The U.K. has approved construction of a nuclear power plant for the first time in almost twenty years, and it has made a guarantee to buy electricity from the plant at double the current going rate, the BBC reports. The new plant will be an expansion of existing facilities at Hinkley Point in Somerset.
The U.K. government has agreed to set a minimum price of £92.50 per megawatt hour
The project, which is being led by French energy company EDF Energy and includes China National Nuclear Corporation and China General Nuclear Power Corporation as minority partners, would create 25,000 jobs during construction and 900 permanent jobs for the plants 60 year lifetime. It is expected to increase output at Hinkley from 1 percent of British national electricity consumption to 7 percent in 2023. The UK government has agreed to set a minimum price of £92.50 per megawatt hour, but if EDF Group also builds a nuclear power plant at Sizewell in Suffolk the price will drop to £89.50 per megawatt hour for both plants.
David Einhorn’s Greenlight had a strong fourth quarter; Gains on Neubase Therapeutics [Q4 Letter]
David Einhorn's Greenlight Capital was up 5.2% in 2020, underperforming the S&P 500's 18.4% return. For the fourth quarter, the fund was up 25%, which was its best quarterly result ever. Longs contributed 42% during the fourth quarter, while shorts detracted 15% and macro detracted 1%. Q4 2020 hedge fund letters, conferences and more Growth Read More
The high minimum price is supposed to make up for the fact that taxpayers won’t have to contribute anything to the construction of the plant, which is estimated to be around £16 billion for two reactors, but some critics say that it is still too high.
“It is essentially a subsidy of between what we calculate to be £800m to £1bn a year that the U.K. taxpayer and energy consumer will be putting into the deep pockets of Chinese and French corporations, which are essentially their governments,” Dr Paul Dorfman, from University College London told the BBC.
The deal hasn’t been finalized and the terms announced aren’t binding, but there is also wiggle room in the existing deal that would allow prices to be pushed up even more.
The strike price could be adjusted
“EDF and the government say the deal protects the public against the near-certainty of broken promises on costs. But read the small print: ‘The strike price could be adjusted, upwards or downwards, in relation to operational and certain other costs,'” writes Damian Carrington for The Guardian, who would rather see the government develop wind farms and other renewables while working on the U.K.’s poor energy efficiency.
U.K. government currently expects electricity demand to rise
“The U.K. government currently expects electricity demand to rise by 33-66% by 2050. Why? Germany predicts a 25% cut,” he writes. “That’s how to seriously cut energy bills and the carbon emissions driving climate change: by not having to generate power in the first place.”