Thursday, 29 March 2012

++ Horizon partners pull out of Wylfa B ++

Instead of an expected announcement of what reactor type they planned to use at Wylfa B, Horizon's joint venture partners E.ON and RWE npower have this morning instead announced that they will NOT proceed with plans to build Wylfa B and will instead seek to sell Horizon as an ongoing concern to new investors. The press release from RWE describes the reason as follows:

  • The global economic crisis has meant that capital for major projects is at a premium and nuclear power projects are particularly large scale, with very long lead times and payback periods; 
  • The effect of the accelerated nuclear phase out in Germany, which has led to RWE adopting a number of measures, including divestments, a capital increase, efficiency enhancements and a leaner capital expenditure budget;
A combination of these strategic factors, together with the significant ongoing costs of running the Horizon joint venture, has led to a situation where capital investment plans have been reviewed.
Press releases here, here and here.

Rumours began to surface last July, following the Fukushima disaster and Kanzler Merkel's decision to close German nuclear plants, that E.ON and RWE npower would "struggle to convey to investors the billions of euros in investment that would be required for building new reactors in the U.K. at a time when cash flows and earnings are under increased pressure after Germany decided to exit all nuclear energy". More recently there had been further rumours that the two partners were looking for a third partner in order to spread risks. With hindsight it becomes clear why the reactor vendor announcement has been continually delayed for the past few months. 

The implications of this news is catastrophic for Ynys Môn as so many other developments are predicated on Wylfa B going ahead, the following being just two examples:

  • Land & Lakes holiday resort development on the majority of the Anglesey Aluminium site has a business plan based on providing housing for Wylfa B construction workers
  • Coleg Menai's Energy Centre built to train a new generation of nuclear workers


Will this be the end of Wylfa B? I don't believe so: the Department of Energy and Climate Change's own estimates show that of a total of around 75GW in UK generating capacity, 20GW will disappear by 2015 as various ageing nuclear and coal plants will need to be decommissioned over the next few years. And as they current peak demand is around 65GW and growing, that means that the UK could be facing energy blackouts within the next decade — as made clear by the adjacent graph from The Economist.

The reality is that the UK government needs Wylfa B more than Horizon needs to build it — which means that by hook or by crook Wylfa B will eventually have to be built.

The fact of the matter is that the decision to replace the UK's ageing nuclear reactors should have been made years ago, instead Labour spent its 13 years in power obsessing over renewable energy and introducing ever more stringent carbon targets, under Energy Secretary Ed Milliband, which have led to our countryside being covered with hundreds of useless windmills but with no replacement for lost baseload capacity. (Ironically, according to the RWE and E.On's press releases they plan to instead invest in more UK renewable projects, no doubt due to faster returns due to a crazy market deforming subsidies!) 

If you don't believe me that Labour didn't make the necessary decisions, then believe Unite regional secretary for Wales, Andy Richards, who told the Daily Post in January 2009:

"The origins of [Anglesey Aluminium's problems] pre-date the current economic crisis, which is why Unite has been calling for the Labour Government to make the important decisions on energy supply for years. The procrastination over Wylfa means we are now looking at a probable closure, which would be catastrophic for Anglesey and Wales."

It wasn't until the Coalition government came into power two years ago that plans to replace our ageing nuclear fleet were finally put in place. The delay by the previous Labour government has meant that the UK now needs to make the necessary immensely costly infrastructure investments both post-Fukushima and during Europe's lowest economic ebb since WW2. Which puts the recent furore about Pastys into perspective.

33 comments:

kp said...

You talk of possible blackouts here in the UK.

Tosh!

Turn the lights off at night and introduce other voluntary energy saving measures. That'll reduce annual consumption by 30%. And that's without even trying.

Look to Japan. And don't forget, Japan is a major manufacturing nation with serious energy needs. If they can manage without almost any nuclear we sure as hell can!

As for this decision being catastrophic news for Anglesey and all the other proposed projects, I think not. The good projects will carry on, because they are good projects! The bad ones will fold and, for once, we, as taxpayers, won't have to pick up the tab!

