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France bets huge on Britain

Robert Peston | 12:40 UK time, Wednesday, 24 September 2008

For those who fear we're in danger of talking ourselves into an irredeemably deep and dark depression about the prospects for our economy, EDF's acquisition of our nuclear power industry can be seen as a powerful message of hope.

British EnergyThe financial commitment being made to the UK by the French state-controlled utility is enormous, in a literal sense.

It may represent the biggest ever overseas investment in the UK, when the various bits are added together.

In round numbers, EDF is paying a touch over €15bn for British Energy's existing assets.

It will spend a further €10bn over the coming 15 years on the construction of four new nuclear generators (the first of which is scheduled to open at Christmas 2017 - and the other three in a rolling programme over the following five years or so).

And it will invest €400m a year maintaining British Energy's existing generators.

That represents an aggregate investment of around €30bn - or £24bn - from now to around 2020, in today's money.

It's a spectacular vote of confidence from La Republique no less that the United Kingdom is anything but bust.

Of course, if the Centrica deal goes through as planned, the owner of British Gas will take on a quarter of that massive financial commitment.

But that deal is not done. And as of this moment, EDF is on the hook for €30bn.

The deal demonstrates that power, especially reliable energy that doesn't emit C02, is almost the most precious thing on earth right now.

But it also shows that there should be plenty of vibrant economic life, once we're through le Crunch (whenever that'll be).

Comments

  • Comment number 1.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 2.

    I don't think anyone but the Tin Foil Hat brigade think we're all doomed, doomed I tell you! Perhaps they're wagering on better economic stewardship in the future?

  • Comment number 3.

    To any nimbys who start complaining about a British company being brought by a French one - we live in a global economy and I would not be surprised in future if we have European wide utility companies.

  • Comment number 4.

    It also indicates that a)EDF expects relative fuel prices (other fuels) to remain high in the long term; b)that a largely nationalised company/industry will now be running an important part of the privatised electricity industry in Britain, and that c)the managers of the nationalised concern reckon they can run the company better than its current management. It would be interesting to know to what extent the investment will be backed by money raised on the back of French-government guarantees, and what EDF reckon its decommissioning costs to be in the future.

  • Comment number 5.

    I'm not sure I share Robert's optimism (i.e. "It's a spectacular vote of confidence from La Republique no less that the United Kingdom is anything but bust. "). Shouldn't this really read, "No matter what happens to the economy, there will always be money to be made from energy"? As suggested elsewhere, doesn't this purchase pave the way for us to subside energy prices in France (if they can't raise the cost of energy for fear of losing votes across the Channel, I suspect they won't be squeamish about raising the price of energy generated on our shores whilst sticking it to Le Rosbifs).

  • Comment number 6.

    It could be seen as a "powerful message of hope", or alternatively and more accurately it could be seen as a powerful message of despair.

    If you want new nuclear then you need the French because (i) The British deregulation experiment dating from 1989 has effectively destroyed domestic capability to develop, design and construct substantial new civilian nuclear and, (ii) The costs and risks involved in nuclear are so huge that no private enterprise can assume them, and the French, who managed to resist the siren voices of the market still have EdF as a state owned business.

    The long term risks of EdF (absent some catastrophic failure) are not so high. The British Govt and not the market has determined that we will have new nuclear, and hence the British Govt., and not the market, will ultimately determine that electricity prices will rise to reflect the costs of new entry - with the new entry being nuclear.

    In the event that these price levels are politically unpalatable (which they will be) then the magic of discount rates, excel spreadsheets, and assumptions regarding long term decomissioning costs will magically combine to backload various billions of costs. The fact that this will ultimately create or contribute to the next financial crisis will be conveniently forgotten, and EdF will make very sure that it won´t create any crisis for them - as they´ll have their money and be long gone by then.

    It´s perverse to suggest that the French are making any financial commitment to the UK - It is the UK that is making a financial commitment to EdF, and it is the UK that is once again selling it´s industrial base (both existing and future) into foreign ownership.

    Only a maniac would dare wonder why the British are paying the French to build new nuclear for them whilst at the same time pulling out all of the stops (including the possibility of further armed conflict) to make sure that the Iranians be denied this technology.

    I seem to recall that the first time around the British population were told that nuclear power "would be too cheap to meter."

    Seems that history can teach us nothing at all.

  • Comment number 7.

    The cynics amongst us might be thinking the following:

    1) That the UK gov't is spinning the BE sale in the same way it is spinning the sale of Gatwick Airport (that it will mean better service for us lol) when in fact the Spanish company that owns BAA and thus Gatwick is facing bankrupty due to huge leverage that it cannot afford to pay back. I wonder how leveraged BE is?

    2) Energy is THE resource of the future and we are insane to be selling it off to a Foreign company that will:

    3) take any amount of power generated it deems neccessary from our nuclear power stations that it owns to keep the French national grid supplied in an emergency

    4) EDF gets to build NUCLEAR REACTORS on an offshore island local to France (erm...the UK). Any meltdowns will be OUR problem.

    Middle age has made me so cynical.

  • Comment number 8.

    the deal demonstrates the stupidity of Labour. There is lots of backslapping in the financial world how good a deal this is for EDF.

    What it means is the death of the two way grid. The Uk will remain one of the few countries not to have one. A two way grid has proven to create hundreds of thousands of jobs, billions in income, reduce bills for ordinary people [who can sell back to the grid], help free from carbon and make it more cost effective for business.

    In germany their two way grid provides more power than the whole of the uk nuclear industry.

    the nuclear deal requires minimum purchases of energy which means a one way grid is 'locked in'. A wicked crime by Govt upon the ordinary people.

  • Comment number 9.

    Clearly an enourmous deal but i believe the largest investment was the Netherlands Royal Dutch Shell purchase of Shell Transport and Trading at about £50bn in 2005.

  • Comment number 10.

    Only one thing is certain - The British people will end up paying through the nose for this.

  • Comment number 11.

    "The deal demonstrates that power, especially reliable energy that doesn't emit C02, is almost the most precious thing on earth right now."

