Financing future energy capacity, including renewables > Parliamentary Committee launches inquiry and asks for evidence: "A bigger shift in our energy infrastructure to a low cost, low carbon energy system is necessary."

There are questions around nuclear energy in the UK:
Futures Forum: The weakening business case for nuclear energy
Futures Forum: Energy infrastructure @ Hinkely C >>> losing control and paying tithes to Direct Foreign Investors

And in parallel, there is more interest in renewables:
Futures Forum: Getting the government to adopt the Community Energy Manifesto
Futures Forum: Small-scale low-carbon generation reintroduced in the UK
Futures Forum: Climate change: the CPRE and renewable energy in Devon

Meanwhile, a parliamentary inquiry into the future of energy has been launched: 

MPs launch inquiry into government energy policy after nuclear setback

August Graham
Friday 1 March 2019 12:00am

MPs are set to review the government’s plans for Britain’s energy sector after a string of major projects were abandoned by international companies.

The Business, Energy, and Industrial Strategy Committee said it would look into the government’s plans to see if they are fit for purpose.

It will examine if the country needs a new approach to speed up investment into low-carbon, low-cost energy and secure supplies in the long term.

The decision comes after Japanese firms Hitachi and Toshiba pulled out of the Wylfa and Moorside nuclear projects, dealing a serious blow to the government’s plans. The committee also said it will investigate concerns over foreign investors in British nuclear. This comes amid worries about Chinese involvement in major projects.

Committee chair Rachel Reeves said: “In the wake of investment decisions over nuclear plants at sites such as Moorside and Wylfa, a giant hole has developed in UK energy policy. With coal due to go off-line, and the prospects for nuclear looking unclear, the government needs to set out how it will create the right framework to encourage the investment needed to plug the gap.

“In this inquiry, we want to examine the government’s approach to creating the right conditions for investment to deliver the secure energy capacity to meet the nation’s needs. A bigger shift in our energy infrastructure to a low cost, low carbon energy system is necessary.

“As a committee, we will want to consider what more the government needs to do to attract greater investment into financing future energy capacity, including renewables.”

MPs launch inquiry into government energy policy after Hitachi and Toshiba abandon nuclear plants | City A.M.

As the East Devon Watch blog comments:

Owl says: Such a shame that our Local Enterprise Partnership – dominated by people with a vested interest in the nuclear industry – has put all our growth and regional investment eggs in the Hinkley C basket!

“MPs are set to review the government’s plans for Britain’s energy sector after a string of major projects were abandoned by international companies” | East Devon Watch

See also:
Futures Forum: Is the Heart of the SW Local Enterprise Partnership delivering value for money? "Its below average performance - from unlocking investment to falling productivity - surely can only be seen as a failure?"

Here's what the Committee has to say on the future of energy: 

Committee explore finance and investment in UK’s future energy infrastructure

28 February 2019

The Business, Energy and Industrial Strategy Committee has today launched an inquiry to examine the outlook for future investment in energy infrastructure in the UK. The Committee will be looking at whether the Government needs a new approach to bring forward investment to deliver a low carbon, low cost energy system and secure energy supplies for the long term.

Inquiry: Financial energy infrastructure
Business, Energy and Industrial Strategy Committee

Purpose of the inquiry

The Committee’s inquiry is launched in the wake of recent decisions by Hitachi and Toshiba to halt new nuclear projects at Wylfa and Moorside and concerns over how the UK’s ‘nuclear gap’ for low carbon electricity can be filled. The inquiry will examine the challenges to raising finance in clean energy technologies such as renewables and storage. As part of its look at the Government’s approach to attracting investment in energy, it is also likely to look at the potential future financing of nuclear power, and concerns around foreign investors in this technology.

Chair's comments

Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy Committee said:

"In the wake of investment decisions over nuclear plants at sites such as Moorside and Wylfa, a giant hole has developed in UK energy policy. With coal due to go off-line, and the prospects for nuclear looking unclear, the Government needs to set out how it will create the right framework to encourage the investment needed to plug the gap. In this inquiry, we want to examine the Government’s approach to creating the right conditions for investment to deliver the secure energy capacity to meet the nation’s needs. A bigger shift in our energy infrastructure to a low cost, low carbon energy system is necessary. As a Committee, we will want to consider what more the Government needs to do to attract greater investment into financing future energy capacity, including renewables."

Send in your views

Evidence is invited on potential investment across the energy sector, including power plants, system flexibility, and heat decarbonisation.

The Committee is inviting written submissions on the following points:

• How do recent investment decisions on nuclear and trends in low carbon investment affect the UK investment outlook for energy infrastructure? Is there a case for changing the Government’s current approach to delivering a low cost, low carbon energy system? How could the ‘nuclear gap’ be filled?
• How attractive is the UK energy sector for investment compared to other countries? Are there particular technologies which are more – or less – attractive to investors under current arrangements?
• How has Government policy improved the UK energy investment environment over the last three years? 
• What types of investor can we expect to finance future UK energy infrastructure? What are their criteria for investment, including on risks and returns? Does it matter if investors for specific technologies are largely from overseas?
• What role should the Government play in providing financial support and sharing risks for new energy infrastructure? Are existing financing mechanisms, notably the Contracts for Difference, fit for purpose? Are there any practical issues, or potential unintended consequences, that could affect the feasibility of implementing alternative support models (such as a Regulated Asset Base)?
• What further steps should the Government take to increase investor confidence in the UK energy sector? 

The deadline for written submissions is 3 April 2019.

Send in your views for the financial energy infrastructure inquiry.

Committee explore finance and investment in UK’s future energy infrastructure - News from Parliament - UK Parliament
.
.
.