How comforting is that.

mairede thomas said...

The UK and Wales desperately need a reliable source of baseload power if the lights are to stay on. Who got us into this mess? Yes Druid you have given us the answer and the last Labour Government knew this only too well by 2005 - but took no decisive action.

The only other option short term for back-up and baseload is to develop coal and gas with or without CCS.

However I expect Horizon can be sold to another developer and French may be preferable to Chinese! In any event it will delay jobs coming to Anglesey for at least another year, and this is unfortunate to say the least.

Anonymous said...

Privatisation by Maggie stopped the first Wylfa B. The land had already been purchased. British companies had started designing it in the 80s.

Gruntfuttocks said...

I among others have been predicting this outcome for over 2 years. The fact that the two companies that make up Horizon are German is the clue. I spoke today to a good friend in Berlin who gave me the likely scenario. Frau Merkel under pressure from the Greens (who are strong in Germany) having already bowed to pressure to close the nuclear stations there and have slapped in enormous nuclear tax on RWE and Eon will have cornered the Horizon group with an ultimatum. They should withdraw from the Wylfa and Oldbury projects forthwith and the German govt will reimburse them for the huge investments already made in the preparation to build.

So who will now pick up the poisoned chalice? The French? Well
as I recall EDF were the first purchasers of land around Wylfa when Wylfa B was being mooted. They sold out to the Horizon group. So why would they want to return to the fray here when they are already busy getting Hinkley ready for take-off? I'm not sure what difference it would make but I understand that Horizon were leaning strongly towards the Westinghouse reactors as opposed to the French Areva which have been inundated with problems in Finland. If EDF were to return then I am sure the French govt would insist on the Areva reactors.
I really cannot see how Wylfa B can go ahead under current economic constraints. The only realistic option if for the Coalition to fund the whole thing and I just cannot see that happening.
Thank you Tony Bliar and Gordon Brown and all the other Labour politicians who did such a good job of stitching our country up in the 13 years of mis-rule. Certain local councillors with an interest in wind turbines will now be rubbing their hands in anticipation.

richard sletzer said...

Well ....respect to Leanne Wood.

....Just a flick of her Wicked Witch Wand and bingo - the whole plan to build a second nuclear power station at Wylfa collapses - and so do the hopes of hundreds of honest, decent, men - and possibly women - who would have wanted to work on the project.

Agree or disagree with Leanne (and I totally disagree with her) and say what you like about her crazy politics and loopy beliefs she's scored her first major victory as Plaid leader without so much as breaking sweat.

She is a far greater threat to the future of this poor benighted island than any nuclear power station....and I suspect we ain't seen nuthin yet.

Wonder if anyone still makes ducking stools?

Anonymous said...

How is this the result of the last (Labour in name only) government? The present state of the UK energy supply industry (electricity and gas) basically dates back to privatisation.

There were plenty of people who warned back then that there would be no incentive for companies to make long term investments for security of supply, because the necessary short term profits wouldn't be there. That's markets for you. Why did anybody expect anything different than what we see?

The authorities with their snouts in the trough said "it'll be fine, the markets know what they're doing". What the big boys are doing is ripping us off by dodgy accounting (not quite as bad as the banks, but not far off).

What we actually got was an INSANE dash for gas, pre-packaged CCGT power stations that were quick to build and quick to be profitable but which sent a valuable irreplaceable natural resource (natural gas) up in smoke.

It was INSANE to leave security of energy supply to the short term and long term madness of the market, and this announcement is an example of why.

The Government doesn't need Wylfa B but it does need a few more GW now and a lot more soon (sooner than new-build nuclear can supply, for sure). I suppose it's a bit late now for another German-style extension to Wylfa.

LED torches are getting quite good now. Stock up on them, rather than on petrol.

Anonymous said...

13:38 There can be no more extensions to Wylfa because there is no more Magnox fuel since Blair closed Sellafield.