    Which is, surely, precisely why we should not be handing that resource over to a foreign power!

    Do we actually have any industry left that is fully UK owned (excluding farmers)?

  • Comment number 12.

    So what if a French company will own our nuclear stations? E.On already own a large number of our coal power plants, and they too are a foreign company. How is nuclear any different to coal in that respect?

  • Comment number 13.

    What happened to the huge profits the banks posted over the last ten years? For example, wasn't Barclays being criticised for making 7bn GBP in each of 2006 and 2007 while still charging fees to customers (those fees will be back soon, by the way, along with a whole lot more)? Didn't the other banks save anything for a rainy day out of a total profit of 38bn GBP in 2007?

    Or is it the case that the huge profits never existed and were just based on notional values of "assets" which were hopelessly overvalued?

    If that's the case have they really "lost" anything? Except the faith of investors and through paying cold, hard cash in bonuses? You can't lose what you never had -

    If these companies were overvalued until 2008, then isn't it right to have this correction? If they've over extended themselves based on fictional balance sheets, then thats bad decisions made by bad management and they should all go to the wall.

    Aggressive market share increases have led to this juncture, with banks lending money they don't really have to people who couldnt afford to pay it back.

    In this sense, perhaps the HBOS / Lloyds merger isnt a bad thing, as clearly competitiveness DOESNT work in the banking sector? If one introduces a 100pc mortgage, the next will bring out a 110pc, then NR will bring out a 125pc! If one offers 2x income, the next will introduce 3x, then 4, etc. We may need to see much LESS competition and a much more stable market, so why shouldnt each smaller bank be taken over by a successively larger bank until weve only got a handful left (aside from the redundancies this would cause)?

    If savings are guaranteed and mortgage debt is still a relatively reliable source of continued income and can be cherry picked from the rubble by the bank buying these mortgage books, I'm all for it. The consumer wont lose out, their payments will just go to a Spanish or Hong Kong / Shang Hai bank instead (more than likely).

    Please don't let the government just throw cash at the issue, as in the US! Unless Gordon has a lot of banker friends he wants to ensure are personally liquid, rather than the institutions or markets they represent, it wont help, longer term.

    America is over (for now) and we should concentrate on building relationships with our European neighbours!

    Moral hazard... Moral bankruptcy more like (not just economic bankruptcy). I wonder if you can file for that..?

  • Comment number 14.

    The government stands to recieve 36% of the £12.5 Billion sale which is £4.5 billion.
    How is the government going to invest this one off payment from the sale of a state owned asset?
    In recent days Gordon Brown has failed to mention the fact the government will recieve this money once the sale goes through or how it will be spent. The money needs to be ringfenced and accounted for before Labour either use it to pay off its increasing budget deficit due to Browns failure to save money for an economic downturn or use it to try and buy election votes with one off gimmicks.
    The government also need to remove red tape for the creation of new nuclear plants,they must be built safely but without being hindered.
    The UK needs to build up its nuclear power generation before the UK suffers an energy crisis.

  • Comment number 15.

    "The deal demonstrates that power, especially reliable energy that doesn't emit C02, is almost the most precious thing on earth right now."

    Shame Nuclear energy doesn't meet that requirement then. Or do you suppose that the quarrying, transporting and processing of Uranium ore produces no CO2 emissions?

    Why is it that we privatise the energy utilities because, according to the theory, they were not properly run when in our Government's ownership, but effectively sell them to the French government? Is their public sector so more efficient than ours?

  • Comment number 16.

    How can France's state controlled energy company take over a uk energy company?

    What is the purpose of being part of Europe, really?

    Disgusting!

  • Comment number 17.

    It is very depressing to see people celebrate this deal with EDF. Nuclear power is not a low carbon energy source if the full life cycle (carbon) costs are taken into account. The lock in to nuclear will be disastrous both for environmental and economic reasons. Has anyone looked at the price of uranium recently? It is very volatile but has gone up enormously in price.

    The unbelievable aspect is that we think it is sensible to spend billions of these kinds of energy sources rather than solar and wind. When will people start using common sense?

  • Comment number 18.

    #3 "To any nimbys who start complaining about a British company being brought by a French one - we live in a global economy and I would not be surprised in future if we have European wide utility companies."

    It's not the fact that a British company is bought by a French one that rankles, it's the fact the French Government wouldn't let a reciprocal arrangement take place.

  • Comment number 19.

    It does seem odd that, at a time when it is acknowledged that being an importer or oil and gas is putting the country at a great disadvantage..we are selling off power. lets hope there is a big off switch at the English channel.

    If it is ever viewed that the French are gaining an advantage from Nuclear power stations over here, with the prospect of barely affordable energy as it is,... the sort of demonstrations that have been common place in France against UK goods..will seem minute by comparison.

  • Comment number 20.

    I don't share Pestons enthusiasm for the EDF deal.It may indicate Britains relative economic health,but is nuclear energy really any more the answer that it was 30 years ago as an eco friendly CO2 free energy source?It wasn't seen as all that viable then so why is it now? Is gamma radiation exponentially greener than carbon dioxide that can be absorbed by flora? Not only environmental concerns abound,but what about the notion of placing a nations energy supply in the hands of a foreign power?What are the implications for national security?After all when it was divulged that Dubai was to own most of the US's most important ports, that caused a storm of controversy surrounding security.And what of consumer security? Will the French think twice about ripping off the English? The list of questions coupled to unknowns as responses goes on ad infinitum.I wish someone could answer them.

  • Comment number 21.

    This is crazy - Completely Crazy - no wonder they held the news back until after Brown's speech yesterday.

    I did not hear him say that we would be handing British Assets away to the French.

    It should remain in British Hands as after all we are the only one's who are going to look after our interest ' First '

    EDF is only in it for the money and prices are sure to rise

    Next we will have the Chinese taking over BT - its the short end of a very short straw.

    Keep it in British Hand.

  • Comment number 22.

    Why won't it let me post on here? Is this a closed debate like the whole Nuclear decision??

  • Comment number 23.

    Is there a size limit or something? These small posts seem to work but not what I really want to say!!!

