Britain has lightbulb moment on nuclear plant replacement
The UK’s previously unrivalled expertise in the nuclear sector is long squandered
David Cameron addresses workers at the Hinkley nuclear power station
As an island nation with a woefully ill-thought-out energy strategy, Britain has latterly become very switched on to the idea it needs to act urgently to keep the lights burning. Against that backdrop the finalisation of a long-planned government deal hiring French and Chinese companies to build the first new nuclear plant here in 20 years has triggered a great deal of debate.
Ireland, as Britain’s neighbour, has an understandable interest in these events: the new reactor will be sited at Hinkley Point in Somerset which, while further away than Sellafield, is still only 150 miles from the Irish coast.
It may as a come surprise then that questions of safety and environmental impact, which would dominate the debate elsewhere in a post-Fukashima world have – rightly or wrongly – barely been heard here. Rather, the finalisation of the Hinkley Point deal has reignited the issue of foreign involvement in sensitive industries – and they don’t get much more sensitive than nuclear – and the question of whether public-private initiatives (PPI) provide value for money.
First the government, which opened Britain’s nuclear industry to China as part of a broader trade deal last week, banged the drum for globalisation and a lowering of trade barriers. But chancellor of the exchequer George Osborne’s noise was quickly drowned out by an extended grinding of xenophobic teeth in the usually supportive right-wing press.
Pundits here complain British consumers and taxpayers will be subsidising our ultimate “frenemey” – France – through EDF. Even worse, they complain, billions of pounds of subsidies will also go to Chinese state-backed companies whose approach to safety in their own turbocharged nuclear building programme has been somewhat lax.
The less xenophobic debate on cost centres on the fixed “strike price” for energy to which the government has signed up to until the middle of this century. At about £92.50 (€109) per megawatt-hour (MwH), it is double the current market price for wholesale energy, a cost that will ultimately be borne by consumers. Coming just a few weeks after Labour leader Ed Miliband announced a crowd-pleasing promise to free energy bills until 2015, this certainly looks unfortunate.
In reality, much of the teeth-gnashing here is because Britain should have been able to build new nuclear plants better itself. Unfortunately the UK’s unrivalled expertise in the sector – the world’s first nuclear power plants were here – has long since been squandered or exported, hence no national champion to build Hinkley Point exists.
Ultimately, while elements of the prototype nuclear deal could be better, the political consensus on the UK’s desperate need to shore up its energy supply means it was always going to go ahead in some form. And in a world where nobody really knows what to do about energy it is, at least, not completely stupid.
Meanwhile, with the autumn nights drawing in but the lights still operational, the City of London is in the throes of a long-awaited boom in initial public offerings (IPO) – stock market flotations.
IPO activity was stymied in 2010 thanks to domestic investor cynicism and European and global economic fundamentals. But with the euro zone’s troubles receding and a US debt crisis averted, at least for some months, companies are rushing to the market hoping to take advantage of the feel-good factor generated by the Royal Mail sell-out float earlier this month.
Front and centre of the trend is private equity, which has been desperate to exit its biggest investments since the markets crashed in 2008. This week Blackstone’s Merlin Entertainments, which owns Madame Tussauds, the London Eye and Legoland, among others, announced its intention to float, as did Infinis, Guy Hands’s renewables business.
While Blackstone and CVC pulled a float of Merlin in 2010 due to market turbulence, the company is reckoned to have fair fundamentals with a good emerging-markets portfolio. Hands, meanwhile, is desperate to prove himself to investors in his Terra Firma fund after his £1.75 billion losses on EMI, so would not pick a dud for his first major exit.