I feel duty bound to keep readers up to date with the slowly unfolding Hinkley Point meltdown – spasm by agonising spasm. Three important updates:
1. Jean-Bernard Lévy throws a wobbly
Jean-Bernard Lévy, CEO of EdF, has just threatened to cancel the Hinkley Point deal unless the French Government provides even more subsidy for the project than it is already doing. “We are negotiating with the State to obtain commitments allowing us to secure our financial position. It’s clear that I will not engage in this project unless these conditions are met.”
Ye Gods! The gall of the man! “Hand over the cash, otherwise the most expensive, the most high risk, the most insane project my company has ever developed gets it!”
This outburst may well have had something to do with the resignation of his Finance Director the week before (who left recommending a minimum delay of at least three years, giving EdF a chance to restore its balance sheet) and with the latest from the French Cour des Comptes.
2. A ‘yellow card’
A ‘yellow card’ from France’s state auditors. The Cour des Comptes (the French equivalent of our National Audit Office) has just urged EdF to reconsider its investment in the two EPRs at Hinkley Point, given the ‘financial stress’ that the company is currently facing – and the near inevitability of cost overruns and time delays should the project (ever) go ahead.
Since EdF is 85% owned by the French Government, this is basically France’s auditors telling France’s Ministers that this is an incredibly risky project.
3. Flawed vessels
And what might well be influencing the Court des Comptes is the increasingly likely possibility that the steel reactor vessel EdF has constructed for the EPR at Flamanville may be so seriously flawed (through high concentrations of carbon, with a correspondingly high risk of cracking) as to require it to be broken out of the reactor building for repairs. This would be an unbelievably expensive and time-consuming process.
Meanwhile, time marches on. When the initial deal was done, those incredible savants in the UK Treasury guaranteed EdF a strike price of £92.50 per MW hour. At the time, that was already TWICE the wholesale price of electricity in the UK – so just about as bad a deal as you can possibly imagine.
O ye of little imagination! The deal was also inflation-proofed. That £92.50 has now risen to £98.26! And at the same time, wholesale electricity prices in the UK have fallen to £33 per MW hour.
Which means, for those of you who can do the maths (unlike those melon-heads in the Treasury), we will now be paying THREE TIMES the wholesale price here in the UK!
This is of course a deal that has nothing to do with market reality. Nothing to do with affordability, let alone with the UK’s ‘hard-working families’ that Secretary of State Amber Rudd keeps bleating on about. And nothing to do with addressing our climate change responsibilities.
By contrast, it’s got everything to do with political leaders in three nations (the UK, France and China), all of which ‘need’ Hinkley Point to happen for grubby geopolitical interests of their own.
And that’s what it all now comes down to: three powerful nations versus the market. A titanic battle for our time if ever there was one.
Originally published in his personal blog.