  • Comment number 24.

    So what's going on? - It's all about the scarcity of resources. Unlike Nucleaur fuels (Uranium, plutonium etc) solar power is limitless and in abundance, therefore a market would not be able to function. There wouldn't be any profiteering or money to be made.
    It means that those who hold the cards would not be able to charge us for energy. That would lead to the elimination of the energy industry and the loss of many jobs and a possible decline in growth.

    With the free provision of energy it would remove millions from the breadline and remove a large number of people from state supplements. These people would be free and would only need to grow their own food for complete self sufficiency. The Government has control over these people now and that would all be lost.

    The Government is basically putting the creation of money / wealth ahead of the survival of the human race. It's also proving that the whole energy issue is about POWER - and not just the kind that we use to boil our kettles.

  • Comment number 25.

    I worked it out - it seems the BBC have decided to deliberately (or through inability to manage their website) restrict the size of postings.

    Possibly I have said too much, or have revealed the Governments true intentions - sadly no-one will ever know due to the media oppressing the free speech of the ordinary citizen.

  • Comment number 26.

    I do not see this move as a sign of hope. We should not sell any of our utilities to foreign nationals, it gives other people enormous power over us. The profits leave the country! The only reason it has been sold to the French is because we have no faith or funds to retain ownership and buy in the technology. I think it proves that we have become bankrupt of confidence and are handing more and more power to people outside the country. This government have no idea how to protect our interests, and now so near their demise they care less. I am in France at present and on another point have not seen a single camera when we drove 1200kms!

  • Comment number 27.

    An awful lot of negative comment here... and as for #13 wrong blog I think.

    We badly need to invest in more electricity generating infrastructure and new nuclear stations to replace our existing ones. We need a balance of different sources of electricity production (unless, of course, you are happy for the lights to go out because its not windy enough in the middle of winter). The question that really should be being asked is why are we not doing this ourselves? is it political? or economic? or technical? (I don't think its the latter). However, Whatever the reason, I am glad that someone is actually prepare to come along with a working solution to start building and investing again. If we haven't got a viable nuclear program who is going to decommission all the old nuclear station? The fact that EDF has proven expertise in this field should re-assure us all.

    The nuclear industry in this country has just been drifting for the last 10 years. It's time it is given some direction again.

  • Comment number 28.

    Power generation - like oil and banking - are far too big and money consuming to be held in national corporations any more. This is the global age and multi-nationals are equipped and funded far better. EDS will be subject to scrutiny by the regulators, the Centrica deal, assuming it goes ahead, will claw back 25% of it. EDS has an excellent safety and productivity record and Alister Darling get's a nice wadge to knock off the PSBR. What's the beef?

  • Comment number 29.

    For the people complaining about the safety of nuclear, perhaps they could list the nuclear accidents that have happened in the UK in the past 60 years?

  • Comment number 30.

    #27

    Absolutely, was aiming for the previous one. I've since uploaded it to there.

  • Comment number 31.

    Re: 24

    Someone has to build solar cells and operate them on a large scale if we are to get significant energy from solar power. It costs them £x to run them. People need energy but don't have time, space, inclination to run solar panels etc. Therefore Solar Power Company Ltd charges them £(x+y) to supply them with electricity. The people holding the cards receive £y profit.

    There's no conspiracy, solar power production is inefficient.

  • Comment number 32.

    Robert - I agree with you this is good news.

    Of course this country has a future - it has a very bright future. If we ignore all of the apocalyptic headlines, the figures show a different story, if you look beyond the short term.

    We have had a fantastic run over the last 16 years or so, but a correction always had to happen (and it was always going to be a largish one), but much of the economy (including most of the B2B sector) is still doing just fine. Within 18 months or so, my guess is that we will be through all this and it will be onwards and upwards again.

    Many of the doom-mongers have no grasp of even basic economics. Sure the World will be different in the future - but nothing indicates that it will be worse!

    So here we have £30 billion (repeat £30 billion) of inward investment - inward investment is normally considered a good thing. If the French weren't spending this money we would have to find it ourselves. EDF will employ people here, pay taxes here and supply much needed electricity here. They will also repatriate some profits (which is fair enough) Leaving UK investors free to invest £30 billion where they think they can the best return.

  • Comment number 33.

    This is not about business, but globalist new world order politics. the UK is not allowed to be self dependent any more. We must become dependent on other countries in the EU, then we will not be able to leave and become a prosperous independent nation.

    Each of the EU countries are having parts of their economies/national structures changed slowly in much the same way, so that every country in the EU is wholly dependent on every other country in the EU.

    This will be continued as the multinational blocks of the European Union. North American Union, African Union, Asian Union etc etc are slowly merged and made to be dependent on each other to create an undemocratic, totalitarian single global government.

    As the recent MASSIVE price hikes in our energy bills have shown, We cannot trust the French for our energy supplies. After all their price rices are capped to 5%.

    The French are utterly ripping us off and we are now completely at their mercy.

    Labour have been treasonous to allow this.

    But then, self reliance is an evil that must be defeated according to labour.

  • Comment number 34.

    The French have a better utility ownership model than the UK. Thatcher stripped the cupboard bare. EDF is largely owned by the French state. Water Utilities in France operate in a private management, but public asset owned model, at the end of each contract the assests are in public hands. Whereas in the UK the objective was to sell the assets lock stock and barrel as this gave a much higher sale price and income to the Thatcher government. As French utilites buy up the UK sector it is sure sign they have the better solution. A cautionary tale for those who are so devout in their belief that strategic infrastructure utilities must be in private hands.

  • Comment number 35.

    The reporting standards are dropping to a new level at the beeb these days, sorry but this isn't right, it does not show any hope, unless you hope to have hugely inflated bills in the coming years, this should be owned by the British tax payer and no one else.

    Any sell off of assets of this country to another should be a crime.

  • Comment number 36.

