New nuclear will deliver ‘best value’ for taxpayers

EDF Energy boss insists a new generation of nuclear plant in the UK will deliver declining costs, others express doubt

EDF Energy's outgoing chief executive Vincent de Rivaz has promised the firm will “earn” the right to operate a new generation of nuclear plant in the UK.

To do this, de Rivaz acknowledged, “we must offer the best value for money for taxpayers and we will make it happen”.

EDF’s boss of 16 years made his comments at Utility Week’s Energy Summit in London where he expressed his pride in having secured a deal for the construction of Hinkley Point C.

He insisted “Hinkley Point C is making the industrial strategy happen”.

He also said the project is “delivering its construction milestones to plan” and that an update on the project’s progress overall will be published “shortly”.

Addressing the future of nuclear power in the UK, de Rivaz said the Hinkley Point C will act as a trailblazer which will trigger a decline in the costs of new nuclear power stations.

He said building a “series” of nuclear plants “remains the best way to bring the construction and operational costs down. And at the same time, if in the future we can continue to adapt the nature of the private-public partnership, clearly, we can reduce further the costs for consumers.”

Other speakers at the event disagreed however.

Speaking during a panel session Keith Anderson, chief executive of Scottish Power Renewables said he was a “huge proponent of a mixed energy system”.

But: “I think you need to be realistic about the costs for investment in that system…and to be very open and upfront about what is the likelihood of those costs coming down.”

Anderson said renewables, in particular offshore wind, have an opportunity to significantly reduce costs because they are “modular” and new technology iterations can be developed and deployed very quickly.

“I am uncertain about the future cost trajectory of nuclear,” he continued, “just as I am uncertain about the future cost trajectory of huge tidal barrage schemes. I’m not too sure how you make that cheaper.”

A fellow speaker, Joan MacNaughton, chair of The Climate Group, also expressed some doubt over the future affordability of nuclear power.

Despite de Rivaz’s assertion that Hinkley Point C and new nuclear generally enjoys widespread public support in the UK, MacNaughton insisted that the matter “is divisive”.

If a new fleet of nuclear power plants is built, MacNaughton said: “I would hope for the next plants we do not go down the contracts for difference route – making the developer take all of the construction risks in exchange for a nice premium once their operation starts.

“I don’t think that’s the most affordable solution, and I don’t think it’s the way on making sure it happens most quickly.”

A recent report from the National Audit Office slammed the economic case for Hinkley Point C, labelling it  "marginal and subject to significant uncertainty".

The scheme secured a contract for difference which awarded EDF a strike of £92.50/MWh or £89.50/MWh if its planned new nuclear power plant at Sizewell goes ahead.

Responding to the NAO report, Richard Black, director, of the Energy and Climate Intelligence Unit said: “The costs of renewables and smart power technology are changing much faster than the government predicted [when the Hinkley deal was struck]”.

He continued: “What might have looked good value 10 years ago looks much less so now. Arguably new nuclear build isn’t compatible with the government’s smart grid ambitions, and the NAO is surely right to recommend reviewing the case for nuclear power once in every parliament.”

Black added that he also thought the NOA was “right also to note that given EDF’s ongoing financial and technical woes, Hinkley C isn’t 100 per cent certain to be built.”

The Energy Summit’s chair, BBC broadcaster Roger Harrabin attempted to press EDF Energy’s boss on the number of new nuclear plants he imagines will be built in the UK to support its low carbon future.

De Rivaz was evasive. He said, “more will follow” the three nuclear power plants already in EDF’s pipeline: Hinkley Point C, Sizewell C and Bradwell B.

However, he refused to answer Harrabin’s question whether that might mean “more than ten or less than ten?”

Author: Jane Gray,
Channel: Operations & Assets , Finance & investment

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