Prometheuswrites said...

Energy provision should be above political jousting. (Just go down to your petrol station to see what happens when energy becomes a political football).

If we are to have nuclear power it needs to be run via the public sector - the private sector has too narrow a focus on what is important (and health and safety, community and 'the moral question' don't appear to figure in privatised provision any longer).

As for Lakes and Land: if what you say is true then it wasn't a viable business on it's own merits in the first place and merely existed as a thinly veiled rationalisation for Welsh Government (Labour) policy; in a place where there's no longer any constitutional democracy.

So it's back to the industrial scale windmills which exemplify Westminster Conservative policy (and Cardiff Bay policy)- i.e.'make money for those that have the resources (or in Cardiff's case - are friends of the party) and as long as personalised profit is generated for them then those whose most treasured resource is their environment and landscape can go whistle down the wind'

If we each and all of us start to generate our own electricity (the democratisation of power politics) then we'll stop being held to political ransom - but I suspect the energy mega-corps lobby groups would have something to say about that over dinner; even if individual power generation would lead to more jobs in manufacturing and installation than Wylfa could ever provide.

Remember the first rule of politics: Whatever they are talking about they're talking about money.

JohnJ said...

The Birds are starting to come home to roost, Nuclear Power does NOT PAY. Sad thing is though, we will still have to pay through the nose for the profligacy of the Governments, who took us down this road of death industry in the first place!

Lets hope for the workers sake something more sustainable can be found for them.

Anonymous said...

This is quite an interesting story:

1. Lessons must be learnt that we cannot put our eggs in one basket. Entire departments have been "sponsored" by Horizon. Our economic policy all revolved around a Wylfa B, and even the education on this island was heavily promoting Nuclear. At this present moment in time it seems that that has been an investment gone to waste. And also promises given to the young: 'study this' and you'll get a job in Wylfa B, will not dis-hearten many.

2. We must now plan "as if" a nuclear plant will not come to Anglesey. In my view the economic strategy must be re-written. Yes, try and get somebody to build one. But we cannot live on 'hope'. I've always thought we have a great asset already: Port of Holyhead - why can't we do more with this?

3. It seems that PAWB were correct and that the economy behind this was not correct. It seems that subsidies will have to be given if any nuclear site is to be built - but will any Government commit to this?.

Now the politics to this:
BOTH Labour and Conservatives are to blame for this. Labour: as they seemed to have done nothing on this issue for 13yrs, Cons: privatisation. But Druid: although I do not agree with wind farms, they are not 'pointless' - this remark is not helpful. They do generate SOME electric, albeit in my view, not enough. Praise however should be given to the Coalition on how they've tackled this head on, although not allowing state subsidies may be naive.

As for Leanne Wood. I think credit must be given to her. We all know that nuclear is a polarising issue - there are strong feelings for and against it. I am also sure she is under immense political pressure to support Wylfa B. However she is sticking to her principles, and although many on Anglesey with disagree with her - I admire this.

Andrew said...

Tidal power is the way forward.

Anonymous said...

What planet does Richard Sletzer and his right-wing free-market Thatcherite chums live on?

The free market is fine for baked beans, eggs, coca cola etc.

But, you cannot leave essential industries such as water, energy, transport, and dare I say banking, to the free market.

Today's announcement regarding Wylfa B, is the price we are all going to be paying for the mess Thatcher and her cronies created back in the 1980's.

Anonymous said...

Is Leanne Woods the only politician who reads the Economist 'The dream that failed'? I have no idea where her anti-nuclear views come from but to hard-nosed economists it was clear that nuclear was on its way out. Quote from the Economist leader: "without governments private companies would simply not choose to build nuclear power plants. This is in part because of the risks they face from local opposition and changes in government policy. But it is mostly because reactors are very expensive indeed." As a previous contributor said - this should be above party politics - the long-term economic argument doesn't stack up for Anglesey or the companies involved.

The Red Flag said...