    The UK's openness to 'inward investment' can also be seen as further pawning of the family silver.The price will be paid later in excessive profits returned to foreign owners of UK utility 'monopolies'.
    We're now at the mercy of oil suppliers, tomorrow foreign owned nuclear power companies.
    It is highly unlikely that our European (or US) partners would allow foreign ownership of their own utilities.
    I would like to see the BBC conduct an investigation into how electricity/gas prices compare in France, Germany etc with the UK with its foreign ownership.
    How quickly falls in oil prices are passed on in each market (are they passed on in the UK?), how utility owners profits(returns on investment) compare across these markets.
    That might tell us whether it is (as usual) the British public who end up paying for the fast buck British shareholders make from selling out to foreign investors.
    The total failure of regulation, which is now apparent, over the UK's financial markets applies equally to other markets. The government's failure to regulate utility suppliers needs to change along with its regulation of those much vaunted financial markets, if the British consumer is to have any confidence in 'open' markets.
    Light touch regulation may attract 'investment' but usually at the expense of the wider public.

  • Comment number 37.

    There's no conspiracy, solar power production is inefficient.

    No it's not. A 12 year old science student has recently developed a way to make solar panels using carbon nano-tubes that is about 20 times more efficient than the current leading edge systems.

    Once this technology is more widely available it could solve the energy crisis. But then that would close a multi-trillion dollar global energy industry, because they will not be able to meter and charge for energy that is derived directly from the sun.

  • Comment number 38.

    #29

    Radioactive fuel (such as that used in nuclear reactors) remains radioactive for hundreds of years. There may not have been many accidents in the nuclear energy sector in the past 60 years, but we're going to have a backlog of radioactive material to get rid of that won't start clearing until about the 24th century. The current best proposal to dispose of nuclear waste appears to be digging a big hole and dumping it in there - the equivalent of sweeping dirt under your bed, hoping that it'll just go away.

    The fuel used for nuclear energy is a finite resource, so eventually it's going to face the same problems as coal, oil and gas. But not for a while, so politicians and energy companies couldn't care less - let's leave it to future generations to worry about, just like always.

    #25

    It's hardly unusual for a text input box to have a maximum character size. Get a book on basic web design and read the chapter on "Forms".

  • Comment number 39.

    What's wrong with wavepower as the energy source of the future?

    No contamination, no leaks, no problem if one breaks down and not built in anyones backyard.

  • Comment number 40.

    Some people here appear to trust the corporations to do the right thing, let us get one thing clear, corporations work to get the best deal for their shareholders, they do not care about customers needs one jot.
    This government protects the needs of the corporations, not the individual, the sooner everyone realises this the better.

    We all need to be getting into generating our own power within the home, don't go expecting any help from Gordon though, unlike in Germany and other forward thinking countries....

  • Comment number 41.

    Sorry correction:

    this 12 year old's solar panels equipped with his 3D cells could provide 500 times more light absorption than current commercial solar cells and nine times more light than existing 3D solar cells.

  • Comment number 42.

    Johnny #29 - what about Windscale? (now Sellafield). There were several radiation leaks over it's history. The smaller leaks are covered up by government - it's only the really big ones that they cannot hide.

    ...and what about a Chernobyl? I know it's not a UK station but I read the whole story on that disaster. It was effectively caused by human error, something which is not attributable to a particular country or political ideology (i.e. blaming communism). It could easily happen here - just as Hatfield, Paddington, the M42 pile up etc. all happened due to human error.

    It's so arrogant of mankind to actuallt believe Nuclear power is safe because we have convinced ourselves 'we don't make mistakes'

    You only need one accident and you have suddenly stopped people living in an area the size of Scotland. Imagine what that would do for our economy, house prices, food production, oil production and natural resources.

  • Comment number 43.

    "The EDF deal proves that Britain is far from bust "

    And I suppose it was once argued that the investment of major banks into the debt on American mortgages proved that the American housing market was far from bust?

  • Comment number 44.

    Two things any nation will need in the coming decade are Food Security and Energy Security. At present Britain has neither with an over dependence on imports and foreign energy companies. The sale of British Energy is one for short term gain the consequence of which will be long term loss.

    To those 'bloggers' who bang on about being in a 'global economy', a couple of lessons to learn from the current economic crisis is that the global economy is subject to sudden changes and is on occaison very fragile. Any nation needs some form of insurance against the vagaries of 'globalisation'

  • Comment number 45.

    #37 - Absolutely 100% correct.

    This is all about scarcity of resources - and the dogged insistance that "the market rules the world".

    I think the fact that EDF is state owned and is currently buying our entire Nuclear industry with cash to spare is testament to how wrong Thatcherite followers were (which includes Blairites).


    The only reason the other utilities haven't all been bought up by better run foreign companies is because they are in such a bad state no-one wants to take them on as a going concern.

  • Comment number 46.

    "For the people complaining about the safety of nuclear, perhaps they could list the nuclear accidents that have happened in the UK in the past 60 years?"

    Perhaps you'd like to read the report

    THE GRAPHITE MODERATOR CORES AT HINKLEY POINT B AND OTHER
    ADVANCED GAS-COOLED REACTORS

    I'll summarize it for you

    The nuclear safety issues identified by NSD are:

    o A number of the graphite bricks that make up the moderator cores of the Hinkley Point reactors are extensively cracked.

    o The operator BE has not yet developed a full understanding of why the cracking is occurring and it is unable to reliably (statistically) extrapolate how many core bricks may be similarly damaged from the limited in-core inspections available during the periodic shut downs of each reactor.

    o BE has been unable to establish the level of cracked bricks (numbers and locations) tolerable within the core before the residual strength of the core falls below the minimum required for the reactor nuclear safety case.

    o Because of significant uncertainties the Nuclear Installations Inspectorate has, or is about to, impose a requirement for more frequent in-core inspection of a greater number of fuel channels than BE has hitherto agreed to undertake.

    o Even with more frequent and probing in-core inspections, there are currently no means of detecting hidden but developing sub-surface cracks, so it is entirely possible that this age-related damage may be much more extensive that presently determined.

  • Comment number 47.

    This move does concern me as in effect we are losing control of energy generation in this country and passing it into the hands of others who may not care so deeply about the future welfare of people here in Britain as they would about their own populations.