The weakening business case for nuclear energy

The Japanese energy company Hitachi is pulling out of building nuclear in the UK:
Hitachi scraps £16bn nuclear power station in Wales | Business | The Guardian

One of the alternatives is to allow the Russians or Chinese to build instead: 

The withdrawal of the Japanese conglomerate could leave the nuclear newbuild industry open to Russian and Chinese state-owned companies as Western private firms struggle to compete.

China’s General Nuclear Services, an industrial partnership between China General Nuclear Power Corp (CGN) and French utility EDF (EDF.PA), plans to make a number of investments in Britain’s nuclear power sector, most notably the Hinkley Point C project in southwest England. China’s CGN told Reuters it would bring forward plans to build a nuclear plant in Bradwell, eastern England, helping to plug a potential supply gap.

Hitachi halts UK nuclear project as energy supply crunch looms | Reuters

Perhaps post-Brexit, this would be a good thing:
Futures Forum: Brexit: and the fleet-footed, clever trading nation

But there are national strategic considerations to take into consideration when it comes to who builds nuclear - as the Welsh MP Geraint Davies has just warned:
China would be a fickle and dangerous ally for post-Brexit Britain | The Independent

And as this blog has considered, in the context of the nuclear build in Somerset:
Futures Forum: Energy infrastructure @ Hinkely C >>> losing control and paying tithes to Direct Foreign Investors
Futures Forum: The future of Hinkley: Is the UK government about to invest 'direct public subsidies'? And is China about to 'pull out of the UK, creating an even bigger tax burden'?

Indeed, in these parts, all eyes are now on Hinkley, as outlined by the East Devon Watch blog: 

HITACHI SUSPENDS WALES NUCLEAR PLANT – WHAT IS THE BUSINESS CASE FOR HINKLEY C

17 JAN 2019

Hinkley C is leaking out money from Devon via the Heart of the South West Local Enterprise Partnership, whose board (past and present) includes people with direct and tangential interests in the nuclear industry and that particular site.

Now we hear that Hitachi is suspending work on the nuclear plant it was meant to build in Wales. It is prepared to take a hit of more than £4 billion to walk away.

It begs questions:

> How can the French (EDF) and Chinese – who now own Hinkley C – make a business case for Hinkley C even with the massive subsidy for its (eventual) electricity?

> Just how much of OUR money is propping up these French and Chinese businesses?

> What is the Plan B if one or both of the companies fail; how much of OUR money will be used to plug financial holes?

> What effect has this had on renewable energy sources in Devon and Cornwall?

Hitachi suspends Wales nuclear plant – what is the business case for Hinkley C | East Devon Watch

Others are insisting everything is going very nicely:
Innovation drives Hinkley Point C construction | Feature | New Civil Engineer
Hawk Plant jobs saved as Plantforce acquires Hinkley assets | News | Construction News

Hinkley work progressing well as row over new nuclear erupts - Bridgewater Mercury 

However, there are bigger questions over the future of nuclear power in the UK - and in the wake of Hitachi's decision, these are being asked more urgently, whether it's about:

Climate change:
Why ditching nuclear is bad for climate change, good for Putin - The Scotsman
Climate change: Is nuclear power the answer? - BBC News

Or the alternatives:
Does Hitachi decision mean the end of UK's nuclear ambitions? | Business | The Guardian 

Scrapping of nuclear plant should see UK renewables filling the void

Letters
Fri 18 Jan 2019

An artist’s impression of the Wylfa nuclear plant in Anglesey, which Hitachi has announced it is pulling out of building. Photograph: AFP/Getty Images

The pulling out of Hitachi from the proposed Wylva nuclear power plant is a good thing for energy policy – not a serious blow as said in the article (Hitachi scraps £16bn nuclear power station in Wales, 18 January). Nuclear power is now one of the most expensive form of electricity there is. But beyond the economics, it no longer fits with the digitalising world that we live in. The global energy system is undergoing change similar to that in telecoms and computers over the last few decades. The energy system is becoming smarter and more flexible and it is on the path to being operated in a completely different way than hitherto because of that.

Nuclear – with its huge, inflexible output – is the equivalent of a giant boulder in the middle of a motorway. We, the energy customers of Britain, would have ended up paying way over the odds for Wylva, which would have also undermined the UK’s move to a smart and flexible system – which really is the future. We are already going to do that for Hinkley Point C.

Going down the nuclear route has been a wasted decade for UK energy policy. Exiting from the EU and the loss of flexibility we may end up with because of difficulties to do with interconnectors and market arrangements is a far greater threat to security than some phantom nuclear power plant from a previous age. 

Catherine Mitchell

Professor of energy policy, University of Exeter

Or lack of a Plan B:
The UK could suffer a blackout in 10 years if new a energy plan isn't implemented in the wake of the latest nuclear plant shutdown - The Sun
Will Britain's new nuclear age ever see the light of day? - Telegraph

Or cost:
Work on UK nuclear power plant halted over financing impasse - New Jersey Herald -
Government admits nuclear is far too expensive, but will renewables plug the gap? | The Independent
Hitachi pullout throws UK nuclear policy into disarray | Financial Times 

Why is the government cooling on nuclear?

Simon Jack Business editor

@BBCSimonJackon Twitter

17 January 2019

The previous power station at Wylfa was closed in 2015

There was a time - not so long ago - that government ministers talked enthusiastically about a new nuclear age. A fleet of brand new reactors producing reliable, low carbon electricity for decades to come. Not only that, but the government wouldn't be taking any of the risks associated with financing and building them.

Hinkley, Moorside, Wylfa, Oldbury, Bradwell and Sizewell were identified as the sites for the most significant national wave of new nuclear power construction anywhere in the world.

Of those six, only one is under construction, three have been abandoned, and two face an uphill battle to get the green light.

Under those circumstances, you might think the government would be embarrassed that its energy policy was in disarray. But it's not.

