Comment & Analysis
The protracted negotiations over a “strike price”, or subsidy for the nuclear industry for new build, show no signs of coming to a conclusion.
Ed Davey, the coalition energy secretary, has gone on the record to say that he is seeking the best deal possible for the British public – and while that effort continues, the building of a new plant by EDF and its French partner Areva at Hinkley Point seems further away than ever.
Some have already commented that EDF has the government “over a barrel” in terms of the negotiations. The difficulty in agreeing on a price that satisfies the French utility while also ensuring that consumers aren't ripped off only serves to highlight the stasis afflicting new build in Britain.
Now some believe that the government may simply walk away. Had they done this a year ago, when hype over the Hinkley Point C project was at its greatest, there would have been outrage given the effort that had gone into conducting the generic design assessment and post-Fukushima deliberations of Mike Weightman. A year down the line people are losing interest. Westinghouse, which took its AP1000 reactor design through the majority of the GDA, was quick to retreat once RWE npower and E.on backed out of the Horizon project, which aims to build new reactors at Wylfa, Anglesey, and Oldbury, Gloucestershire. There is no competition and no movement. Walk now, and perhaps few will be up in arms.
Horizon, now owned by Japan's Hitachi, could see that company's own reactor built on these sites – perhaps even before EDF gets a reactor up and running. It is thought that with one proven design to get through the GDA, it could negotiate this process relatively quickly. Could a reactor be constructed at Wylfa before Hinkley Point?
Some industry insiders are also worried, bearing in mind delays and escalating costs in the construction of Areva's EPR at Normandy and in Finland, that building the same design on these shores could tarnish Britain's nuclear industry. Perhaps another reason to favour Hitachi and Horizon. It's even thought that the Japanese company is prepared to be “a bit more reasonable” in terms of the subsidy it demands.
If the government and EDF can reach agreement then this will be a moot point. But the French companies must consider the impact of the Japanese latecomer on the scene. It's turning the heads of ministers and nuclear industry veterans.