    Our Government has failed to make adequate and secure provision for the growth in demand for energy forecast for Britain in the coming years and that is indeed a worrying prospect, especially as they are intent on building thousands more homes and seem inept an controlling immigration.

  • Comment number 48.

    Oh dear we cant even develop energy on our own anymore...what a state of affairs when we have to look overseas to help us.

  • Comment number 49.

    As of 2007, two EPR units (the type EDF are proposing) were under construction, one each in Finland and France. So how's it going?

    Finland
    ---------

    In May 2006 construction delays of about one year were announced, following quality control problems across the construction. In part the delays were due to the lack of oversight of subcontractors inexperienced in nuclear construction. The delays led to disappointing financial results for the Areva NP. It blamed delays on the Finnish approach to approving technical documentation and designs

    At the end of June 2007 it was reported that Säteilyturvakeskus, the Finnish Radiation and Nuclear Safety Authority, had found a number of safety-related design and manufacturing 'deficiencies'. In August 2007 a further construction delay of up to a year was reported associated with construction problems in reinforcing the reactor building to withstand an airplane crash, and the timely supply of adequate documentation to the Finnish authorities.

    France
    --------

    In April 2008 the French nuclear safety agency (Autorité de sûreté nucléaire, ASN) reported that a quarter of the welds inspected in the secondary containment steel liner are not in accordance with norms, and that cracks have been found in the concrete base. EDF stated that progress is being made on these issues raised very early in construction, however on 21 May ASN ordered a suspension of concrete pouring on the site. A month later concreting work resumed after ASN accepted EDF's corrective action plan which included external oversight checks.

    Doesn't bode well, does it?

  • Comment number 50.

    Remember this just 12 months ago :

    "Everything we build — we build on a strong foundation of economic stability.

    Our commitment to stability has been tested again and again over ten years: the Asian crisis; the Russian crisis; the American recession; the trebling of oil prices. And in the last month a wave of financial turbulence that started in America and then Germany and has impacted on all countries including the United Kingdom and tested the stability of our financial system.

    Yesterday Alistair Darling set out how we will continue to respond with the same calm vigilance that he has demonstrated over recent weeks.....

    As we set out on the next stage of our journey this is our vision: Britain leading the global economy - by our skills and creativity, by our enterprise and flexibility, by our investment in transport and infrastructure - a world leader in science; a world leader in financial and business services; a world leader in energy and the environment from nuclear to renewables....drawing on the talents of all to create British jobs for British workers."

    Gordon Brown conference speech, September 2007

    We're a world leader in nuclear energy, despite selling Westinghouse and British Energy? Remind me how that works again?

    How many British jobs will there be at HBOS?

    And there's not been much mention of stability recently, either....

  • Comment number 51.

    Has Mr Peston, whilst waxing lyrical about another British Institution being sold off, not realised that if you sell an asset, it is gone forever and the money paid for it will be but a pittance in 10 or 20 years time when the energy, then owned by the French, will be charged to us, who will have no control over policy, direction or pricing

  • Comment number 52.

    So to summarise, UK nuclear accidents were Windscale (1957), Sellafield leak (2005)

    Deaths due to Windscale were around 200, there were no deaths due to the Sellafield leak.

    Deaths on UK roads this year will be around 3000. So more people will die this year due to cars, than have ever been killed by nuclear accidents in the UK, yet nuclear power is considered dangerous.

  • Comment number 53.

    Heh. Interesting stuff. In terms of the deal itself, I’m not especially happy with us handing over our energy sector to a French, state-run, company. But then, the problems with the energy market stem from the wholesale privatisation of the sector by the Tories. Short of nationalising the sector again (or following the… French… model) there probably isn’t much that can be done, since there aren’t any British companies willing or able to take on such a large project.

    On nuclear power generally, it is safe, efficient and an effective means of generating electricity. That is simply a fact. If you’re going to mention Chernobyl then at least research it first. The accident was caused because of an experiment they were carrying out on the reactor and the reactor type is not the same as any built in the West.

    Ultimately there is no such thing as “carbon-free” electricity generation, wind turbines and solar panels don’t magically appear and have to be built, both are incredibly inefficient and unreliable so it’s a utopian pipedream to think we’ll ever be able to generate all of our electricity requirements from them. Nuclear power, whilst far from perfect, is IMHO superior to coal/gas power stations as a source of power and in environmental terms.

  • Comment number 54.

    The French have 80% + of their electricity from nuclear - that's why their electricity bill rises can be capped at 4% whilst ours rocket.

    Britain used to be a world leader in nuclear technology. But after 20 years of pandering to the eco-lobby we have dropped behind.

    We are dependent on foreign gas, have massive electricity bills and now we have to rely on the French to build our next generation of power stations.

    People need to think about this next time greenpiece or fiends of the earth are trying to create a climate of fear about power stations.

    I'd love to see you guys interview the eco-zealots in the same challenging way as you confront the politicians - why do you give them such an easy time?

  • Comment number 55.

    @ 46

    The graphite moderators slow down neutrons allowing the nuclear reaction to take place. If they are damaged then the rate of the reaction will be slowed, and the amount of power produced will be reduced. This isn't a nuclear accident.

  • Comment number 56.

    Family silver anyone? Going cheap due to shortsighted Govt who are guaranteed to create a power shortage to sell into in 10 years time. Is Robert obliged to show "balance" by trying to turn this into a good news story?

  • Comment number 57.

    It's a fire sale in the UK today - everything must go! Brown is continuing what Thatcher started.

    Didn't you say Robert that the UK gov get several billion for their golden share? ..

    Wonder how long they will take to burn through that?

    They'll probably use it to prop up the banks.

  • Comment number 58.

    Solar energy is inefficient in the amount of space it takes up, and is proportional to the amount of sunlight falling on the cells. Northern Scottish cells would generate less energy than those on the south coast of England, due to the differences in amount of sunlight, already giving you an energy production gap depending on geography.