The collapse of the Wylfa and Oldbury projects today (following the abandonment of Moorside) is evidence of some new economic realities that have seen government enthusiasm for new nuclear fade.

High price

The first and most obvious is the cost of building the darn things.

At £20bn Hinkley Point is the most expensive UK construction project to date - HS2 will beat it.

The good news is that the UK government isn't paying a penny of it.

The bad news is that the electricity it will one day produce will be expensive.

EDF, the French contractor that's paying for its construction, could only raise the money to do it by extracting a guarantee from the UK government that it would receive more than double the current going rate - for 35 years.

That's one way to finance it. Let EDF raise the money and take the risk but ultimately foist the cost onto future generations of energy customers.

Who pays?

One of the reasons Hinkley is so expensive is that EDF needed to go out and borrow huge sums for a risky project at interest rates of over 9%. In fact, of the total £20bn bill for Hinkley, well over half of it was the cost of raising the money over the lifetime of the project.

There are cheaper ways to finance a project like this.

The government can borrow money much more cheaply than anyone else. Right now it could get a £20bn 10-year loan at 1.3% and use that money to build the thing itself. There are financial and political problems with that.

First, it adds to the public debt - which successive recent governments have been keen to reduce.

Second, if there are massive cost overruns (and that is almost a rule with nuclear projects), the government foots the spiralling bill, taking commensurate political flak.

Third, if the government is suddenly in the business of building nuclear power stations, why not other things - in fact why not nationalise the infrastructure we have already got? That is not comfortable territory for a Conservative government.

Doing the sums

There is a another way. Pay-as-you-go. Rather than lumber future generations with more expensive energy, get current consumers to pay a little extra on their bills (amount decided by the regulator) during the construction. This removes the need for massive borrowing and means you don't have to offer a juicy price guarantee to the contractor at the end as a reward for taking the operational and financial risk.

This is the model the government now prefers and is testing on the Thames Tideway project. If Sizewell and Bradwell are ever built - this is how they will be financed.

I say "if" because the truth is, the sums for new nuclear have been made very tough by the sharp falls in the cost of renewables. In 2015, the cost of offshore wind was over £140 per megawatt hour. That makes Hinkley Point look cheap at £92.50. The price of offshore wind is now £57.50.

But hang on, says the nuclear industry. The wind doesn't always blow. When it doesn't, you will have to fire up gas or even coal stations to fill the gaps in the depths of winter. You are jeopardising our chances of meeting CO2 emissions targets and threatening security of energy supply.

The government accepts some of this, and that is why Business Secretary Greg Clark said today that he is still open to new nuclear projects. But the government's preferred direction is towards smaller reactors of the type being developed by Rolls Royce, in which the government will contribute research backing, in the hope it becomes a major new export industry.

Future calculations

The UK government is not alone in cooling on big nuclear. One of the reasons that Wylfa, Oldbury and Moorside collapsed was because the Japanese government could not get sufficiently behind the Hitachi and Toshiba projects. After the Fukushima disaster, backing nuclear power - particularly foreign nuclear power - is a pretty tough sell back home.

Whatever it does, the government doesn't feel the need to do anything very quickly. The National Infrastructure Commission has said it doesn't need to make a decision for several years yet, and the National Grid says spare energy capacity is increasing rather than decreasing. Government sources say the resilience of the system to last year's "Beast from the East" also reassured officials.

All this makes life difficult for EDF, which wants to build the follow-up to Hinkley Point at Sizewell. They will argue strenuously that only by adding a second, do you realise the economies of scale. Same design + same process + same skilled workforce + different funding model = quicker and cheaper project. Also, the more you rely on wind, the more exposed you are to its intermittence. The only way to make sure you have a secure, low carbon, reliable "base load" is to double-down on nuclear.

That argument may yet still work but it is now much, much harder to win.

Why is the government cooling on nuclear? - BBC News
.
.
.

The Greater South West Local Enterprise Partnership >>> of 'mis-speak' and the unrealistic expectations of growth

It's all rather confusing as to what regional business set-ups we have:
Futures Forum: District Councils must be 'fully represented' on Local Enterprise Partnerships
Futures Forum: Can the Devon/Somerset Local Enterprise Partnership 'double' the regional economy in 18 years?
Futures Forum: The picture of 'devolution' in the South West gets murkier

There are the impressive headlines and 'big initiatives', though: 

Leaders call for a Great South West 'ministerial champion'

Steve Hindley, chairman of the Great South West partnership explains the next steps for the campaign

Hannah Finch
17 SEP 2018

Steve Hindley CBE DL has more reason than most to listen closely when the Chancellor, Philip Hammond, reveals his Autumn Statement later this year.

As chairman of the Great South West Partnership, Heart of the South West LEP and Midas, one of the region’s biggest construction firms, he has been at the forefront of a campaign for the South West to get the recognition it deserves with the man who hold the country’s purse strings.

Mr Hindley said: “I am hopeful of getting a mention, they do know that the South West exists,” he said.

Mr Hindley is at the forefront of the Great South West vision. Together with the #BackTheSouthWest campaign, spearheaded by Western Morning News and Pennon Group, it quickly gathered momentum after the first South West Growth Summit in October 2016 - just four months after the decision to vote leave in the Brexit referendum.

It gave rise to The South West Growth Charter, which outlined priorities for the region and was heard in parliament.




Since then, the Great South West committee has been formed.

Now, six months until Brexit actually happens in March, the alliance of business leaders, local authorities and higher education chiefs have officially launched its Great South West vision that aims to put the South West on the UK economic stage.

Mr Hindley said: “Having an identity is incredibly important. The Great South West is our equivalent of the Northern Powerhouse or the Midlands Engine. We have told our MPs that we want them to put the Great South West on the map at Westminster. The Great South West already has an economy twice the size of Greater Manchester’s and the West Midland’s yet we do not share the same level of investment.

