Government pauses new nuclear after EDF approval

After many months of delay, the EDF board eventually made its final investment decision to build the Hinkley Point C nuclear power station only for the UK Government to refuse to sign the final contract confirming the power price. The project is now obviously on hold until the contract can be agreed which new Secretary of State for Business, Energy and Industrial Strategy (BEIS) Greg Clark says will be in early Autumn.

While EDF’s announcement had been widely trailed in advance the Government’s response has caught everyone by surprise. The planned signing ceremony and celebration that had been organised for today have now been cancelled – clearly the fact that these were all organised mean that the companies (including CGN the Chinese investor) were not expecting this but also the civil service were also not expecting it. It is certainly then a political decision taken at the highest level. Greg Clark has been supportive of new nuclear when he was Shadow Secretary of State in opposition but Theresa May on the other hand has not been involved in energy policy issues prior to becoming Prime Minister. She is also known to be someone who is very keen to understand the detail underlying decisions so it is highly likely that it is the Prime Minister who has put a hold on the process. That said perhaps given her track record of scrutiny of the detail it should not be the surprise it has apparently been. Equally it is not necessarily the problem that some think it is as it is not certain that it represents an intention to try to re-negotiate the power price but rather a determination by the Prime Minister to fully understand the deal.

The Government’s move has clearly come as a shock to the industry but reaction has been mixed. For EEF, the manufacturers’ organisation Claire Jacobson their Head of Climate, Energy and Environment Policy described it as, “yet another blow to a decision that has been hindered by many delays and uncertainties”.

For the Labour Party Shadow Energy Minister, Barry Gardiner said, “I’m furious that for 2 years we have been asking the government what their plan B is and they said they didn’t need one.” In interviews this morning he clearly outlined the more sceptical tone that the current Labour leadership has been taking towards nuclear power in recent months.

However, speaking to the BBC this morning Nuclear Industry Association Chief Executive Tom Greatrex took a more measured tone saying, “What is significant is EDF’s decision to go ahead with the project but it is understandable that the new prime minister and chancellor want to study the deal.”

It may well be that the effect of the Government’s move will result in very little overall delay given that EDF’s decision was not originally expected until September anyway and it could be that approval from Theresa May could come then anyway. However, it is clear that this additional uncertainty is the last thing the nuclear industry needed but it will also cause serious concern to infrastructure investors across all sectors.