The Government is under growing pressure to abandon plans to construct the UK’s first nuclear reactor for more than 20 years, after a damning report into the viability of the project by financial analysts was swiftly followed by data showing that the legal bill has already exceeded £1 million.
Analysts at HSBC bank said in a report published over the weekend that the creation of the Hinkley Point C plant in Somerset was “becoming harder to justify”, concluding that the energy produced by the reactor is likely to be too expensive and that there was “ample reason” for the Government to delay or cancel the £25 billion project.
Now The Independent can disclose that the Department of Energy and Climate Change (DECC) has already paid the London law firm Slaughter and May more than £1.3m for its role in negotiating the final contract for the construction of the reactor with EDF, the French energy company given the task of developing the Hinkley site.
According to official DECC figures compiled by Greenpeace Energydesk, seven separate payments totalling £1,336,565 were made to the law firm between January and April this year in return for “final investment decision enabling” services, understood to relate to the nuclear deal.
Last month Amber Rudd, the Energy and Climate Change Secretary, said there was a “very good prospect” of the ultimate decision on the project being announced later this year. She told MPs on the energy select committee that the Government was still “very committed” to building new nuclear power stations.
But the former Conservative Energy Secretary Lord Howell of Guildford – who led Britain’s previous drive for nuclear energy under Margaret Thatcher – has urged the Government to reconsider the Hinkley project, which he described as “one of the worst deals ever for British households and British industry”.
He told the House of Lords that while he was personally “very pro-nuclear”, he would “shed no tears” if the “elephantine” scheme was to be abandoned “in favour of smaller and possibly cheaper nuclear plants a bit later on”.
Giving a long list of reasons for his pessimism, he said: “The component suppliers to EDF are in trouble, costs keep rising, no reactor of this kind has ever been completed successfully, those that are being built are years behind – and workers at the site have been laid off.”
EDF has been guaranteed twice the current market price of electricity over a 35-year period, thanks to a deal struck under the Coalition in 2013. But the HSBC report warned that European wholesale electricity prices are expected to fall over the lifetime of the project, resulting in a “huge difference between UK forward prices and the Hinkley price”.
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Dr Doug Parr, chief scientist at Greenpeace UK, said: “After being potentially fleeced over the multi-billion-pound sweetheart deal for Hinkley, UK taxpayers are left to foot a hefty bill for leading lawyers to help this rip-off contract through.
“Instead of locking two generations of consumers into paying over the odds for their electricity, the UK government should invest in the kind of clean energy sources that are getting cheaper by the year, don’t take ages to build and don’t cost billions to clean up.”
A DECC spokesperson said it was “obtaining the appropriate external advice” as part of the negotiation process. They added: “The Government is continuing to work to finalise the Hinkley project. When completed, Hinkley will power nearly six million homes and replace old, polluting power plants, creating more than 25,000 jobs as we build a skilled, low-carbon future.”
Slaughter and May declined to comment.
Untested design: EDF shuns Japanese technology
If and when it is completed, Hinkley Point C will make use of two European Pressurised Reactors (EPRs), which are being built in France and are supposed to be safer and more efficient than older nuclear reactors. The problem is that none have yet been built, so their record for safety and reliability cannot be tested.
For this reason, some have argued that tried-and-tested Japanese technology in the form of Advanced Boiling Water Reactors (ABWRs) should be used instead. Such reactors are already being developed for use at new nuclear sites at Wylfa Newydd on Anglesey and Oldbury in Gloucestershire.
