Newsnet Main Articles

  By Owen O'Donnell
INEOS boss, Jim Ratcliffe has warned that nuclear power provided by the new Hinkley Point C plant will be unaffordable for UK manufacturers.
The owner of the Grangemouth complex, responsible for the production of 70% of Scotland's fuel, said that the government's guaranteed minimum price of £92.50 per megawatt hour (Mwh) from the Somerset plant, backed by French firm EDF and a consortium of Chinese investors, is "not competitive".

Mr Ratcliffe said in an interview with the BBC: "Nobody in manufacturing is going to go near [that price]."

He added: "The UK probably has the most expensive energy in the world.

"It is much more expensive than Germany, it is more expensive than France, it is much much more expensive than America.  It is not competitive at all, on the energy front, I'm afraid."

Ineos has reportedly guaranteed a deal for nuclear energy in France at £37.94 per Mwh in a deal of an "unknown duration," less than half the price in the UK which the coalition government has fixed for 35 years.

The Hinkley site, estimated to cost £16 billion to build, is expected to generate 7% of the UK's energy supply when it is fully operational as the government finds itself under pressure to find an affordable source of energy.

A spokesperson for the Department of Energy and Climate Change said: "The UK Government has always been clear that EDF will only be offered an investment contract for the Hinkley Point C new nuclear power plant if it is fair, affordable, value for money and consistent with state aid rules.

"No consumer in the UK will pay anything for electricity from Hinkley until 2023."

The UK government came under fire in October for agreeing to the building of the plant despite making a pledge that nuclear power would not be subsidised by the taxpayer.  Household prices will be expected to increase as electricity was sold at double the current level of wholesale prices.

The guaranteed price, agreed after a year of talks with EDF, was seen as necessary for funding to be given to the nuclear capacity when held up against the price of building the complex.

As previously reported on Newsnet Scotland, the agreement came only months after the UK Treasury acknowledged it had underestimated the cost of decommissioning nuclear power plants by around £16 billion between 2007 and 2011.

The UK Government's decision is in stark contrast to the direction of other European nations.  In September, the French Government announced the introduction of a levy on nuclear energy and a tax on carbon emissions in a bid to raise the billions of pounds needed to fund renewable energy projects and improve energy efficiency.

In Germany, Chancellor Angela Merkel has detailed plans to phase out nuclear power by 2022 and instead invest in renewable energy.

MEANWHILE, Enterprise Minister Fergus Ewing has criticised energy watchdog Ofgem for delaying conclusion of a review of the framework for charging power companies for using the high voltage electricity network – Project Transmit.

Ofgem's Project Transmit aims to ensure the charging regime promotes greener energy while also keeping transmission costs under control.

Currently, Scottish electricity generators face higher transmission charges than those levied in the South of England. 

For example, the Wider Zonal Generation Tariff paid by generators in the North of Scotland is currently set at £25.42/kW for 2013-14.  This compares with a subsidy of £5.17/kW in West Devon and Cornwall.

Even under Ofgem’s proposals Scottish generators would still face higher charges than generators south of the border.

Mr Ewing said:

"I am extremely disappointed in Ofgem's announcement of a further year’s delay in introducing measures to the tackle the long term discrimination against Scottish electricity generators. I consider this to be unacceptable.

"After three years of exhaustive examination of electricity transmission charging and associated connection arrangements, Scottish generators are facing a further three months of uncertainty – and further 12 months before any new arrangements take effect – while the benefits for consumers risk being delayed.

"Since 2010 Ofgem has looked at the issue in a huge amount of detail and consulted at length with every interested party. It recognises that a new approach to transmission charges is in the best interest of consumers, is necessary to facilitate the move to a low carbon energy sector whilst boosting security of supply.

"The proposals that Ofgem published in the autumn would support the transition to a low carbon energy mix and deliver significant long-term benefits to consumers – cutting bills by around £8.30 a year from 2020 – and help keeping the lights on south of the border.

"Further delay in the implementation of new charging arrangements threatens vital investment Scotland’s renewable, clean thermal and pumped storage schemes – the latter being of particular importance in maintaining stability across the GB electricity grid.

"After today’s announcement, the benefits of Project Transmit will not now be realised until 2015 at the earliest. It is vital that this disappointment is offset by a positive decision in March 2014 which gives certainty to investors."


# theycantbeserious 2013-12-16 22:52
Too complicated! Post independence energy companies and the Scottish Government need to work together to ensure jobs, greener energy and acceptable profit but most importantly a fare deal for the Scottish consumer.

No more fuel poverty in an energy rich Scotland! Add that as a right to the people of Scotland, within the Scottish constitution!!
# Marian 2013-12-16 23:17
When a business shark like Jim Ratcliffe tells you to forget British nuclear powered electricity because its far too expensive to be viable - you sit up and listen and learn.