As was reported months ago at least one of the French consortiums planned builds is also dodgey - they also are struggling to find enough money.

Bottom line is the cost is simply to big and too longterm unless it's in the public sector, and the profits are non-existant unless the public pick up the tab for the decommissioning clean-ups - and without profit the private sector simply are not arsed.

If we want nuclear then it's going to have to be state-run. If current political dogma is that the private sector is to provide, then get some candles stored in your cupboard and a solar powered radio.

What will happen over the next 6 months is posturing by the consortia as they try to brow-beat the government (taxpayer) into picking up the tab.

Andrew said...

We are perfectly positioned to capitalise on the gas fields under the Irish Sea and St. George's Channel and Holyhead would make the ideal supply base for the operation.

JohnJ said...

Best look to wind turbine manufactures for inward investment or solar panel manufactures like at Wrexham. There is also a new combi panel (solar voltaic and thermal in one panel, being developed) which will be lots more efficient and looking for investment and manufactures.
Battery manufactures for Electric cars.
Turbine generators,for Tidal or Wind.
There must be loads of new Green jobs to be had if we grasp the new low Co2 economy.
If not green jobs then what ELSE is going to get the whole nation going again?
So much covetous behavioural attitudes about.

mairede thomas said...

Ok I’m going to come off the fence on this one. There are some things that have to be done by Government and having a secure food, water and energy supply are the 3 essentials for everyday living that any Government has to ensure for it’s people. And having armed forces and the military might to defend your citizens is of course the other ‘essential’ for the security of the Nations citizens. Almost everything else can, or could potentially, be left largely to the private sector.
Government has to take the long view (though politicians seem incapable of that).

The UK Government has got a very real looming problem that any amount of renewables are not going to fix, so let’s just park the renewables debate because it’s an irrelevance right now, an expensive distraction from the huge problem facing Anglesey and for that matter the UK Government. The energy black hole will probably start to manifest itself in the run up to the 2015 election. So this prospect should give all our politicians a bit of short-term impetus.

So what should Cardiff Bay and Westminster do? - they must throw every resource they have at fixing the problem. Cardiff Bay has to get behind Westminster to draw up plans that will make the UK Government and the UK taxpayer the backstop, paymaster and administrator for enabling the safe development of the next generation of nuclear power plants. If we do not do this we will kiss goodbye to any prospect of economic recovery both here on Anglesey and for that matter throughout the UK, as we simply will not have the necessary power.

We nationalised the banks (well 2 or 3 of them). You tell me what’s more important? A power supply or a cashpoint?

Anonymous said...

We have to import our electricity from Europe as we can't make our own, I wonder what the future holds for Wylfa, I hope the farmer who is holding off compulsory purchase of his land is ok, that's the main thing. When will we learn it's people first and not MONEY.

Anonymous said...

On shore Wind Turbines, FORGET THEM.
You would need at least 60.000 monsters on Anglesey alone to generate half what Wylfa turns out and that only when the wind blows.

BetterWales said...

Come on, this is fantastic news. Now our poorly educated Anglesey children will have to compete with their peers from the rest of the UK for jobs, albeit for jobs elsewhere.

Wow, what a wake-up call!

Anonymous said...

"You would need at least 60.000 monsters on Anglesey alone to generate half what Wylfa turns out and that only when the wind blows."

You what? This evening at 7pm, total UK wind 1.6GW, total UK nuclear 6GW (link below).

"We have to import our electricity from Europe as we can't make our own"

Only a bit. But every little helps when you've let market forces not make any strategic investments for the last few decades.

UK total maximum electricity demand: say 45-50GW (for comparison, overnight minimum is 25-30GW)

UK maximum import capacity: currently around 2GW from France and around 1GW from the Dutch.

What's contributing what right now, and over the last year:
http://www.gridwatch.templar.co.uk/

Today's peak demand, around 40GW, at 7pm tonight. The results, in reverse order, are as follows:

Hydro (classic): 0.7GW
Dutch imports: 1GW
French imports: 1GW
Hydro (pumped storage): 1.2GW
Wind: 1.4GW
Nuclear: 6GW
CCGT (gas): 11GW
Coal: 19GW

Which of these were funded and developed by "the markets"?

