Hinkley, guaranteed
The new Department of Energy and Climate Change update on electricity market reform hints at further Government guarantees for investors in the plant. The Chancellor announced a £2bn guarantee for Hinkley investors during his recent trip to China – DECC’s report now describes this offer as “the initial guarantee for Hinkley Point C”, suggesting more to come.
Future funding guarantees are set to focus on decommissioning costs, as DECC says EDF’s decommissioning programme must have “secure financing arrangements”. This would be politically controversial, as the Government is already offering to pay twice the current wholesale energy price for electricity produced at Hinkley, with that difference agreed in part to offset the building and decommissioning costs borne by the commercial developers.
The Government hopes today’s DECC report helps prepare the ground for a series of announcements on Hinkley during the Chinese President’s visit to the UK next week.
The Government is in a weak negotiating position on Hinkley. It faces dwindling energy supplies, a long wait for new power plants to come online, and a political need to announce something big and substantive during President Xi’s state visit. It would not be surprising if potential investors exploit that position to secure a better deal.
The energy demand in the UK has been falling for several years and if HMG had continued with household energy efficiency ( insulation ) and the transition to zero carbon homes would fall further. Nuclear, esp the Untried or tested EDF variant is soo last century ( especially as we cannot safely dispose of the detritus from existing decommissioned sites:subs etc. It's time to call time on Nuclear and transform our economy.