    They don't work at all at night either, so hospitals would need some help keeping their life support machines running. Batteries are one answer, but that supposes that the day has been sunny enough to provide energy for equipment during the day and provide a surplus to run it over night as well.

  • Comment number 59.

    sorry to have to state the obvious, but this deal is largely about promoting our long term energy security (and of course raising much needed cash for the government).

    despite what many posters claim, edf does not represent a threat to the uk's energy security. yes it is french state owned (which means that it benefits from cheap funding as markets infer a de facto state guarantee). the uk should absolutely be lobbying for the eu to make france speed up the privatisation and break-up of edf and the opening up of its energy market to new entrants, but that is a separate issue.

    what is relevant here is that eu competition law does not allow edf to (i) unfairly favour the french market over the uk market, or (ii) receive subsidies, favourable loans or any other financial support from the french government. france has much more to lose than gain by flouting eu competition law, which works for the benefit of everyone in europe. if france did cheat, and assuming the legal recourse available to the uk via the eu proved ineffective, then we could always choose to flout the rules ourselves and renationalise our nuclear industry.

    the purpose of the deal is not to produce masses of cheap energy for the uk. nuclear is not cheap, although it will become more competitive as fossil fuels become scarcer.

    instead, this deal needs to be understood as part of a broader push by the eu to promote its collective energy security vis-a-vis russia. the eu (incl the uk) is becoming increasingly dependent on oil and especially gas imports from russia. unlike edf, gazprom is a state owned energy monopoly that IS cynically used as a foreign policy tool by its government and is therefore something to be very scared of.

    the solution to this threat is (i) to move towards nuclear, thereby reducing dependence on oil and gas imports, and (ii) indeed to make eu national energy industries more interdependent as post 33 suggests, as this will prevent russia or anyone else being able to divide and rule the eu (e.g. by building a gas pipeline to germany that bypasses poland and ukraine).

    unlike the uk, the french government never lost faith in nuclear, and they have many many nuclear power stations in france. bluntly, it means they have the expertise that we lack in the uk, so getting them to build our new nuclear power stations makes a lot of sense.

    whether the details of the deal that brown has signed are good for the uk or not i do not know, although i find post 8 from bookhimdano interesting and would like to know more.

  • Comment number 60.

    How can this be good for Britain? This is not a vote of confidence for anything other than the realisation that there are 65 million people in the UK that will need energy and food. All profits will go to France and to the rest of Europe.

    And what guarantees do we have that the French will not simply abandon the old/leaking nuclear plants in 20 years' time leaving us to deal with them?

  • Comment number 61.

    Prestons opinions read like the ravings of a madman.

    When a company takes over a company like this it means simply that they feel they can bring better management and in this particular case engineering and technical expertise that the taken over -the British- do not posssess.

    It represents an enormous humiliation for the British nation that has lost its great engineering base during the last forty years.

    Every nation -including America-France and Germany -have prevented such takeovers in the national interest.

    In this case the power company will be owned by a nationalised French GOVERNMENT company!!

    Brown has allowed the selling off of nearly all of Britains great international companies in the last few years-
    -yet he continually says we must be proud of being British

    What does he want us to be proud of? Crime? Binge drinking?

  • Comment number 62.

    "Deaths on UK roads this year will be around 3000. So more people will die this year due to cars, than have ever been killed by nuclear accidents in the UK, yet nuclear power is considered dangerous."

    Remind me, how many cars there in the the UK and how many Nuclear Power stations? If you wish to make the point that nuclear power is safe, quoting meaningless statistics isn't the way to go.

  • Comment number 63.

    Pestons opinions read like the ravings of a madman.

    When a company takes over a company like this it means simply that they feel they can bring better management and in this particular case engineering and technical expertise that the taken over -the British- do not posssess.

    It represents an enormous humiliation for the British nation that has lost its great engineering base during the last forty years.

    Every nation -including America-France and Germany -have prevented such takeovers in the national interest.

    In this case the power company will be owned by a nationalised French GOVERNMENT company!!

    Brown has allowed the selling off of nearly all of Britains great international companies in the last few years-
    -yet he continually says we must be proud of being British

    What does he want us to be proud of? Crime? Binge drinking?

  • Comment number 64.

    Who will pay the cost of decommissioning the new (and the existing) reactors?

  • Comment number 65.

    We badly needed a nuclear development program 10 years ago but we have run our existing facilities into the ground .

    Living where i do selling off Sellafield to a US led consortium fills me with dread,this just beats the lot,I thought it couldnt get any worse but it just has 10 fold....

    Having a huge slice of our generating power controlled by a foreign power is tantamount to treason in my book,our energy prices will go through the roof while the french bask in the huge profits to be made not only from the reactor building (guess which design will be chosen)but ,we will also supply the ability for the french government to keep its own energy prices low.

    The government have already shown that they are unwilling to get the producers to lower prices as higher prices mean higher returns for them through vat.

  • Comment number 66.

    #55

    "The graphite moderators slow down neutrons allowing the nuclear reaction to take place. If they are damaged then the rate of the reaction will be slowed, and the amount of power produced will be reduced. This isn't a nuclear accident."

    If the graphite moderators deteriorate to the extent that they interfere with the ability to lower the control rods, or impede the fuel flow, then that is a potential nuclear incident.

  • Comment number 67.

    I cannot see how this story can be presented as some kind of vote of confidence in the UK, other than in the0 obvious sense that (a) the UK is likely to remain a sizeable market for electricity, and (b) consumer prices are likely to go on rising as indigenous energy supplies diminish.

    The sad fact is that new capacity is required as a matter of urgency, and that Britain has neither the technological abilities nor the investment capability to do it for ourselves.

    What I would like to know is this; what assurances has EDF received over taxation in the future?

    They would hardly have gone ahead with this if they felt that they faced some threat of windfall taxes in the future, so there has presumably been some form of guarantee on this issue?

  • Comment number 68.

    At least now the lights will stay on.

    Mind you, I will have to liquidate my positions in candle and tallow futures.

  • Comment number 69.

    purpleDogzzz ( #37 #41 )

    You are just plucking numbers out of the air! Solar panels are currently between 6% and 40% efficient (depending on the technology). So they can’t be made 20 times better!

