Mark Letftly: Why the sun has not yet set on nuclear ...
... despite the greens' glee at the latest setback
Mark Leftly is political correspondent at The Independent on Sunday and associate business editor across the Independent titles. He writes a weekly column, Parliamentary Business, published on a Wednesday, that covers politics and the City. He is a multi-award winning reporter and was named Press Gazette's business magazine journalist of the year prior to joining The Independent on Sunday.
Sunday 01 April 2012
The vividness of their prose showed just how much glee environmental campaigners have taken from RWE's and E.ON's decision to abandon their plans to build nuclear power plants in the UK.
The Government's nuclear programme is "crumbling", according to Greenpeace policy director Doug Parr; the WWF's climate change head, Keith Allott, declared that it was "blindingly obvious that the economics just don't stack up" and that our political masters should "stop flogging the nuclear horse"; The Friends of the Earth campaigner Paul Steedman said the news meant that it was "virtually game over for new nukes".
These guys need to calm down quickly if they are to avoid one almighty disappointment: nuclear won't go away.
The Government and whoever wins the 2015 general election will stick by the new build policy, particularly while most other renewables remain either or both expensive and unproven.
The RWE/E.ON joint venture, Horizon, is only second in the queue in building the plants. If EDF and Centrica, which are the most advanced with their plans for Hinkley Point, had pulled out, then we would have a serious problem, perhaps years of delays, and I'm aware that a number of the brains behind the overall nuclear programme would resign.
The decision to sell Horizon was led by E.ON, though RWE faced similar difficulties. Essentially, they were struggling in Germany, where a nuclear fuel tax and a shutdown of plants in the wake of the Fukushima disaster caused E.ON's ebitda, the key profit measure, to drop 30 per cent in last month's full-year results.
Being contractually obliged to generate more electricity from wind, rather than fossil fuels, has also put up production costs in their home market. Energy companies the world over struggle to keep electricity prices down when they are required to use clean sources other than nuclear.
Long-term investments elsewhere came under question and Horizon was the unfortunate victim of the duo's attempts to move away from large-scale projects where there was potential for cost overruns. Nuclear programmes at the construction, rather than operational, phase have previous in going over budget, as delays costing billions of dollars to Finland's nuclear ambitions have shown.
However, even as E.ON hinted that its British nuclear ambitions could come to nowt at those results last month, chief executive Johannes Teys-sen conceded that the "investment environment [for nuclear] in the UK is friendlier than in other countries".
The truth is that a number of investors and utilities are already talking to each other about forming consortia to bid for Horizon, which will build plants in Wylfa, North Wales, and Oldbury, South Gloucestershire, by 2025. For some time, these potential buyers, who I'm told are geographically spread from Europe to Japan, have been looking to take stakes of 10-30 per cent in Horizon. All that has changed is whether they have the appetite to buy the whole venture.
RWE and E.ON have basically declared themselves forced sellers, so they can't really expect an awful lot more than £250m for the venture. That said, we should get a better idea of the likely runners and riders over the next couple of weeks and a crowded auction might push the price up a bit.
The real costs come later, when buyers will cough up billions to develop the plants. Budgeting for this is what will be vexing bidders and determine who they partner up with. This means that it could take until the new year for Horizon to have new owners.
Naturally, this nine-month pause will lead to suggestions that Wylfa won't be up and running until 2022, a year later than planned. A minor delay at worst, but changes to the programme management over a near decade-long development should mean that many of those months are made up over time.
And, if RWE and E.ON had to pull out, it might as well be now. Horizon was poised to choose which of the two UK-approved reactor designs, one by France's Areva and the other by Toshiba-owned Westinghouse, it would use for the plants.
This is an incredibly intense time, with the possibility of legal action by the losing reactor designer looming over the whole selection process. If, as planned, Horizon had chosen its designer last month, the likelihood is that it would have halved the field of potential buyers, as reactor preferences seem to be split roughly down the industry's middle.
Make no mistake, this is a reputational blow for UK nuclear, which had already been heavily criticised in the wake of the disaster in Japan last year. But the mere mention of the word "nuclear", even in a civil rather than military context, means that this was always going to be a tough road to travel.
The environmentalists, then, have a minor victory – and that's it.
Quotas for women on boards won't work - and the row risks sidelining race issues
Your regular author of this column is a keen proponent of fixed quotas to promote more women to the boardroom. Margareta Pagano might soon get her way: EU Justice Commissioner Viviane Reding is pushing for a directive that would impose quotas across the bloc.
Far be it for me to disagree with my illustrious colleague and Europe's top brass, but I can't believe that quotas would be anything other than counterproductive.
Every female appointment would be questioned, their position undermined. As it is, there is a fear that this would end with a system that would see just a handful of women taking up a bulging portfolio of roles: "golden skirts" as they are known in quota-driven Norway.
Quotas provide a short-term fix to a long-term problem. It's getting women into management rather than on to executive boards that is important, so that there is a bigger pool of talented candidates to choose from. That means ensuring career progression isn't hindered by children. Frankly, that should be a non-issue anyway, as women in professional jobs tend to have kids a little later in life when their skills have already been proven.
Initially, firms would be better off choosing non-executives from different types of businesses, such as lawyers, where there is a better gender balance of senior staff than selecting the run-of the-mill investment-banking candidate.
And progress is being made, with the proportion of women on FTSE 100 boards up to 15.6 per cent from 12.5 per cent last year. Maintaining that progress is key, not adding regulation that reinforces old biases.
Worst of all – and I have to declare a familial interest that won't be clear from my picture – this debate over women in the City continues to sideline the far more severe diversity problem of a lack of Square Milers of, in particular, Afro-Caribbean heritage.
Race issues, which affect both women and men, must not be obscured by a mounting, but flawed, gender-equality campaign.
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