Reactor technology is 鈥榰nproven鈥, government spending watchdog warns

Hinkley

The government鈥檚 controversial 拢18bn deal to build the Hinkley Point C nuclear power station in Somerset has trapped Britons into a 鈥渞isky and expensive鈥 project based on an 鈥渦nproven鈥 design, the National Audit Office (NAO) has warned.

In a deal approved by the Department for Business, Energy and Industrial Strategy (BEIS) last year, the new nuclear plant will be built and operated by French energy firm EDF and the China General Nuclear Power Group.

In a new report released today, the government鈥檚 spending watchdog said: 鈥淭he Department鈥檚 deal for HPC has locked consumers into a risky and expensive project with uncertain strategic and economic benefits.鈥

It also warned of risks to be managed during construction: 鈥淭he reactor design for HPC is unproven and other projects that incorporate it are experiencing difficulties. There are no examples of HPC鈥檚 reactor technology (the European Pressurised Water Reactor, EPR) working anywhere in the world.鈥

Consumers will paying subsidies on their energy bills for the scheme for 35 years in future 鈥渢op up鈥 payments that have soared from an estimated 拢6 billion to 拢30 billion, according to the report.

It stated: 鈥淭he Department has not sufficiently considered the costs and risks of its deal for consumers. It only considered the impact on bills up to 2030, which does not take account of the fact that consumers are locked into paying for Hinkley Point C long afterwards. It also did not conclude whether the forecast top-up payments are affordable.鈥

The risks of failure are such that the government should have a 鈥溾楶lan B鈥 for achieving its objectives in the event that HPC is delayed or cancelled鈥.

Other recommendations include making it clear who in government 鈥渉olds ultimate responsibility to represent consumers鈥 and taxpayers鈥 interests鈥 and having mechanisms in place to 鈥渆nsure oversight structures are effective across the lifetime of the project.鈥

Tom Greatrex, chief executive of the Nuclear Industry Association, said: 鈥淣ot only will new nuclear help secure the UK鈥檚 future energy needs, but will lead to substantial industrial and employment benefits 鈥 including considerable opportunities for the UK nuclear supply chain and a boost for UK manufacturing and construction at a time when the economy faces significant challenges.鈥

In a statement, a BEIS spokesperson said: 鈥淐onsumers won鈥檛 pay a penny until Hinkley is built; it will provide clean, reliable electricity powering 6 million homes and creating more than 26,000 jobs and apprenticeships in the process.鈥

But Amyas Morse, head of the National Audit Office, said: 鈥淭he Department has committed electricity consumers and taxpayers to a high cost and risky deal in a changing energy marketplace. Time will tell whether the deal represents value for money, but we cannot say the Department has maximised the chances that it will be.鈥

 

Report raps department over conflict of interest worries

The government used a company to advise it on the Hinkley Point C deal despite knowing there was a potential conflict of interest, according to the NAO report.

LeighFisher was paid 拢1.2m by the Department for Business, Energy and Industrial Strategy to 鈥減rovide advice on the deal鈥 which included checking whether EDF鈥檚 estimate of costs were reasonable.

The firm is a subsidiary of Jacobs Engineering Group 鈥 which 鈥渉ad provided engineering and project management services, including seconded staff, to EDF in relation to the HPC deal.鈥

The report said LeighFisher had notified the department about the potential conflict of interest but the NAO added: 鈥淭he department鈥檚 monitoring and management of the potential conflict was insufficient.鈥