British Energy profits hit by shutdowns at its ageing nuclear plants
The fragility of British Energy's ageing fleet of nuclear reactors, producer of a sixth of the nation's energy, has been pushed back to the top of the public agenda after a second reactor in as many days shut down unexpectedly.
The company confirmed that its Hunterston B7 reactor at Largs, Ayrshire, tripped in the mid-afternoon, a day after its Sizewell B reactor in Leiston, Suffolk, capable of powering more than 1 million homes, shut down suddenly, triggering blackouts across large swathes of the country.
The operational issues were highly embarrassing to the UK's biggest energy producer. Earlier in the day, British Energy revealed in its annual results the financial toll of trying to keep the troubled fleet of reactors in operation – profits plunged by a third last year to £538m due to a raft of station closures, down from £796m the previous year. It also highlighted the progress of repairs to several reactors, including Hunterston, which have been rendered inoperable or severely constrained due to structural breakdowns.
The shutdowns threw into relief the tentative balance between the country's rising demand and the pace of new supply to replace older, more polluting stations soon to be decommissioned. David Porter, the head of the Association of Electricity Producers, said: "People should be aware of the importance of building new power stations and power lines. Huge investment – some estimates suggest £100bn – is needed over the next decade or so to replace old power stations and those that cannot meet ever-tightening environmental requirements."
British Energy decided this year to invest a further £90m to extend the life of its reactors at Hinkley Point B and Hunterston, which were originally slated for closure in 2011, to 2016.
Bill Coley, its chief executive, said: "I don't think people realise how important British Energy is to the UK." The company was "the single biggest source of carbon emission avoidance" – 31 million tonnes annually – in the country, he added.
The problem, however, is that seven of its eight nuclear power stations are riddled with technical problems due to reactor designs that have long since been dismissed as obsolete by the rest of the industry. A spokeswoman said it was "too early" to determine the cause of the unscheduled stoppage at Hunterston. The station's other reactor was continuing to operate, she added.
As of yesterday, Sizewell B was still not working. Mr Coley said the shutdown, which was caused by a false instrument reading, was "no big issue, and that the plant would be back up "within days". He declined to discuss the progress of the auction for the company, which has received at least two offers that would value it at nearly £11bn. Wrestling with an acute budget shortfall, the Government is keen for a swift resolution to the bidding as it could pocket up to £4bn for its 35 per cent stake in the business.
British Energy's operational issues have been well-documented. As Mr Coley said: "I can't say what people might think about the company but we have been very forthcoming with the public and the markets."
The key for bidders is the company's ownership of all the sites where nuclear reactors are operating. The Government has said these are the most suitable for the next generation of nuclear reactors. If the company is sold, Mr Coley said he has no plans to step down but would not stand in the way if that was what was best for British Energy. "I am one of the oldest rats in the barn," he said.
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