Points about Hinkley
This week on Facebook: A conversation with a friend drew my attention to Hinkley Point and the cost. In researching the cost of what is termed Hinkley Point C nuclear reactor the estimated construction costs alone are running at £18 billion and rising. Finding an estimated overall project cost on Hinkley Point C nuclear reactor — from conception to decommissioning — is very difficult as those financially involved in the project are quite coy about pricing.
Part of a £100 billion energy project, Hinkley Point C is the major consumer of that £100 billion, which will inevitably escalate due mainly to ill conceived political planning and project management, coupled with complete a disregard for the taxpayer who must fund government fiscal policy. The only guarantee is that like all government grossly optimistic financial costs and project timing estimates, the major burden of the project itself and cost overruns will fall on the taxpayers both present and future. This won’t matter to politicians of course whose only objective is their self interest and short term political opportunism.
Monday 26/9/16 Missing the Hinkley point: If there are any aspirations at all to grow our expertise in a sector in which the UK once led the world, any future deals such as the anticipated announcement on Sizewell C, must look for ways to involve UK engineering firms in the advanced high value areas of the projects. Otherwise, all talk of a UK nuclear revival will be for nothing.
Tuesday 27/9/16 Hinkley Point C is a bad project. Now it has the go-ahead can we please focus on making the future renewable? After a bit of dithering, the PM has decided that the world’s most expensive white elephants is going to be built after all. That should at least spare Chancellor Philip Hammond a few blushes, given he publicly backed it shortly after Ms May handed him the keys to No 11 Downing Street.
Wednesday 28/9/16 Hinkley C – a nuclear subsidy too far: The government had promised the public electorate that new nuclear will only be built on the condition that it receives no public subsidy. It’s now adapted its position to say that State Aid for nuclear is not a subsidy if it is available to other energy technologies.
Thursday 29/9/16 The cost of Hinkley Point C and the UK nuclear renaissance: A final investment decision for Hinkley Point C in Somerset, which would start the nuclear renaissance in Britain, has been just around the corner for several years. Delays were caused by Fukushima, contract price negotiations, State Aid approval from EU and seeking foreign investment in the £24 billion project.
Friday 30/9/16 Hinkley Point: Bold move or white elephant? Is giving the green light to Hinkley Point a bold move on the part of the government and a vote of confidence in the UK economy? Or has Theresa May signed off on the most expensive white elephant in British history?
For the state by its nature claims sovereignty, the right to an unlimited development of power, determined only by self-interest. It is by nature anarchistic. [Christian Lous Lange]
As a project The Great Wall of China could be made analogous to Hinkley Point C not the least for the involvement of the Chinese in both. For example, The Great Wall of China —
- Was never really completed and neither can an energy programme be completed. As with the wall various phases of it may be completed but energy needs will continue to evolve and change. In pure cost terms Hinkley C will consume the major part of a future energy programme, either constraining or breaking its budget.
- Must have been subjected to enormous cost overruns — based on the stages and time it took to complete its course. Even the cost of lives lost during its construction must have had an economic knock on effect and whether or not we could estimate such economic costs today — say in relation to Health and Safety requirements at Hinkley C — is complicated.
- Largely failed in its objective as a defensive obstacle. It must have prevented minor raids but whether or not the cost of these minor raids outweighed the cost of building a wall is debatable. The wall failed to stop the mongol invasion of China and establishment of the Yuan dynasty. We will have to wait and see if Hinkley C succeeds or fails as the main consumer of an energy programme budget.
- Continues to present running costs related to its upkeep that has created a never ending project with consequential costs (comparisons could be made to the cost per Mwatt of Hinkley C returning a profit, the decommissioning costs plus the actual and environmental costs relating to the storage of spent fuel).
- Provided employment when each build was under construction (as with Hinkley C — short term costs that assume a long term benefit).
- Provided employment on the completion of each build (ongoing running costs that are probably not included in any cost benefit analysis that may be applies to Hinkley C).
- Presumably had an assumed benefit based on the decisions to complete the building of the wall but which are difficult to quantify (similar to Hinkley C where the benefits assume — against all odds — that the world as we know it will continue into the future much as it is today) .
- May have always been a vanity project, something public administrations have always indulged in and which inevitably fail to show a return on investment (as is predicted for Hinkley C).
It’s estimated that The Great Wall of China cost in the region of £271 billion ($360 billion) in todays money, a somewhat specious estimate and took some 2 millennia to finally complete its unfinished course. I guess that £271 billion spent over 2 millennia makes it quite cheap when compared to say £100 billion spent in a decade. In reality this isn’t a fair comparison and it would be quite difficult to make a fair one.
I would think that The Great Wall of China project costs far exceeded the estimated £271 billion and could make the cost of Hinkley Point C look relatively cheap. However costings must include affordability, which is the economic ability necessary to fund a project. At Hinkley Point C the consortiums must pay for and pay back monies borrowed (plus interest), if they are to make a profit. A government raises taxes to pay for and pay back monies borrowed (plus interest), something that short term thinking politicians usually address with optimistic predictions that fail to materialise and which they rarely (if ever) have to justify.
Infrastructure funding — an ICAEW assessment (pdf): The level of guarantees is expected to increase further, with 15 projects relating to energy generation or energy transportation and storage, the largest being a £2 billion guarantee to support the investment in Hinkley point C.
Response To European Commission Consultation London Uk — 4.4.14 (Pdf): Invitation to submit comments pursuant to Article 108(2) of the Treaty on the Functioning of the European Union (Text with EEA relevance) (2014/C 69/06)
A.P. Herbert AI Albert Haddock Banks blog book books budget budget deficit C.S. Lewis censorship China Civil Service constitution Crime CRT cryptocurrency CWG debt deficit democracy economics economy education ethics EU euro fiat money Film France freedom of expression gdp government history human-rights inequality internet J M Keynes language Law Ludwig Von Mises Margaret Thatcher Matt morality music Musical national debt New Labour NHS opinion parody PFI poetry police Police & Crime Commissioners politics Quantitative Easing research school Screwtape Sir Ethelred Rutt K.C. social-media Social Media Social Welfare statistics T.E. Utley taxation terrorism Thatcher UK Unemployment USA Victor Hugo war war on terror
© Peter Barnett and Aasof’s Relections. Unauthorised use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Aasof and Aasof’s reflections with appropriate and specific direction to the original content.