Only wind and CCGT. The rest exist because of the public-sector Central Electricity Generating Board and related organisations abolished by Thatcher and not replaced by the post-Thatcher innumerates in Downing Street and elsewhere.

CCGT exists because it was profitable quickly. But what a wasteful way to use our gas (and now Russian and Libyan gas...).

kp rambled:
"Turn the lights off at night and introduce other voluntary energy saving measures. That'll reduce annual consumption by 30%"

Maybe it will, maybe it won't (I'd like to see kp's analysis).

Look at the graphs on the gridwatch site and readers will see that overnight isn't the time of peak demand anyway, so reducing overnight demand helps reduce overall energy usage (which is always a bright idea) but doesn't help reduce peak demand.

And there *is* going to be a problem with peak demand.

The Red Flag said...

Stop fibbering about Cardiff Bay, or the Assembly, or Anglesey Council, or even Parliament, . Forget the AM, forget the MP. None of this has got anything to do with them - never has had, doesn't now and never will in the future.

Nuclear energy is 'UK Strategic'. All decisions are made at Cabinet level and any consultation is purely advisory. Cabinet can (and will if it needs to get it's own way) impose with no right of Appeal.

Thinking the AM or MP can rescue this is as laughable as it is nonsense. (although if it should be rescued at year's end I have absolutely no doubt the bumbling irrelevance Albert will bravely step forward as the man who saved the day lauded and applauded by Ieaun Wynn Grayman - who is even more bumbling and irrelevant if such a thing is possible.)

Anonymous said...

Anon 22:54, '(I'd like to see kp's analysis).'

No need for his analysis, just go ask the Japanese themselves. Better still, look at the public data.

I've waited over 70 years to get this island back to what it does best, nothing! Nothing but a bit of poverty farming and a bit of tourism.

Happy days.

Anonymous said...

"just go ask the Japanese themselves. Better still, look at the public data."

Fair point. Perhaps you could provide a link or two, because although I have heard that Japan's energy "austerity measures" have enabled them to survive the closure of their nuclear generation, I can't quickly find a simple summary of the facts.

Even without those facts, it's obvious that Japan's use of overnight electricity in city centre retail (for example) is radically different from the UK's.

Andrew said...

Why not do it ourselves. We the people of Anglesey should form a Community Interest Company or Venture Capital Trust for the purpose of capitalising on our wealth of tidal stream energy.

Let's say 3,000 people invested £1,000 each then this would raise £3m in capital and this could be used to buy a significant holding in Marine Current Turbines who are currently looking at developing a tidal farm near the Skerries. I'm sure the company would jump at the chance of having the locals onboard.

Off topic, I happen to be meeting IWJ this afternoon and am going to prove beyond a shadow of a doubt that Pricewaterhousecoopers produce more shite than Stockaitkenwatermans.

Anonymous said...

Thought provoking:

http://ajw.asahi.com/article/views/editorial/AJ201203030025

Andrew said...

We can make huge reductions in power consumption by redesigning everyday appliances. Look at the Xbox for example, the visual image is displayed through a TV, so you are running two appliances.

What if the interface was not the TV but an eye piece just like a hands off mobile bluetooth ear piece and the same concept could also be applied to any interface device.

I'm also all for personal fitness machines that captures otherwise wasted energy and introducing these machines in prisons would be a good place to test them out. Imagine telling your kids they can't play the XBox unless they cycle 2 miles to charge it up.

Anonymous said...

Andrew: I like your thinking regarding energy production.

Let us all know how you got with IWJ.

BTW. I've heard from involved sources that PWC aren't capable of investigating more than one complaint at a time ...

Anonymous said...

PWC aren't capable of investigating complaints, even one at a time without been told what to put in them by those being investigated.

kp said...