    If current panels are 20% efficient they must be absorbing at least 20% of the incoming light energy. Are you really suggesting that a solar panel can absorb 100 times more light than actually falls on it? Or are you thinking of solar concentrator systems (which use arrays of mirrors to track/concentrate the sun on to the cells at great capital cost)? Or have you just been watching too many James Bond movies….

    Do you have any references for your figures? The figures I’ve used are from

    wikipedia topic: Solar_cell

    And be careful with the payback times quoted I think they are relating to how long it takes the solar cell to generate the energy required to make it in the 1st place! The actual energy generated will almost certainly never exceed their initial costs. Should be cheaper than disposable alkaline batteries in the long run though.

  • Comment number 70.

    There are a number of possibilities whereby the structurally degraded graphite core of a reactor subject to a serious event, even though within the ‘design basis’*, could collapse and trigger a cascade of adverse events that might culminate in off-site radioactive release and serious radiological consequences – this situation might arise if the residual strength or ‘redundancy’ of the core had degraded below the minimal level specified in the original design

    * ‘Design Basis’ accidents and incidents are those that are reasonably foreseeable to occur during the lifetime of the plant so the plant should survive such with acceptable radiological consequences on- and off-site. For example, since it is expected that there is a likelihood that a boiler or superheater pipe will fail, the result of which is that water/steam will burst into the reactor space giving rise to a rapid rise in gas-steam pressure, then the core structure has to have sufficient residual strength or ‘redundancy’ engineered in to withstand this ‘design basis’ incident.

  • Comment number 71.

    #42 - TheresOnly1Soupey

    On the contrary, what would be really stupid would be to assume that there is such a thing as a safe technology. By and large, technologies are only dangerous if badly implemented, badly designed or used in a cavalier way. Stay safe!

  • Comment number 72.

    68:

    I think I would hang on to your candle and tallow investments.

    The first new reactors are likely to come on line in 2017, assuming no slippage against targets.

    The first two (of eight) existing plants are due to close in 2014, and another two in 2016.

  • Comment number 73.

    i live in france and would like to thank you for selling your birthright, it means EDF can make money from the brits and leave our prices (already lower than yours) unchanged! Just try to do the reverse, do you think the french government would allow it....no way!

  • Comment number 74.

    Now that the Government has accepted the need for expanding nuclear energy, it is very much a case of 'Two legs good,
    Four legs bad'. For decades Labour has supported the 'No Nuclear Lobby'. What hypocracy!! This must be one of the biggest U-turns on record.

    Who was it who decided on Gas-fired powerstations? How many more years of heating our homes by gas would we have had, had not the decision to needlessly use up this scarce resource been taken?

    As ever with this Government, too little too late.

  • Comment number 75.

    I don't have a problem with this - better a 'state-owned' utility than a corporation whose shares might be bought up by any passing billionaire with little long-term interest in the nation.

    But let us not kid ourselves that we, the British taxpayer, will not find ourselves footing the bill for de-commissioning, and that our continental cousins will be picking up the tab instead. The cost of that would be far, far more than even the French state would be willing to carry the can for..

  • Comment number 76.

    Northern Rock fails, the Govt. can invest billions of pounds to nationalise it to save some jobs.

    We need safe and reliable energy in this country, yet the Govt. decided to sell up our nucler industry to the French, so we will have no chance of increased competition to lower wholesale prices, and pockets £4.5billion to waste on Id cards and assorted trash.

    Funny, why couldn't they have invested in British Energy and made it into a company that could stimulate competition and reduce wholesale prices which would at the end of the day benefit the lower paid?

  • Comment number 77.

    Its the usual problem that very poor strategic decisions were taken decades ago by the UK government. Because of the decline in our technical base and expertise we are left with importing knowhow. The French lead in nuclear and our nuclear plants are way past sell by dates, there have been repeated paperwork studies done to justify them continuing in operation. It is the UK government that has repeatedly taken the low cost route and left us in this position. EDF is a good fit and plugs the energy supply hole which is nearly upon us but I can't think of any other developed country which would see a foreign countries government owning nuclear power stations as a acceptable solution.

  • Comment number 78.

    It is a very sad day when this can ever be seen in a positive light. Having said he was going to look after the energy poor and keep markets competitive Gordon Brown is now trumpeting over the biggest consolidation in an already over consolidated energy market. Problems on competitino have been raised recently by the Energy Select Committee.

    If this deal goes through you would have circa 25% of the UK electricity supply and generation coming together under one company. then to add insult to injury add Centrica [the largest uk energy supplier] This is not good it is a disaster.

    EDF is almost 85% owned by the French Government, the very Government that has not met its EUelectricity deregulation targets. How can any private company compete with EDF's cost of capital, credit rating and power.

    Unable to have a coherent energy policy and strategy of its own the Government is now hoping that EDF and the French Government will bale it out. Imagine there is a constraint on investment capital in EDF one day!! Who do you think will win out? France or England?

    The problem is not that they are French there are multiple foreign players happily competing in the UK market. This is about handing an anti competitive dominant position to a State owned company that just happens to be French.

  • Comment number 79.

    Yep, I agree with #76. We really should be doing this ourselves. But we seem to have run the nuclear industry down for short term gain by burning gas to generate electricity, on the basis that it was cheaper and greener than burning coal.

    I think EDF is just a faster way for the government to get us back into nuclear generation. I'd rather they actually do it this way than keep putting the decision off.

  • Comment number 80.

    Re 79

    Yes agree better to go EDF than wait because overdue but why do we always end up with default no-choice implementations in the UK. As soon as you say this is a poor show you get somebody somewhere saying you can't go back it time and whats done is done etc etc. That would be okay if it was the odd cock-up, but it is just relentless, cul de sac after cul de sac decisions by the UK government that consitently erode the UKs strategic position. No other EU country would behave like this, it just wouldnt wash. In the UK it is all about short term-ism, a quick buck, and joe public ends up paying down the line. The media is rubbish it just repeats the guff it is fed by the government, when was the last time you read an article that actually presented strong argument against these sort of ploys.