“We have got Plymouth and Exeter and in terms of nuclear, we have the largest building project in Europe under way at Hinkley Point C.



“This is essentially us putting forward our business case and it is great news that we have got the business sector in the driving seat.”

The Great South West vision covers the geographic area covered by LEPs in Dorset, Heart of the South West in Devon and Somerset and Cornwall.

Leaders call for a Great South West 'ministerial champion' - Devon Live

But perhaps we need to look behind the 'great news' a little: 

LOCAL ENTERPRISE PARTNERSHIP – PARTNERSHIP: ARISE WESSEX! OR MAYBE NOT …!

17 September 2018

Below is a comment on an earlier post:

Greater South West Local Enterprise Partnership – partnership! | East Devon Watch

... reprinted here as it raises some interesting questions, raised by David Daniel, who so eloquently spoke about the unrealistic expectations of our LEPs growth strategy to a largely uninformed and disinterested majority of Conservative councillors at DCC recently:Watch EDA councillor Shaw and Budleigh resident David Daniel make most sense on LEP “strategy” | East Devon Watch

This now seems to be the THIRD such trial marriage of various south-west LEPs. None of them seem to be made in heaven ……….

“WESSEX here we come!

English devolution is a mess, whether it will evolve into anything sensible is uncertain.

A third of people living in England outside London live in one of England’s nine combined authorities, six being cities with directly elected mayors. These are corporate bodies formed of two or more local government areas to enable decision-making across boundaries on issues that extend beyond the interests of any one individual local authority, like strategic transport planning.

Our nearest is the West of England Combined Authority of: Bristol; North Somerset; Bath and North East Somerset; and South Gloucester. The Government has encouraged the creation of these structures in order to provide the economic scale needed for devolution. These are on the fast track.

County identities are medieval in origin but they continue to lurk in our consciences. We identify with them democratically and historically. The focus of the Coalition 2010 white paper that set devolution in progress was to create administrations based on economic functional areas rather than regions. This has set in train a conflict between perceived economic necessity and community identity and democracy. A few Local Enterprise Partnerships (LEPs) followed county boundaries eg Cornwall and Scilly, and Dorset, but most did not. Some even overlapped.

Following on from the combined authorities, which are all centred on what one might describe as metropolitan areas, we are beginning to see the creation of new concepts by the combination of LEPs into “power” groupings such as the Council of the North, Midlands Engine, Oxbridge Corridor etc.

We now have the Great South West Partnership of: Heart of the South West (HotSW), Cornwall and Isles of Scilly, and Dorset LEPs. Or do we? The reason I add a question mark is because not very long ago (April to be exact) we had the Great South West Partnership comprising FOUR LEPs, including Swindon and Wiltshire “working together” to agree the next steps in implementing the recommendations of a report on Productivity. We were also told that GFirst (Gloucester) and West of England (Bristol) LEPs were also taking an active interest.

In his first interview on Somerset Live the new HotSW Chief Executive, David Ralph said “We’ve set a really big ambition about doubling the size of the economy in this area over the next 30 years.”
Everything you need to know about local enterprise partnerships - Somerset Live

Previously the target had been to double the economy in 20 years. When I asked for clarification I was told it was a mis-speak, not a change of policy to something slightly more realistic.

So who knows where we are going?”

Local Enterprise Partnership – Partnership: Arise Wessex! Or maybe not …! | East Devon Watch
.
.
.

PFI and Devon

It should not be forgotten that the reason why one of the community hospitals in Devon was 'saved' last year was because it is a PFI project:
PFI contract for Tiverton Community Hospital-FOI-16-004 « Northern Devon Healthcare NHS Trust NDHT

 - and so could not be touched:
Futures Forum: The future of Devon's hospitals: Tiverton cannot be closed because it is run as a Private Finance Hospital - "but the local NHS trust will not own a single brick"

Meanwhile, other lucrative contracts have been put together for public services in Devon:
Six firms shortlisted for South West Devon PFI - letsrecycle.com
Exeter PFI Schools - Sheila Oliver's Campaigning Website
Private finance initiative (PFI) schools facilities management | Access to Information - Devon County Council

Here in Devon there will be fallout from the collapse of the facilities management and construction services company Carillion over its PFI contracts:

How the Carillion collapse will affect Devon - including jobs, Exeter Prison and broadband

Devon councillor Rob Hannaford said that 200 jobs could be affected by the collapse of the construction and maintenance giant

Hannah Finch
15 JAN 2018

A spokesman for Devon County Council, said: “We are confident that Devon has minimal exposure to Carillion’s collapse.“The company is currently a named joint venture partner delivering some civil engineering elements of the full-fibre Gigaclear broadband network roll-out for the Connecting Devon and Somerset partnership. We have been assured that Gigaclear has a range of options available to it to deal with any change in circumstances affecting its contractors. Gigaclear is working to ensure that the publicly-funded broadband network is delivered on time and on budget.”

Cllr Rob Hannaford, Leader of the County Council Labour Group said that he understands that the corporate folding could affect around two hundred staff in Devon. He said: "That’s an important economic consideration. I will be putting down some formal report requests to make sure that we are kept up to date locally with this fast changing situation and also its impact on some of our key partners such as NHS, Prison Service, and the Armed Forces.

"Yet again this situation really challenges the wisdom and propriety of out sourcing vital public services to private companies , often with worse pay and condition and poorer pensions, rather than keeping them in house. Indeed I really do hope that this will trigger a full national debate on reconfiguring how the public sector is generally set up and run in favour of more progressive options.”

Carillion Civil Engineering has a base in Exeter and runs projects involving roads, railways, airports and telecommunications. CarillionAmey provides infrastructure and housing services to the armed forces and has a contract for military bases in the South West.