Things are moving apace within IoACC. I gather a motion to move away from 'Energy Island' has already been tabled and a new slogan is soon to be introduced, 'Island of Angles'.

Sounds so good to me!

mairede thomas said...

Energy Island? or back to the old days?
As far as Anglesey is concerned this is how its stacks up:- the Biomass plant site at Anglesey Aluminium, that has gained planning approval, may be able to source cheap waste wood and other imported biofuel but if the experience of DRAX the Uk’s biggest co-firing coal station is anything to go by the cost of buying in imported biofuel could be prohibitive. In mid February Drax decided not to build a £1.3billion pair of 290MW biomass plants reasoning that the Uk subsidy is not attractive enough. And the Banks are not playing ball either, so putting together the finance is not proving too easy. So big biomass projects like the one on the north of our island may not materialize.
Now the Wylfa B site is up for grabs but EDF and Centrica will want taxpayer support too. Who knows what the Russians will want, but do we want them?
There does not appear to be any type of new, sizeable and reliable power generation plant, that is also acceptable in terms of the C02 targets the Uk has burdened itself with, being brought forward for development by the international power companies, or indeed smaller developers, unless they are given assurances that they will get a huge public subsidy.
So do we ditch the CO2 targets and go for coal and gas? Or do we nationalise nuclear?
I would look seriously at both of these options otherwise we may not have enough reliable new power plant and infrastructure being built to keep the lights on. And unless we find some significant new gas reserves (shale?) we will be at the mercy of imported fuel prices to heat our homes and run our businesses.
I hope our politicians will do everything possible to ensure that the skills built up in Anglesey over many years in the nuclear industry are not lost to the island or dispersed abroad. The excellent facilities at Coleg Menai offer young people who study there the prospect of sustainable and rewarding careers, let’s hope they can fulfil their career ambitions on Anglesey.

Anonymous said...

What I'd like to know is who worked out that Anglesey will loose out on thousands of Jobs, I don't think there are thousands workers at Wilfa A now !!! If they were construction workers jobs why would we need all the accommodation planned at Wylfa A and the land & lakes site ?? I suspect this was to accommodate the workers brought in off Anglesey !! So who's been selling this twaddle to Anglesey residents for years ???
Perhaps if the Islands politician's and Cardiff sorted themselves out and realise that the biggest income provider on the Island probably isn't Wylfa A or B - it certainly wasn't Anglesey Aluminium or the plant in Amlwch nor is it he farming fraternity but it could just be the Tourism Industry - the little cottages - b&bs - shops - garages - tourist attractions and a plethora of small one man/woman operations catering for our visitirs and guests!!! in this context wouldn't it have been nice for some of the Millions/Billions already spent or what we could now say as wasted by Local/Regional and National Governments on this project to have filtered down to them for regenerationand growth/new businesses and aiding employment for the young in the tourist sector with a helping hand and mentors to help with all the red tape !! But one thing's for sure its every resident on Anglesey that will suffer not because Wylfa has been cancelled or the loss of perceived benefits No ! but for the perceived by many Island residents incompetence of those that govern us and thinking that there is a single one fix solution to Anglesey's dire economic issues.

The Red Flag said...

Anon- they make it up about the 'thousands of jobs'. They are of course referring to the construction and decommoisioning, and over the entire lifetime of the project. Very few jobs will actually be 'created' - most will just be construction teams finishing somewhere else and starting here - more job re-allocation than job creation. Most of the jobs will exist for only a short time according to the projection graphs.

The council's own documents show that even they expect the vast bulk of the workforce to be imported from elsewhere and what does get given to locals they caveat with the definition of loacal as "within 90 minutes commute time of the site" =- by my reckoning that makes Chester and the Wirral local.

Job creation should only be calculated on net permanent full time posts created - ie how many people would be working in Wylfa B in comparison to Wylfa A. Calling a self-employed carpet fitter from Flint given a two week contract to carpet office buildings 'job creation' is taking the piss and playing people for fools. (council falls for it every time though)