Centrica's exit isn't as big a deal as you think

Centrica withdrew from new UK nuclear projects.

Yesterday Centrica announced it would not take a 20 per cent share in the new nuclear power plant planned for Hinkley Point in Somerset. It was the minority partner with EDF, and leaves the France-based utility holding the entire (potentially £6 bn) can.

Centrica pulled out because of uncertainty on cost and schedule. No doubt its decision is a blow for the project to build a 1650 MW EPR pressurised water reactor—for which, by the way, EDF has not made a final investment decision. But there still are lots of reasons to hope that the project will still go ahead.

First, the current adverse market conditions favour nationalised utilities (or vendors) like EDF for nuclear new-build; whether it is Russia in India, Turkey, Belarus or China, or South Korea in the UAE, state-owned developers have the deepest pockets. They need them: unlike gas or coal, nuclear power plants demand most of their costs up front.

And those vendors that are not state-owned but wish to pursue nuclear new-build have had to act like it. In 2011, GE Hitachi proposed being a major investor in a new reactor for Lithuania (although those plans have probably been shot down by a referendum). Its corporate cousin Hitachi has recently come to the UK and is underwriting its pre-construction safety assessment (for now) as the new owner of nuclear new-build venture Horizon, after Germany-based utilities e.on and RWE sold out. They were beset by problems at home: after Fukushima, the German government quickly arranged a phase-out of all nuclear power plants. Over the next decade, their once-profitable assets will have to be written off.

One nuclear new-build vendor who has so far not pledged to take a share of a new-build project is France’s AREVA (79 per cent owned by the French state). However, its role as the principal contractor (with Siemens) for Finland’s Olkiluoto 3 has become tantamount to the same thing. To land the contract for the first non-France EPR, AREVA agreed with client TVO on a fixed-price contract. Subsequent delays and cost overruns have led to litigation with billions at stake.

Second, EDF’s purchase of British Energy in 2008 really only makes sense in the context of the opportunity for new-build. Seven of the eight nuclear power plants it bought at the time were based on obsolete technology whose potential for long-term operation was iffy (although their lifetimes will be extended by seven years in general). Those assets were not worth the £12.5 bn purchase cost. What was worth paying for, according to this idea, was lots of potential for new-build sites. Backing out now would harm the company’s future prospects.

Third, the UK branch of EDF, EDF Energy, has had a good 12 months. Its performance in 2012 was the best for seven years, which means not only cash in the bank but also a hopeful step away from technical faults that have hurt recent performance. Commercial production of the first units of its new 1300 natural gas plant in West Burton, Nottinghamshire started in 2012 and the rest are due to come online later this year. When Centrica joined EDF in new-build, it also put in a 20 per cent stake in EDF Energy’s operating nuclear power fleet. It has not announced plans to pull out of that investment.

The most important development for EDF’s new nuclear ambitions was that its nuclear reactor design was finally approved by the regulator at the end of 2012. Although it will still have to apply for a nuclear construction permit, obtaining design approval has broken the back of one of the biggest sources of nuclear new-build investment risk: the uncertainty caused by regulatory scrutiny. As of right now, the EPR reactor is the only modern nuclear power plant design that can be built in the UK. The Westinghouse AP1000 reactor is next in line; it is waiting for a customer to  finish the review process.

Will Dalrymple is editor of Nuclear Engineering International

Photograph: Getty Images
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Meet the MPs who still think they have a chance of defeating Brexit

A crossparty group of MPs believe they have a right to vote Brexit down in the House of Commons. 

The decision on 23 June was final. With the ballots cast, the nation’s voters started the conveyor belt that would take the United Kingdom in only one direction - Brexit. It was independence day, or Brexitpocalypse, depending on your point of view.

But some MPs think differently. A growing handful of of crossparty MPs who backed Remain are now saying they will vote against Brexit if offered the chance. 

With Article 50 yet to be triggered, they still have an opportunity to influence what happens next. But the decision also raises questions about democracy. What is an MP’s role at this point of national crisis? To respect the will of the majority? Or to fight for their individual constituents?

David Lammy, the Labour MP for Tottenham (pictured), has led the charge for a second vote on Brexit.

He points out the referendum was “advisory, non-binding”, and argues it should be up to Parliament to make the final decision

In a series of tweets, he said:  “Our Parliament is sovereign and must approve any Brexit.

“My position is clear. I will never vote for Brexit or to invoke Article 50. On behalf of my constituents and the young people of this country I will not do it. Three quarters of my constituents voted to Remain, and I will continue to stand up for them.”

Lammy isn’t the only one to invoke the will of his constituents. Another Labour MP, Catherine West, represents Hornsey and Wood Green. In Haringey, the overlapping local authority, three quarters of voters chose to Remain. 

West tweeted: “I stand with them on this issue and I will vote against Brexit in Parliament.”

Daniel Zeichner, the Labour MP for the Europhile island of Cambridge, has also pledged to vote Remain. Geraint Davies, a Welsh Labour MP and Jonathan Edwards, from Welsh nationalist party Plaid Cymru, have submitted a formal notice to Parliament demanding a second referendum "on the terms of leaving the EU". 

Perhaps it is not surprising English and Welsh MPs are taking such a stubborn view. Short of following Scotland’s example and demanding London’s independence, they have few other options.

But the MPs’ resistance also brings up a thorny political question. A majoritarian vote is only one part of democracy after all. Constituency MPs and minority protections are also part of the mix. 

There may also be an argument that responsible MPs should act in voters’ best interests - even if that is against the wishes of the voters themselves. 

Speaking in the House of Commons, Tory grandee Ken Clarke noted MPs were yet to actually hear the details of what Brexit Britain would look like. 

He asked the Prime Minister:

“Does my right hon. Friend agree that we still have a parliamentary democracy and it would be the duty of each Member of Parliament to judge each measure in the light of what each man and woman regards as the national interest, and not to take broad guidance from a plebiscite which has produced a small majority on a broad question after a bad-tempered and ill-informed debate?”

It is not a straightforward democratic case. But with two parties divided, a 300-year-old union in jeopardy and the peace process in Northern Ireland under pressure, MPs might be tempted to put the patriot’s argument first.