like Hinkley. If it ever gets funded, it will be a white elephant before it is even finished and this government, with this £22bn ‘poison pill’, will have tied the next generation into paying for it, for no reason that I can understand. If it is simply political saving face, it really is pitiful.”