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Monday, October 21, 2013

Hinkley Point - £16bn For 2 Generators That Would Cost £4.5bn If The Politicos Would Let It

Hinkley Point C: £16bn nuclear power plant gets go ahead despite criticism over 'strike price'   
THE plant in Somerset will begin operating in 2023 but ministers faced criticism over the £92.50 per Megawatt hour that will be paid for electricity produced - around double the current market rate.


Hinkley Point
Hinkley Point

BRITAIN'S first new nuclear power station in a generation is to be built under a £16 billion project which will create thousands of new jobs.
The move followed an agreement between the Government and French-owned EDF Energy, which will see Hinkley Point C in Somerset begin operating in 2023.

   That's how the Daily Record put it, neatly combining enthusiasm for the project with anti-nuclearist concern for the price and an absence of any mention of who is responsible for the price.

   This is a rather long post I put on John Redwood today and which is also going out, slightly edited,  as a letter to all and sundry. We will see if any sundry part of the press is less obedient in censoring the facts than I expect:

This is not a good day for the supporters of nuclear because the government have negotiated all their parasitism in place.

The reactor will take 10 years to build. In China they are building them in 3. This means it has no effect on the previous politicians' promises of electricity bills of £2,000 a year by 2020.

It will cost £16 bn. An equivalent pair built by European firms in China is costing $7.5bn (£4.5 bn). 

The difference in cost is entirely government regulatory parasitism. Thus so is the need for a price guarantee.

But it allows the Luddites to scream "subsidy" (though they are on a sticky wicket in that they approve far greater subsidy on windmills).

Also there is less to the eye on the price guarantee than appears - in 10 years prices will have increased about 40% so the guarantee is the equivalent of about £60. 60 years later, when it closes prices will have increased  8 fold so the "guarantee" will be equal to £12.

This suggests the builders are working on the assumption that they will make back their money in 10 years and hoping that Miliband or some successor doesn't break the contract before then (as Labour bankrupted BNFL by regulatory fiat and forced them to sell off Westinghouse, probably the world's leading reactor builder, at a fire sale price to Japan). This distrust of government and the state parasitism obviously both push up prices beyond reason.

There is no honest debate against the proposition that 90% of our electricity costs are state parasitism (the price differential mentioned above proves it again). Unfortunately there is no honest debate allowed on the subject in our state owned broadcaster or most of the obedient press.

Because of the 1:1 correlation between gdp and energy use it is obvious that the recession is entirely the fault of the political class who make electricity 10 times more expensive than it should be. The 25,000 pensioners who die of fuel poverty every year are also on their consciences.

I am quite sure the Chinese would have been willing to build on purely commercial terms if the government had agreed to remove their parasitism (or to pay them for it). It might be worth a question in the House on that.

A bad day for Britain because state parasitism has been welded even more strongly in place.

The price guarantee situation is considerably worse than I thought. John's new post today says

"However, the guaranteed price at twice today’s wholesale market price, to come in in 2013 when they start generating power, is also indexed to general prices."

I don't know if this means the indexing starts in 2010, in which case we are stuck with paying the equivalent of £60 forever, or tomorrow in which case it is the equivalent of £92 forever.

In either case an abysmal "deal" at least for the people, designed to hide the amount of government theft (about 90% of total cost) going on.

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