This morning Policy Exchange hosted an event about small modular reactors (SMRs) – the technology is derived from nuclear-powered submarine systems. A consortium led by Rolls Royce is pushing the idea of using new nuclear technology scaled down to a fraction of the size of older plant designs. The mini-plants would be made in factories to be re-assembled on site much more quickly and cheaply than large-scale projects like Hinkley. Rolls-Royce reckons the global export market could be worth as much as £400 billion for the made-in-Britain technology.

The report claims that the mini-plants would produce power at £60/MWh, which is far more competitive than the £92/MWh strike price guaranteed to Hinkley by George Osborne. It is clear that as old power stations are decommissioned Britain is going to need to replace them – wind is too intermittent to make up for the loss of capacity – nuclear is going to have to be part of the energy supply mix. Hinkley type technology is just too expensive.

Download the report Small Modular Reactors.

Ed Davey is expected to launch his bid for the LibDem leadership imminently, so it is good timing for the National Audit Office to release their report into his Hinkley Point deal today. Sir Edward was the Energy Secretary pushed though the £18 billion deal and insisted it was good value. The National Audit Office disagrees, this morning calling Hinkley Point “a risky and expensive project” that is “not value for money“. They say the case for the plant is “marginal“. As damning language as it gets…

Even more embarrassingly for Sir Edward, his own party opposes Hinkley Point. LibDem energy spokesman Lynne Featherstone says:

“Failing to call a stop to Hinkley will prove a costly mistake. The opportunity to pull the plug on Hinkley has been missed, and we will all pay for it from our pockets.”

The final humiliation for Davey. Well, depending on how his leadership bid goes…

This chart from Bloomberg Energy is devastating. For the same budget as Hinkley we could get 20 gigawatts more electricity from gas, or the same for a fraction of the cost. Even solar would produce more energy at that price. Though with green renewable sources the capacity has to be discounted to reflect how much of the time the wind doesn’t blow and the sun doesn’t shine. Even so, that renewables are anywhere near competitive in cost terms means this has to be looked at by Phil Hammond with his calculator. George Osborne looked at it in political terms – the Chinese and the French will no doubt create some geo-political problems if May cancels the deal. The dash for gas makes far more sense…

Gaia has been sceptical of the case for Hinkley Point C on the grounds of cost, the history of over-runs and the manifest problems with these type of EPR reactors. The guaranteed price of the energy and the subsidy required seem a high price to pay – even considering the strategic importance of have diversity in energy supply. So the government’s decision to reconsider the deal is not unwelcome.

There are also legitimate security concerns about giving China a stake in Britain’s energy supply – concerns that George Osborne ignored. That there was a political consensus – the deal has antecedents going back to the last Labour government – does not mean it was well judged. There were terrible deals done under PFI which were unopposed by the Tories at the time. This is the biggest public-private partnership in history, a pause to check the small print and that the sums add up given the history of financial shambles under Brown and Osborne seems prudent.

See also Hinkley Point C

As news breaks that the new nuclear power station at Hinkley Point could cost an additional £3 billion, a smaller story from the US serves as a stark warning of the risks when building new plants.

Watts Bar nuclear power plant’s second reactor is scheduled to finally go into operation this summer. This project has taken 43 years, with shifting regulations, unsure demand and spiralling costs all helping to create a stop-start pantomime.

There has been criticism about the decision to build an EPR reactor at Hinkley Point, seen as overly expensive and previously dogged by severe delays – Finland cancelled their new EPR reactor last year after the project had gone over budget and schedule, France saw the cost of one such project nearly treble, and China is facing significant delays on the construction of its own EPRs. In fact, since the first order was placed in 2003, not one of French company Areva’s EPR plants have been completed: of the three EPR reactor projects signed up to so far, one is delayed, one is delayed and over budget, and the other is cancelled. These are the reactors Britain will likely be lumbered with…

News of these delays, and the lessons from America, should be of concern to DECC. Having already signed up to the most generous nuclear subsidy package in history, there is a real danger that Hinkley Point C becomes a mega-watt white elephant. French company EDF has refused to sign on the dotted line until summer. There is still time for a strategic re-think…

Ed Davey’s “worst ever“ Hinkley Point C deal, which will allow owners EDF to charge treble the current market rate for 35 years, was featured on the Today Programme this morning. The BBC failed to mention at any point before, during, or after Davey’s interview that he is now working for EDF’s lobbying firm, MHP. Davey spoke for three minutes defending his deal with EDF, and did not once think to mention his new role as a ‘strategic adviser at MHP to the energy sector’.

Davey claims the agreement was made with “the best available advice”:

“… the truth is, if you look at deals like this, which are over 60 years of generating, you don’t know sitting here today exactly what the value’s going to be, because you’d have to know the price of carbon, the prices of gases and things, in 20, 30, 40 years time – I’m not a clairvoyant, I’m not God.”

You do work for a firm that lobbies on behalf of EDF though…