Ineos boss says Hinkley nuclear power too expensive

 

Ineos boss Jim Ratcliffe "Forget it. Nobody in manufacturing is going to go near £95 per Mwh"

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.

'Not competitive'

"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."

Start Quote

Even for a massive company like EDF, [Hinkley Point] is a huge investment, which makes it inherently risky”

End Quote

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.

'Knife-edge'

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.

Grangemouth oil refinery Mr Ratcliffe's company Ineos owns the Grangemouth plant in Scotland

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.

What is Ineos?

  • The world's fourth-largest chemicals company, with its headquarters in Switzerland;
  • It has sites in 11 countries across the world, including the US, Canada, France, Germany and Italy;
  • The company makes solvents used in antibiotics, biofuels, chlorine, plastics, and materials to insulate houses;
  • It also makes products for car parts, medical applications, mobile phones and construction.

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.

 

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  • rate this
    +4

    Comment number 507.

    A solution to our energy woes will not be forthcoming because our energy 'strategy' is plagued by short term thinking. It's a sad fact that short term greed has become a part of British culture and we are happy to sell off national assets for a quick buck.

    It was possible to embrace the free market whilst protecting broader national interests. We didn't have to sell everything & lose control

  • rate this
    +2

    Comment number 506.

    We are playing the price for 30 or more years of Government inertia. There is now a seller's market. The effect on power prices? Well, they go up of course- the generators know that the Government is over a barrel. And they know better than to trust that this or the next Government will not suddenly change the rules. Oh for politicians who can see beyond the next headline!

  • rate this
    +2

    Comment number 443.

    Wind power has a CURRENT strike price of £155 MWh. So new nuclear seems like a very good deal to what we're paying with renewable energy. Is shale the answer? It may be cheaper now, what happens with the US up their prices when selling it to us? At least we know what we're paying for the long term with nuclear unlike any other source.

  • rate this
    -2

    Comment number 425.

    As per usual in UK we want our cake and to eat it. We want clean renewable energy in this country to reduce our carbon emissions, we also want a fantastic distribution network where we all receive power without any interruptions, but we also want it to be dirt cheap so we pay virtually nothing for the energy we consume.

    People you cannot have your cake and eat it.

  • rate this
    -19

    Comment number 296.

    How on earth can anyone say NP is safe and clean? The March 2011 disaster in Japan is still out of control. We are still experiencing the fall out from Chernobyl. Of course it is too expensive - in terms of environmental impact when things go wrong.

 

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