Ineos boss says Hinkley nuclear power too expensive
- 16 December 2013
- From the section Business
Power from the new Hinkley C nuclear generator will be too expensive, the boss of one of the UK's biggest energy consumers has warned.
Jim Ratcliffe, whose company Ineos owns the Grangemouth plant in Scotland, told the BBC that UK manufacturers would find the price unaffordable.
The government has guaranteed a price of £92.50 per megawatt hour (Mwh).
Mr Ratcliffe said Ineos recently agreed a deal for nuclear power in France at 45 euros (£37.94) per Mwh.
The government has guaranteed that the new Hinkley station, being developed by France's EdF and backed by Chinese investors, can charge the £92.50 minimum price for 35 years.
"Forget it," Mr Ratcliffe said in an interview with the BBC's business editor Robert Peston. "Nobody in manufacturing is going to go near [that price]."
Mr Ratcliffe said: "The UK probably has the most expensive energy in the world.
"It is more expensive than Germany, it is more expensive than France, it is much, much, more expensive than America. It is not competitive at all, on the energy front, I am afraid."
A spokesperson for the Department of Energy and Climate Change said the UK needed an affordable energy supply.
He said: "The UK Government has always been clear that EDF will only be offered an investment contract for the Hinkley Point C new nuclear power plant if it is fair, affordable, value for money and consistent with state aid rules.
"No consumer in the UK will pay anything for electricity from Hinkley until 2023."
When running at full capacity the new Hinkley plant is expected to generate about 7% of the UK's electricity.
Ministers and EdF were in talks for more than a year about the minimum price the company would be paid for electricity produced at the site, which the government estimates will cost £16bn to build.
In the end, the government guaranteed the group a price for electricity in 2023 at twice the current level of wholesale prices.
The guaranteed price was seen as necessary to ensure the investment in new nuclear capacity took place, given the huge cost of building the nuclear plants.
A spokesperson for the World Nuclear Association said the cost of nuclear energy in the UK was a "complex issue".
The association said Mr Ratcliffe had compared £92.50 per Mwh, a 35-year deal, to France's 45 euros, which was a "deal of unknown duration".
"It should be pointed out that France has the highest proportion of nuclear in its generation mix and lower than average EU power prices, so there is nothing automatically expensive about nuclear power," the spokesperson added.
The Grangemouth refinery is set to become the first chemical plant in the UK to receive shale gas from the US. This will be the first time it will transported across the Atlantic ocean.
The plant supplies 70% of the fuel used at Scotland's filling stations.
The company had announced in October the permanent closure of the plant, affecting 800 jobs, but the bitter dispute with the Unite union ended after workers agreed to changes in conditions - including a three-year pay freeze and an end to the final salary pension scheme - and the plant will stay open.
Saying that the plant was on a "knife-edge" after "that turbulent time" in October, Mr Ratcliffe said: "I think Grangemouth has the prospect of a very good future if it can get through the next three years."
"Attitude on the site is much more positive and you can see people are really anxious to move on."
Mr Ratcliffe was a chemical engineer before he became an entrepreneur, when Ineos started by buying a Belgian chemical plant in 1998, for less than £90m.
He was reckoned to be one of the UK's 10 richest men before the credit crunch, worth £2.3bn, although Forbes magazine put his worth at $1.1bn (£680m) this year.
He added that Ineos was looking into hydraulic fracturing, or fracking, where water and chemicals are pumped into shale rock at pressure to release gas.
"We are having a look at whether we have a part to play in the UK in shale gas exploration," Mr Ratcliffe said.