EDF strike price delays damaging UK says nuclear expert

The UK’s nuclear power sector is being damaged by the protracted delay in agreeing a strike price between EDF and the government, according to an international nuclear advisor.

George Borovas, head of international nuclear projects at global law firm Pillsbury, said: “The continued delays to these negotiations will potentially undermine the international perception of the UK’s nuclear sector.”

The strike price is part of the government’s Electricity Market Reform package and is an agreed baseline sum that the government agrees to pay generators of nuclear power for the electricity they produce.

EDF wants to build a new nuclear plant at Hinkley Point in England and if it goes ahead it will be the first new nuclear plant in Britain for years.

As such, the strike price with EDF will set a benchmark for all other potential new nuclear players. However, negotiations between EDF and the government’s Department of Energy and Climate Change have dragged on since last year.

And this week Energy Secretary Ed Davey said an end was not yet in sight. He told the government’s Energy and Climate Change Committee that it could take “a few months” to agree the price.

Davey added that he would not sign any deal with EDF unless it represents “value for money” for consumers.

And when EDF Energy boss Vincent De Rivaz appeared at a hearing of the committee earlier this year, he made no apology for trying to secure a “reasonable profit” from the strike price negotiations.

De Rivaz assured MPs that the final strike price result would “pass the trust and transparency test” but stressed that it was simplistic to assume that any company would enter strike price talks without planning to get a “fair deal”.

“Yes, we are going to ask for a reasonable profit,” he said. “We are a force for good. It is time to respect investors.”

But George Borovas, head of international nuclear projects at global law firm Pillsbury, says that the longer the talks go on, the greater the risk becomes of damage to the UK as a destination for investment.

“Traditionally the UK has been viewed as an advantageous market due to a strong political commitment to new nuclear – this advantage is now dissipating,” he said.

“New nuclear projects will struggle to move forward without investors and a tangible commitment from the UK government. With each month that the strike price decision is delayed, the perceived project risk increases and the prospect of enticing necessary international investment diminishes.

Borovas said that “opportunities for the UK nuclear industry to participate in new build in its home market – such as job creation and the development of both strategic relationships and technical competencies – are threatened if new build does not take place at home”.

And he warned that “if the deal does not go ahead soon, it is likely that the UK nuclear industry will have to seek opportunities abroad”.

“The failure to agree on a strike price raises serious questions for the future of the UK Energy Bill. This may have an impact other European nuclear programmes which are carefully following the development and implementation of the proposed UK contracts-for-difference mechanism.”

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