Carillion was previously involved with the Exeter PFI schools contract but has not been for some years after the maintenance contract was awarded to Sodexo in 2015.

Subcontractors are likely to be the hidden victims in the collapse of construction giant Carillion, insolvency practitioner David Kirk predicts. The affect could be felt far wider through the supply chain and the companies hired by Carillion to carry out its public sector or public/private partnership contracts, including providing school dinners, cleaning and catering at NHS hospitals and prison maintenance.

Mr Kirk, of Exeter-based Kirks Insolvency, said: “This is a very complex case and the largest company in recent years to go into liquidation. The last one was around eight years ago with the loss of Rok. The losses are likely to be far higher than initially anticipated because Carillion uses a lot of subcontractors who may not ever get paid. Even if, say 20% can be recovered by creditors, it can be months if not a year plus before the creditors see that money. The knock on effect can mean lots of contractors who worked for Carillion, with no special rights like employees, not receiving any money at all or very little which could well put them into financial difficulty.”

How the Carillion collapse will affect Devon - including jobs, Exeter Prison and broadband - Devon Live

The EDW blog points to a murky link with another lucrative project:
“Disgraced Carillion chief now director of firm in charge of inspections at Hinkley Point C nuclear power station” | East Devon Watch

For some time now, the national press has been questioning the dubious finances of this  project - which is not a PFI project but is nevertheless proving even more attractive for those involved:

EDF's Hinkley Point returns 'substantially higher' than other projects

Think tank chaired by former energy minister finds investors could earn a return of up to 21pc over the lifetime of the project

The European Commission is investigating whether Britain's support for nuclear complies with European Union state aid rules Photo: Getty Images

18 Mar 2014

Returns for French utility EDF and other investors in Britain's first new nuclear plant in two decades, supported by the Government, are much higher than for other projects, according to a report by a cross-party think-tank.

EDF plans to start operating the first new nuclear reactor at the Hinkley Point C site in southern England in 2023. The Government will guarantee a loan to finance the project as well as a fixed minimum price for the electricity it generates for 35 years.

The investors could earn a return of up to 21pc over the lifetime of the project, Carbon Connect analysts said in a report, which was chaired by former Conservative energy minister Charles Hendry.

"Expected equity returns on Hinkley Point C are around 19pc to 21pc, substantially higher than expected equity returns on Private Finance Initiative (PFI) projects and regulated electricity network assets," the report stated.

By comparison, returns are typically 12pc to 15pc for PFI projects and 8pc to 10pc on regulated networks, it said.

EDF's Hinkley Point returns 'substantially higher' than other projects - Telegraph

And finally, more recently in the Times:

This type of deal always results in the private sector companies taking any profit and the taxpayer covering any downsides ... they're consciously structured that way....Hinkley point C is another white elephant in the same way as all of the PFI schools and hospitals have been. Spot on.

Hinkley nuclear deal ‘cost public £15bn more than it should have’ | News | The Times & The Sunday Times
.
.
.

Keeping Hinkley off the Treasury's balance sheet

Whilst there are very local concerns about pollution from Hinkley Point:
'Radioactive' mud from Hinkley Point to be dumped in Bristol Channel - just a mile from Cardiff bay - Somerset Live

... there are real concerns about the financial fallout for the whole country:
We’ve been nuked by Hinkley Point | Business | The Times & The Sunday Times
Hinkley Point C subsidy has dealt consumers 'a bad hand', say MPs | UK news | The Guardian
Government accused of 'grave errors' in Hinkley Point deal - Telegraph
Hinkley Point will 'hit the poorest hardest', say MPs - BBC News

As covered by the FT yesterday:

UK made ‘grave strategic errors’ in Hinkley Point nuclear project

MPs say consumers were ‘dealt a bad hand’ and warn against more nuclear power stations

YESTERDAY

Andrew Ward, Energy Editor

87 comments

British MPs have urged the UK government to rethink the economic case for new nuclear power stations after making “grave strategic errors” in the Hinkley Point project.

In a report published on Wednesday, the Commons public accounts committee accused the government of neglecting consumer interests and failing to push for a better deal with the French and Chinese investors who are building the £20bn nuclear plant at Hinkley Point in Somerset.

The committee said consumers had been “dealt a bad hand” by the government’s agreement to lock UK households into buying expensive electricity from Hinkley for 35 years.

“Its blinkered determination to agree the Hinkley deal, regardless of changing circumstances, means that for years to come energy consumers will face costs running to many times the original estimate,” said Meg Hillier, the Labour MP who chairs the committee, which is often called parliament’s spending watchdog.

Hinkley is intended to be the first in a series of new nuclear plants in the UK, as part of efforts to replace large amount of old generating capacity due to be decommissioned in coming years.

However, the cross-party public accounts committee urged the government to “re-evaluate and publish its strategic case for supporting nuclear power before agreeing any further deals”.

Recommended

• EDF shares drop on falling demand and nuclear outages
• Lex: EDF, blowing in the wind
• UK eyes rethink after high cost of nuclear plant

Talks are under way with Hitachi, the Japanese company, about a new plant at Wylfa in Anglesey. There are also ongoing discussions with possible Korean and Chinese investors about a project at Moorside in Cumbria.

But the MPs said the economic case for nuclear power had been weakened by the falling cost of fossil fuels and renewable energy since the Hinkley deal was first struck in 2013 with EDF, the French state-controlled company. This meant consumers face paying £30bn above market prices for electricity from Hinkley over the 35-year life of the contract, according to the latest government estimate. That is five times more than the £6bn estimated in 2013. 

MPs said the government should have sought to renegotiate with EDF and CGN, the Chinese state-owned company contributing a third of the finance, after the economic case deteriorated. The government has argued that the deal would have risked collapse, undermining energy security and damaging investor confidence in the UK, had it tried to revise the terms.

