Hinkley Point deal ‘out of date and too expensive’

The head of energy major ScottishPower has emphatically joined the discussion over the UK’s proposed Hinkley Point C nuclear power plant.

The head of energy major ScottishPower has emphatically joined the discussion over the UK’s proposed Hinkley Point C nuclear power plant, insisting that the controversial subsidy deal should be renegotiated because it is too expensive. Keith Anderson, the firm’s chief corporate officer, said the deal, provisionally agreed by the government in 2013 following lengthy negotiations, no longer made sense in the light of lower gas and offshore wind costs.
“It looks like a contract that was written five years ago on a business case that was probably pulled together 10 years ago. It looks out of line with what’s going on in the market now,” he said. Under the proposed deal, EDF would be guaranteed a price of £92.50 for each megawatt-hour (MWh) of electricity it generated for 35 years.
In an interview with UK online newspaper The Telegraph, Mr Anderson praised Theresa May’s “brave” decision to review the £18 billion project and urged her to look at it in its entirety, not just in the light of her security concerns over Chinese state nuclear firms’ involvement.
Another UK newspaper, the Financial Times, has reported on the findings of analysis it has commissioned from consultant AlphaValue which indicates that proposed Hinkley builder EDF and its Chinese partner CGN could be paid more than £100 billion over 35 years for the NPP’s electricity if the UK government gives the go-ahead, and could even reach £160bn, depending on assumptions about inflation, plant output and idle time for maintenance.
Juan Rodriguez, analyst at AlphaValue, estimated Hinkley Point C’s total revenue in cash terms at £102bn, assuming that the plant ran at 90 % capacity for 90 % of the time over the duration of the contract. It also assumes an inflation rate of 1%.
“That is why [EDF] want to build the Hinkley Point project so badly,” said Mr Rodriguez. “If they manage to build it on time, it will be a cash machine.”
On the same day, 4 September, UK prime minister Teresa May confirmed that she has asked the National Security Council to consider the risks posed by China before deciding whether to let the state take a £6 billion stake in the proposed power plant. In short, is it safe to let China gain a foothold in Britain's nuclear industry.
Arriving in Hangzhou for the G20 summit on 4 September, Teresa May defended her decision to delay the nuclear power deal despite the diplomatic tension it has caused with China, saying that her government would give full consideration to the available evidence before coming to a decision. That decision is expected later this month.