Drawn-out negotiations ‘put Hinkley Point jobs at risk’

New power plants are needed to bridge the UK’s energy gap but plans for Hinkley C have been stalled by a long-running row between EDF and the Treasury

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The Independent Online

The nuclear plants at Hinkley Point in Somerset are so old that the health & safety notice boards warn workers not to take snuff into a building that houses two uranium-fuelled reactors. In the shadow of a 90ft high, 650-ton “charge machine” that lifts carbon-encased tubes of uranium from the reactors with little more than the twist of a two-inch joystick, operating technician Rodney Western laughs: “When I started in an engineering factory 40 years ago all the old boys would say to me ‘here young ’un, try some of this snuff’. This is the South-west, mind.”

Sporting a terrific variation of a goatee, Mr Western is speaking on the fifth floor of Hinkley B, from where Weston-super-Mare is visible in the distance. A decade from now his colleagues will go through the seemingly endless radiation clearance checks, such as putting their arms in what look like Dyson Airblade hand dryers for six seconds, for the last time when the reactors generate their final watts. The neighbouring A site, its reactors contained within the twin blue-coloured blocks that overlook the Bristol Channel, has been long since obsolete. 

In fact, no civil nuclear station has been opened on British shores since 1995.

But a two-minute drive away is the site of the proposed Hinkley C, an area surrounded by 30km of barbed wire that is roughly the size of the London Olympic Park.

The place should be buzzing, one of the biggest construction sites in Europe with 5,600 workers at its peak focused on building a £14bn project that will bridge Britain’s yawning energy gap. Convinced by Hinkley’s business model, Japanese and Spanish energy groups would then follow suit with a wave of new civil nukes lighting up the UK.

But the Treasury and EDF have long been battling over the subsidy that the energy giant will receive for building the C site. Irritated, EDF even set a rather arbitrary – and sure to be ignored – deadline for the end of this month to sort out a deal, when even optimists close to the table believe a compromise is still weeks away. 

So, rather than excavating earth and laying the foundations of a project that would boost the regional economy by £100m a year, there is a largely empty stretch of land, bar the odd bat-house and canteen. Trees have been cleared, a solitary crane moves slightly with the gusts of coastal wind, and Gurkhas share a joke in one of the few G4S security vans guarding the site.

Workers are filling their hours dealing with badgers. While the Government has been keen to cull the short-legged omnivores, EDF’s staff tempted them out of the site’s boundaries with honey-coated peanuts. However, three weeks ago they tried to get back home, slyly bypassing those G4S guards by digging under the fence.

“We’ve even given the badgers TB inoculation jabs,” smiles construction director Nigel Cann, before pointing out the seriousness of an impasse that has turned burly builders into concerned ecologists. “The sooner I move from being David Attenborough to Isambard Kingdom Brunel the better.”

Mr Cann admits to being “frustrated” as he has “assembled a group of highly skilled people to build a power station, not to cogitate”. Around 150 of those staff have even been let go recently, as there simply wasn’t enough to do, and Mr Cann warns more people will be moved on to other projects when most of the little remaining preparatory work ends in May. EDF is understood to have broadly agreed terms with the energy department until the Treasury intervened this year, arguing the taxpayer could get a better deal. The French group needs a guarantee that should the price of nuclear-generated electricity fall below a certain point, the Government will make up the difference.

This point is known as the strike price and is the way EDF can convince shareholders that they should definitely get a return on the billions poured into a British power scheme. At the moment, the Treasury, perhaps emboldened by a belief that shale gas could prove a solution to the country’s energy problem, is refusing to pay more than £85 per megawatt hour. EDF thinks that number must start with a “9”.

Until the agreement is signed, Mr Cann won’t be able to risk spending more money on a project that is costing £1m a month. He adds that the “less the strike price is the less money you’ve got to mitigate risk until you reach a level that becomes untenable”.

As the strike price dwindles, there is not as much money to set aside for cost and timetable overruns. Also, elements of the project will have to be pared back to make savings and eventually that could reach a point where the station simply can’t do its job properly.

Hinkley C is supposed to open in early 2019, but each delay makes this timetable less realistic. Mr Cann declines to comment on whether the first electricity can still be generated in six years’ time, but many industry observers are now quoting 2020 as a likelier opening date.

Mr Cann gives some details of what his team will have to do to shut down the site should negotiations collapse. Trees will have to be replanted and the site returned to its previous condition. At least that will please the badgers.

“It would be a sad day,” sighs Mr Cann. “It would feel like I’ve wasted two years of my life.”

It would also upset Peter Higginson, who is technical and safety support manager at Hinkley B. Mr Higginson’s father and grandfather worked on the Iron Bridge coal-fired stations on the banks of the River Severn, and now his son, a geologist, is keen to follow.

Hinkley C would be a perfect place for that family tradition to be continued. “I’m excited about new build because I can see an energy gap looming,” adds Mr Higginson.

With every day that the Government fails to find common ground with EDF, that familial dream fades a little and the energy gap widens.