The committee also criticised government for failing to consider contributing public funds to Hinkley, an approach that could have reduced financing costs. Ministers have been determined to keep the project off the Treasury’s balance sheet.

26,000

Total number of jobs expected to be created over the course of the Hinkley project

“Consumers are left footing the bill and the poorest consumers will be hit hardest,” the report said. “No part of government was really championing the consumer interest.” 

More must be done to ensure that strategic benefits from the Hinkley project, such as jobs and investment, are captured by the UK economy, the MPs added, saying a “plan B” should also be put in place to prevent potential delays to Hinkley leaving Britain short of electricity in the late-2020s, when the plant is due to come online.

EDF said construction of Hinkley was “on track” and “already delivering a huge benefit to British jobs, skills and industrial strategy”.

The cost of electricity from Hinkley — £92.50 per megawatt hour in 2012 prices — was lower than 80 per cent of other low-carbon power sources, such as wind and solar, contracted by the UK government so far, EDF added.

The latest contracts for offshore wind capacity, awarded in September, fell below the cost of Hinkley for the first time — a breakthrough seized on by critics of nuclear power as a sign that renewables were now more competitive. EDF said future nuclear reactors would also be cheaper than Hinkley as the UK nuclear supply chain was reactivated.

The Department for Business, Energy and Industrial Strategy said the government had negotiated “a competitive deal” with EDF, which “ensures consumers won’t pay a penny for any construction overruns and until the station generates electricity in 2025”.

Some 2,400 people are already working on the Hinkley construction site, the government added, with a total of 26,000 jobs expected to be created over the course of the project.

UK made ‘grave strategic errors’ in Hinkley Point nuclear project - Financial Times

The FT is excited by the official picture of loadsa jobs - but the East Devon Watch blog notes who might actually benefit from this public largess:

HINKLEY POINT – THE CASE AGAINST GROWS STRONGER


22 NOV 2017

Owl’s view: meanwhile, all those board members (and former board members) of our LEP with nuclear interests are very happy – those providing the roads to the site, those building houses near the site, those recruiting staff for the site, those building new facilities for site workers and extending their colleges and universities on the back of nuclear training courses they will run. It really doesn’t matter if it is a Somerset white elephant.

AND they are using OUR money for this.

Hinkley Point – the case against grows stronger – part 1 | East Devon Watch
Hinkley Point – the case against grows stronger – part 2 | East Devon Watch

See also:
Futures Forum: The Local Enterprise Partnership in Devon, conflicts of interest and calculating "housing need"
.
.
.

Devolution proposals for Devon and Somerset >>> "focusing on delivering improved productivity" or "an unelected, one-party combined authority"?

Devon would like a bit of devolution:
Futures Forum: Demanding devolution for Devon and Somerset >>> >>> ‘Give us the power and we will create a better skilled workforce to enhance our whole economy’

However, at the heart of any devolution deal would be the Local Enterprise Partnership, around which there are several issues:
Futures Forum: The Local Enterprise Partnership in Devon, conflicts of interest and calculating "housing need"

This was debated at the County Council this week:

Agenda Item 7: Heart of the South West Joint Committee

Since August 2015, Devon and Somerset County Councils, all Somerset and Devon Districts, Torbay Council, Plymouth City Council, Dartmoor and Exmoor National Parks, the Local Enterprise Partnership (LEP) and the three Clinical Commissioning Groups have worked in partnership to progress towards securing a devolution deal for the HotSW area focusing on delivering improved productivity. Since that time the partnership has continued to progress its objectives in spite of policy shifts at a national level.

(Public Pack) Agenda Document for Cabinet, 08/11/2017 10:30

Here is a report from independent Councillor Martin Shaw:

Pursuit of elusive ‘devolution’ deal is leading to a new layer of bureaucracy: an unelected, one-party ‘Heart of the South West’ combined authority

POSTED ON NOVEMBER 11, 2017 UPDATED ON NOVEMBER 11, 2017

This week’s DCC Cabinet meeting approved a Conservative proposal to set up a formal Joint Committee with Somerset (report at item 7 of the agenda). Objections were raised to aspects of the proposal by the leaders of the Liberal Democrat and Labour groups, and I spoke on behalf of the Non-Aligned Group (which comprises the three Independents and one Green councillor). You can watch the debate, and read my speech below:

I think we know what is going with devolution. We have a government which is ripping the heart out of local government spending, pushing services to the border of viability; this is causing enormous difficulties for this council but also driving down local incomes and so weakening our regional economy. But at the same time it is holding out the carrot of giving us limited extra powers and returning a modest bit of the lost funding, if we jump through its ‘devolution’ hoops. The government barely seems to know what it’s doing over ‘devolution’ and the hoops keep changing, but we still have to guess what they are and do our best to jump.

And so we end up with the papers in front of us today. We are asked to endorse a ‘vision’ of higher productivity and economic growth and create an extra layer of bureaucracy to support it. The problem is that the vision bears little relation to reality. The ambition is to double the regional economy in 18 years, i.e. to increase its size by 100% – this requires a compound growth rate of 3.94%. In the real world, the actual growth rate in the SW over the last 18 years has been 30% and the annual rate 1.47%. Nationally, the UK economy has never grown by more than 3% p.a. in any of the last 18 years, and is currently veering downwards below 1.5%.

So we are asked to believe that we can increase local productivity growth from below the national average to well above it, and thereby buck not only regional but also national growth trends. How are we going to that? By waving the wand of the Hinkley nuclear white elephant and hoping that it somehow spreads some stardust over Devon? I can tell you that so far the LEP has produced almost nothing which offers help to the economy in the rural, small-town, coastal Devon which most of us represent.