Unless you are from the unionist pro-nuclear lobby - in which case you stick your head in the sand.
# BillyMac 2013-12-17 00:01
"No consumer in the UK will pay anything for electricity from Hinkley until 2023."
What they will be paying for through their taxes is the billions it will cost to build it!
# ButeHouse 2013-12-17 00:08
This is major slap in the face for the Unionists.

If they can't get their sums on nuclear power right, it pours serious doubt on their judgement re Scotland's Renewable Energy/Non Nuclear Programme.

When it comes to having a Happy Relaxing Christmas I know which camp I would rather be in - shucks, just realised, I'm in it!!

# Breeks 2013-12-17 07:58
Always its the money, but there are still no answers about waste.
# thejourneyman 2013-12-17 08:01
Energy is becoming one of many back door ways for UKGov to try and break the Scot Gov reputation for good governance.
# cirsium 2013-12-17 13:24
so true, the journeyman

The second part of this article should have had its own headline. This discrimination against Scottish electricity generators is happening now.
# EphemeralDeception 2013-12-17 08:19
Its our Energy - not just our Oil.

Scotland has a far greater capacity to meet and surpass our long term Energy needs from various sources of Supply. rUK does not.

Scotland has a far greater capacity:
-for Storage of Energy surplus via Hydro.
-for micro generation schemes eg. used by farmers
-Half of land mass + Huge off_shore potential but only 9% of Pop. compared to England.
- We are already Net exporters in most forms of Energy to our neighbours.
- Energy intensive companies, in theory, should have an advantage in Scotland compared to rUK.

Yet, Norway is 98% Hydro and has an Energy economy, but consumer prices are similar to UK.
eg. UK and Nor. prices both rose by 5.4% in 2013.
But... While the absolute cost to the consumer is about the same in UK and Norway. It is a much lower %age of income for Norwegians since they have only 3.4% unemployed and a far higher average salary and far higher support for lower paid.
# Fungus 2013-12-17 09:17
According to a colleague who was at the Scottish Renewables conference in Glasgow last week, the people from the National Grid were saying that on 5th December Scotland produced over 100% of her electricity needs from renewables, a mix of wind and hydro. The excess was sent to England.
# EphemeralDeception 2013-12-17 22:21
In addition, you can see in real time on-line how much Scotland is exporting. Though it is from all energy sources.

To put it simply. Mainland is split into 3 zones: North, centre and South. Invariably, North produces and exports to centre. Centre produces less, but exports excess to South. South generates shortfall and imports from everyone else, yet has best generation costs.

FYI - right now Wind is generating about 15% UK electricity consumption:

see also BMReports. Google is your friend ;)
# Leswil 2013-12-17 09:32
The Australian Government some months ago had a report done in regards to the future costs of electrical power. They reported in their findings/ conclusion, that Nuclear power would become much more expensive than renewables as we go into the near future.

Sorry no link, did not think to keep it at the time.
# Saoghal Eile 2013-12-17 12:30
It's a quagmire and one the unionists may well drown in.

French nuclear is less than UK average wholesale costs but this is due to the fact that EdF remains 80% in French state ownership and as such is supported through many not obvious financial mechanisms.

For HPC we must also consider the substantial grid upgrades required which will be paid by us all. Also HPC requires the equivalent output running in parallel whenever it is running. STOR was integrated into the grid for Sellafield but HPC will need new fossil plant to be built and run with no out put onto the grid until the unplanned outages occur. Another cost not counted for in the HPC sums. If we need to build and run fossil plant in what half baked economics can we justify adding the cost of new nuke plant (£16M but similar plants are over £70M)and power at double wholesale costs( guaranteed and index linked to keep it that way)?
# Saoghal Eile 2013-12-17 12:51
Early day motion lodged in Westminster calling this economic insanity.
# bringiton 2013-12-18 20:23
Nuclear power stations probably tick a few boxes as far as Westminster is concerned.
It has reasonable credentials in terms of mitigating the effects of global heating and pretty well guarantees security of electricity supply.
The downside,of course,is the huge costs in terms of building the stations and more importantly cleaning up after the event.
In my opinion,the main objection to nuclear fission power stations is the length of time the toxic waste needs to be stored before it can be deemed no longer a danger to public health.
We are still finding fuel dumps which have been forgotten about since world war 11 ( a relatively recent event) so what chance of security after many hundreds of human generations have passed.
I do not believe that this waste is containable over such a period and we owe it to future generations to prevent such a situation arising.

You must be logged-in in order to post a comment.


Donate to Newsnet Scotland


Latest Comments