  • Comment number 81.

    Oh dear, the racist capitalists whinge again... So the French nationalised energy company wants to buy something British, our once state owned energy business, that the capitalists sold off to the highest bidders two decades ago. Was I the only one who saw that eventually all those shares would end up in the hands of a giant company somewhere other than on the little island? Maybe when there`s nothing left to sell, or no buyers for what`s left, you`ll get the idea that we should be doing things differently. Capitalism doesn`t work, end of story, and yes, I do live in France, and it`s lovely. Start buying hot water bottles.

  • Comment number 82.

    Despite what some contributors think the idea that "green" energy does not provide profits for big business is laughable. What about the cost of all those solar panels and wind farms? And they will not last forever. There is no doubt a case for solar panels in much sunnier countries but in this country they do not justify the resources required for their production. It's a bit like the Toyota Prius car. Not much less petrol used than a number of conventional but based on battery technology which sounds environmentally unfriendly to me. But the cost to purchasres is high.

  • Comment number 83.

    Essentially this blog is concerned about economics. Money.

    This topic is concerned with energy.
    Joules.

    As we have seen the last few weeks or months, years, money can be created at the stroke of a pen only to be extinguished later. The laws concerning money are lax to say the least.

    A Joule however is a Joule. It can take many forms but cannot be created or destroyed.

    Some folk posting here should read up on energy before bothering to log on. Science and economics can make strange bedfellows.

    Politicians of course most likely understand no science at all and rely on their advisors. That is where everything gets real spooky.

  • Comment number 84.

    Let's get rid of all our infrastructure then when times get really tough the foriegners can shut us down.
    What happens when there is nothing left to sell and we have spent all the money we got from our assets .... Doom.

  • Comment number 85.

    I think we are well accustomed to foreign state industries investing in UK companies.

    They do so because of the guaranteed profits they will make from our government underwriting the whole process.

    The UK energy market, full of monopoly and a UK government who for political reasons mean it will always be bailed out if necessary. This is the very opposite of risk or betting on the UK. They are investing because they know they cant go wrong.

    This is of course the only way nuclear power can be promoted. It is uneconimical because the end costs are incalculable. But that doesnt matter - we tax payers will end up paying in the end.

  • Comment number 86.

    It seems that we have no option but to throw in our lot an become totally European - at least we will not have to depend on that other federation which has so recently failed so spectacularly and - who knows - with the euro as currency we even make ends meet.

  • Comment number 87.

    #76 why indeed - because Gordon is looking for a nice retirement niche just like the one Blair found.

  • Comment number 88.

    66. , WunnyBabbit

    Graphite is the lead in pencils, they can be used to make notes , draw and resolve problems - and make sensible predictions. All of which practises have been alien to our legislators for the past thirty odd years.

  • Comment number 89.

    Over half of the costs of nuclear power generation arise after the nuclear power reactor closes down. Has the French state or EdF given such a guarantee or is it a guarantee from EdF's UK subsidiary, which would be largely worthless and leave all liability with the UK?

    If the argument is about technology, can someone please explain to me what particular technology EdF has to offer? To my knowledge they are only a generator, and in this respect its recent track record with a number of leaks is poorer than that of BE. And I forgot to mentione that the UK government sold Westinghouse, which actually designs and builds nuclear power units, just three years ago. What a strategic blunder then.

    I am looking forward to the day to the day that Preston acclaims the great inward investment where the UK sells its army to the French state and entitles the French state to raise taxes from the British citizens to pay for the army it runs for them. And I forgot, it is allowed to put a special purpose vehicle in the middle to ensure all liabilities remain with the UK.

    OK, maybe I am just an arrogant and ignorant European when laughing about the lack of strategic thinking by the UK, as probably Brown has done a deal with Sarkozy that in return the latter will now finally lift his objection to HSBC buying Soc Gen.






  • Comment number 90.

    If new build nuclear power is so necessary to the Uks future why was British nuclear Fuels allowed to sell its Westinghouse subsiduary to the Japanese?
    If westinghouse had been retained it would surely have saved us relying on the French to develop the nuclear option?

  • Comment number 91.

    So...... we "owned" the technology to do build nuclear reactors ourselves with Westinghouse. The government sells it off to the Japanese saying we don’t want nuclear power or the responsibility of such a company like Westinghouse. The government then does a complete “U turn” and sells off our nuclear sites to the French.

    WE HAD A COMPANY THAT BUILDS POWER STATIONS AND AS FAR AS I AM AWARE, WE HAVE RUN NUCLEAR IN THE UK UP TO NOW WITHOUT THE FRENCH! YOUR ARGUMENT HAS NO MEANING MR PESTON….

    IF IT IS NOT THE CITY BOYS SELLING THE UK OFF TO FUND THEIR CHAMPAGNE XMAS PARTIES, IT IS OUR USELESS GOVERNMENT!

  • Comment number 92.

    In years to come this episode will be known as "L'expérience Anglaise."

    It all makes sense. If you were running a French state owned utility company with a bunch of nukes beginning to show their age what would you do?
    What better way to try out some new technology than to build test plants on an offshore island?
    It could only be better if you could get the locals to pay top whack for the power generated.
    And of course on top of that the locals will be clamouring for the power. The inspectors will be under great pressure to allow operation rather than allow the lights to go out.
    It gets even better when you think about decommissioning. The Brit nukes will need to be disposed of somewhere. How about sharing that site with the French? All in the interests of neighbourliness of course.
    Nothing at all to do with being held to ransom. No common disposal site: no power.

    There is no disposal site anywhere you say. Not yet. Just watch what happens when power gets really scarce. Previously unsuitable old mines will suddenly become the obvious best disposal sites. For all of europe.

    And if the English Experiment doesn't work out? No matter it was only on an offshore island anyway.

  • Comment number 93.

    it should a matter of great regret that most of our utilities are not owned in this to realy see the games being played with our green energy go to rocs petition and see how undergenerating is being rewarded 20 meg is the magic number

 

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