Let’s take a reality check – if I come to the budget meeting and tell you, ‘the economy will grow by 4%, business rate receipts will shoot up, so spend, spend, spend’, you are going to look on me as a madman, and rightly so. So why should Devon County Council buy this phoney prospectus? And why should we embark on radical constitutional change to support it?

I know this is only a proposal for a Joint Committee, with limited financial implications. But it is clearly presented as enabling us to ‘move relatively quickly to establish a Combined Authority’ if that is deemed necessary. We already have 3 tiers of local government. This is the beginning of creating a fourth tier, without a mandate, without elections, and without balanced political representation.

95% of the people of Devon don’t even know they’re living in something called the ‘Heart of the South West’. It says everything about the lack of democracy in this so-called devolution that we are using this PR-speak rather than the county names which people understand. I know the Government prefers cross-boundary devolution projects, but Cornwall got a stand-alone deal, and we are much bigger in both population and area. 

Apart from Hinkley there is no strong reason for us to tie ourselves to Somerset rather than Cornwall or Dorset. Our local government is being distorted to support an anachronistic nuclear project – for the benefit of companies owned by the French and Chinese states – instead of developing renewable energy for which we have a good basis in the SW.

I have this Cabinet down as a group of a level-headed people. But here we have fantasy economics, making claims which are about as credible as the figures on Boris’s battlebus, and constitutional change which means that Devon people and their councillors are asked to start handing over democratic control to a one-party quango in conjunction with unelected business people.

Since the Government is always changing its mind about devolution, there is no reason why we shouldn’t change our minds too. I ask you to

1. go back to the Government with a realistic agenda for Devon, that addresses the needs of all areas of the county and all sectors of our economy and society
2. back off from this unnecessary proposal for a joint committee.

Pursuit of elusive ‘devolution’ deal is leading to a new layer of bureaucracy: an unelected, one-party ‘Heart of the South West’ combined authority « SEATON & COLYTON matters.
.
.

The Local Enterprise Partnership in Devon, conflicts of interest and calculating "housing need"

'Devolution' actually means kowtowing to the unelected LEP who now hold the purse strings:
Futures Forum: Devolution for Devon and Somerset? >>> "The council is not happy at all, but has no choice. They are being completely squeezed of funds and will have to go cap in hand to the Local Enterprise Partnership in order to keep functioning."
Futures Forum: Devolution and Local Enterprise Partnerships >>> "unaccountable to anyone and unrepresentative of the local economy"
Futures Forum: "Saving devolution from itself" >>> "How do we turn the devolution agenda into an opportunity to develop a real system of regional democracy?"

The LEP for Devon is not particularly interested in 'job-creation':
Futures Forum: "A staggering 50,000 manufacturing jobs have been lost in the South West in a decade." Which is not surprising, as "the LEP area ranks 32nd out of 39 LEP areas in England for the level of productivity."

It's more interested in the Hinkley project, where many of the LEP members have interests:
Futures Forum: Building Hinkley >>> the response from the South-West

It certainly isn't interested in the 'local economy':
Futures Forum: Energy infrastructure @ Hinkely C >>> losing control and paying tithes to Direct Foreign Investors

And it certainly depends on who you know:
Futures Forum: "Cronyism in the South West"

All of which helps in the hoovering up of the Devon countryside in the name of the very lucrative business of 'house-building'...

Here is an excellent article on the topic by Georgina Allen from Totnes which has appeared in this month's Devon CPRE magazine.

The LEP is totally ignoring the people who actually need housing

CPRE Devon magazine 

November 2017 by Georgina Allen

The papers at the moment are full of grim warnings about the Green Belt. It is anticipated that seventy percent of new builds will be built within the Green Belt, very few of which are going to be affordable, none of which, I suspect are going to be well built or add anything to the landscape or to the lives of people who live there. Our countryside is under threat is the general theme, but it is more than under threat, it is under attack. Already thousands of acres have been swallowed up by new mass developments. Little towns are consumed under the weight of great new estates, so often built without thought or reason other than to make money for distant shareholders.

This government has removed, as it loves to do, much of the restraint and red tape around the building industry. A few well placed lobbyists, the understanding that the 'conservative' part of the Conservative Party was on its way out and the housing plan was hatched. It's all been very cleverly done. The housing crisis was basically used as a smokescreen to hide the fact that the building industry was going to be used to prop up the economy. It's a short term solution of course, not much of a solution at all really. It's been used in so many other places and at the end fails, not until a lot of land has been ruined of course, but at least a few people make a lot of money.

We don't have a shortage of homes, of course. What we have is a shortage of houses that people can actually buy. I was 35 when I bought my first house. The mortgage was three times that of my teacher's salary. It was a stretch, but I coped and then, of course, house prices soared; my little house became a valuable asset and when I sold it, the price was above the reach of a similar teacher in my area. This is the problem. If the government actually wanted to solve the housing crisis, they would put money into social housing, control land value tax and limit the amount of housing that investors from overseas can buy. But of course they don't. Osborne was caught on tape saying that he had no interest in social housing, - it only bred Labour supporters. At least that was honest. What isn't honest is the way they've gone about building the myth of housing need to cover up the fact that they are lobbing enormous amounts of our money to the building industry.

I went to look at Canary Wharf recently. It's still an impressive sight, all jostling, shiny towers, cranes everywhere, but a little investigation revealed that many of the new skyscrapers, the residential ones at least, are left empty. Investors come in right at the beginning, when the ink on the architectural drawings is still wet and buy the whole build, neglecting often to rent the new flats out - and why should they? If they are allowed to use our buildings as gold bricks, then it seems reasonable that they should keep the value of their investment high. It makes sense to ensure that demand continues to outstrip supply and that the number of houses available to the public is limited. Thousands of new-builds are breaking the skyline in East London and yet this huge amount of building is yet to bring prices down. People move out of the centre because they can't afford to live there and migrate to the outskirts, the outskirts get more expensive, so they move further out, dislodging the inhabitants there, who are moved even further out and so on and so on, the ripples continuing across the country. Our major cities are hollowed out and people live in areas they don't necessarily want to be in, finding themselves dependent on their cars and transport to get them back to the place where they have a job.

