- Yeo says any delay beyond 2025 should reduce power price
- Premier May has postponed Hinkley decision until September
Electricite de France SA should receive lower payments for the power generated by its planned nuclear reactors in southwest England if the project is delayed beyond 2025, a former Conservative minister who now lobbies for the nuclear industry said.
When the British government agreed in 2013 to pay EDF 92.50 pounds ($121) per megawatt-hour of electricity from the planned power station at Hinkley Point, the French utility was projecting it would be operational in the early 2020s, a deadline that has since slipped to 2025. The U.K. has pledged to phase out all of its coal-fired plants by the same year and is also shutting down aging reactors, so it needs to line up replacements to ensure the lights stay on.
“The value to the U.K. of Hinkley diminishes if it delays, because it’s needed by 2025 as other plants are closing,” New Nuclear Watch Europe Chairman Tim Yeo, who served as environment minister in the 1990s, said in an interview in London. “Part of the justification for this high price was that Hinkley would be contributing significantly to security of energy supply by 2025. If Hinkley isn’t on stream by 2025, the strike price should be reduced for each year completion is delayed.”
The future of Hinkley is in doubt after Prime Minister Theresa May last month delayed until September the signing of contracts with EDF in order to examine the details of the deal. The plant has generated controversy because the agreed power price is more than double current rates, the Areva SA technology has yet to be fully proven, and the 18 billion-pound project depends on a minority investment by China General Nuclear Power Corp.
Yeo scrutinized government energy policy for almost five years until 2015 as chairman of Parliament’s Energy and Climate Change Select Committee, and the nuclear lobby group he founded is funded by companies including Korea Electric Power Corp., Russia’s Rosatom Corp. and Fluor Corp. of the U.S. EDF isn’t a funder. Yeo’s stance echoes that of the opposition Labour Party’s spokesman on energy, Barry Gardiner.
“There is no guarantee that Hinkley will be built on time, and if it’s not, we’ll still be paying a premium price for it, because there is no taper after 2025 and there should be,” Gardiner said in an interview earlier this month. “If they focus on the real upfront issues that make this contract a bad deal for the U.K. then I will welcome any renegotiation.”
The National Audit Office last month estimated government payments to top up prices to the agreed target over the project’s 35-year lifetime would total nearly 30 billion pounds, five times original estimates. As it stands, the draft deal allowed for a four-year delay without penalty. After that, each month of additional delay would cut the 35-year contract length by a month.
Hinkley was originally envisioned to be generating power by Christmas 2017, but EDF repeatedly stalled on making a final investment decision on the project, which is opposed both by French workers’ unions and former Chief Financial Officer Thomas Piquemal, who resigned over the issue.
The utility finally pushed through a final investment decision at the end of last month, sparking May’s delay. Her longtime adviser Nick Timothy warned last year that involvement by China in nuclear projects could allow them to “shut down Britain’s energy production at will.”
“It’s legitimate for Theresa May to say ‘This is a big deal negotiated by other people, and I want to have a look at it.’ We do know the technology isn’t working yet, so it’s valid to examine,” Yeo said. “I’d be disappointed if we pulled out because of concerns about China, unless there was a very strong case that is made public about cyber espionage.”