By the time the ripples get to Devon, they've changed slightly. These ripples are the people who have decided they no longer need to commute to the city. They discover they can buy two houses in Devon for the price of their one in the South East and realise that they can fund their retirement/break through a buy-to-let. This has been the pattern of movement around us in South Devon recently. The new-builds, which were of course spun to seem as if they would solve our local housing issues, have often gone to people moving into the area. These builds come with all sorts of assurances as to improvements in infrastructure - anything over 14 houses is supposed to trigger money for healthcare, transport, leisure, - all sorts of things are promised. Local councillors talk grandly of new parks, new hospitals, but of course that doesn't feed into the ultimate aim of all this building, which is to make money, so the government has cleverly inserted all sorts of get-out-of-jail free cards, which the developers are only too happy to take on.

Viability studies are the worst of these. S106 monies are promised before the build at planning stage. The local council pauses, - they know that this new build on the edge of AONB will severely impact local roads, local services, destroy a farmer's land, restrict access to a town, but they might well run the risk of being sued if they say no and at least afterwards they can point to all the lovely benefits - all that money coming in to improve the swimming pool, health care etc. Planning permission is granted, work starts, ancient hedges are ripped up, protected trees are undermined, the wildlife disappears. Then a viability study is done. Ah, it appears that we won't make enough profit if we build more than 10% of these houses as affordable, so here are our new plans. Also, sorry, but we have no money for S106s, as it proved a little more expensive than we realised to flatten this hill, so that money has gone too. The council, hamstrung by the more than 40% overall cut to its budget and short of legal expertise and planners, has to agree. For example, we’re getting 1,200 houses around our little town of 8,000 and are yet to see the great improvements, any improvements in fact to our town's infrastructure. There's a need for housing we keep getting told. There's a need for actual affordable housing and improvements to roads, we reply and are greeted by silence.

But the worst spin of all is the calculation of need. We need houses and to deny this is selfish and this is said across the political spectrum. So how is local need calculated? Here in Devon, during devolution at least; local need was worked out by a group called the Local Enterprise Partnership, the LEP. These groups have evolved out of the old rural business development model and are in place across the country. Their primary role is to support business and investment in their region. and they are paid vast sums of money by the government to invest locally. So far, so good. Just a quick look at their board. Our one at least seems to be made up almost entirely of property developers, arms manufacturers and the CEOs of major construction companies; almost all of the construction companies at work in the South West seem to be represented. Their conflict of interest declarations cover many pages. So these are the people who came up with the figures of housing need. The fact that they could benefit personally from having high figures here, does not seem to have been challenged in any meaningful way. How did they come by the figures? They do not need to say, they are not an accountable organisation and the calculations behind these figures are not accessible to the general populace. There are three or so councillors on the board; they represent the democratic will of the people, the rest of their work is none of your business. The LEPs are not democratically elected, their meetings are held in secret, their minutes are concealed, their work is surrounded in mystery and yet they spend our money. They are funded with public money.

The audit office has criticised them, our councillors have criticised them, everyone does, but they are the creation of government and can take the criticism. The people on the board benefit directly from much of the building they do with the public purse. Their companies build the roads that lead to the new developments, their companies finance the new developments, their companies profit from the new business parks set up around the new developments. The conflicts of interest are so huge they seem to be forgotten about. Newton Abbot is a case in point. Despite the fact that the population of Newton Abbot has hardly grown at all in the last five years, it was calculated by the LEP that the town housing stock would need to double in the next ten years. I asked the head of Teignbridge planning - Why? The answer - Housing need. How was this calculated? Ah well, its a very complex process, which I personally do not fully understand. Ok, can you point me in the direction of someone who can explain? No. And that's the typical response you get for any of this type of questioning. The LEP was given a multi-million growth fund payment from the government. It’s widely understood by local councillors here that the 40% cut to council budgets has reappeared as payments to the LEP. Our council’s money has in part gone into financing a group we have no say over. £46 million of the growth fund money is going into the Newton Abbot expansion, despite the rejection of this plan by local residents. The money is going into widening the roads and building further access. Who is building the roads? Galliford Try. The CEO of Galliford Try is on the board of the LEP. Who made the decision to spend this money in Newton Abbot? The LEP. Who gave planning permission for this huge expansion into the green belt around Newton Abbot? The leader of the council led the decision. The leader of the council is on the board of the LEP.

I am not of course, saying that this is corrupt. It is not illegal, - it is happening the way it was intended by central government. These are the sweeteners to keep the building going. The government can say they've built new houses, - they point to these spurious housing need figures. The building industry is delighted of course, - they can build cut-price housing in the most desirable areas for the greatest returns. Local councils have been so starved of cash that the promise of new homes bonuses keep them pliable and if they complain, if doesn't matter, they have no money to mount any type of challenge to development anyway. The building trade and certain powerful councillors have formed alliances through the LEP, where they all profit through the public purse and can talk happily of growth and building. The only people left out of this equation are the people who actually need houses, local people, who are completely sidelined and ignored. Their wishes and needs are irrelevant. The biggest loser though, of course, is our countryside, our most valuable resource. In survey after survey, the British people cite the NHS and the countryside as the most precious and valuable assets we have. Our countryside is invaluable really and to see it treated the way it is at the moment, for the profit of shareholders and government is sickening.


Devon Branch - Campaign to Protect Rural England

CPRE Devon - Campaigning to Protect Rural England

See also:
South Devon Watch
.
.
.