[Closed] So these guys are building us a nuclear power station.

As far as I'm aware there has been no mention of the Chinese building us a nuclear power station. What has been suggested is that they might have a substantial stake in the financing and ownership of the new Hinkley Point power station.

[quote=matt_outandabout ]What could possibly go wrong?
The Strike Price will be astronomical?

Hinkley C's construction will be led by the French state-controlled giant, EDF, which has been looking for a partner or partners to share the costs.
EDF has been negotiating with three Chinese nuclear giants on the Hinkley C project - CGN, CNNC and SNPTC - all of which have been seen by the chancellor this week.

*stands corrected*
*bows out of thread*

With reference to the link which is really referring to a planning cock-up rather than a construction cock-up, I think it's just another example of China's infamous planning cock-ups.

This particular one will always stick in my mind not only because of the absurdity but also because of the surprising revelation that the owner was able to stand his ground and wasn't carted off to prison.

http://www.bbc.co.uk/news/world-asia-20463192

To be fair I'm sure that if Britain had experienced the same staggering expansion of its economy, industrial base, and infrastructures, in the last 30 years, as China has, then there would have been at least as many planning cock-ups.

Whoever builds the next wave of nuclear power stations it will surely be just another example of the profit being privatised and the liability nationalised.

Except that China General Nuclear Power Group is a state owned company as is EDF. So it's a case of the profit being foreign state owned, and the loss British state owned.

British consumers will be handing over money to the French and Chinese governments whilst also subsiding them.

matt_outandabout - Member

What could possibly go wrong?

They own you financially.

😆

I don't get this - the Thatcher and Major govts told us it was essential to privatise the utilities so they could attract investment in the market place. Now, none of the privatised generators want to take on the expense of building the next generation of power stations and the Cameron govt turns to ... the [i]state-owned[/i] French and Chinese industries because, hey! They have access to lots of low cost state funding!

China is running a massive surplus due to the expansion and it's massive export markets. It needs somewhere to put it's cash.

neil the wheel - Member

Now, none of the privatised generators want to take on the expense of building the next generation of power stations and the Cameron govt turns to ..

Because China is rich and labour is cheap. Simple.

and most of the jobs will go to locals who will also be the operators creating jobs.

Well I can see what's in it for the Chinese - its the irony of us turning to foreign state-controlled industries to do the jobs that our privatised ones say they can't afford to - even though the whole reason for privatising them was (supposedly) to give them access to lots of investment capital on the open market.

neil the wheel - Member

Well I can see what's in it for the Chinese - its the irony of us turning to foreign state-controlled industries to do the jobs that our privatised ones say they can't afford to - even though the whole reason for privatising them was (supposedly) to give them access to lots of investment capital on the open market.

It's not because they cannot afford to, it's because they can't even trust their own local people.

China is running a massive surplus due to the expansion and it's massive export markets. It needs somewhere to put it's cash.

Don't you mean deficit ? Couldn't they use any spare cash to reduce it, rather than actually increase it ?

[url= http://www.businessweek.com/news/2013-03-04/china-plans-higher-budget-deficit-in-2013-to-support-demand ]China to Raise Budget Deficit by 50 Percent to Boost Demand[/url]

Perhaps Osborne should have a word with the Chinese and point out to them what they're doing wrong ? 💡

Perhaps Osborne should have a word with the Chinese and point out to them what they're doing wrong ?

IIRC there are quite a few people in China, so even if 'they' were on site, it might not be the same incompetent individuals.
I think.

I've just come back from the DRC, where I stayed in a superb Chinese hotel in Kinshasa and to my amazement the roads were excellent and traffic not the usual African nightmare. Here's how this is achieved:

Chinese contractor puts in a bid "at cost", i.e. half the cost of the bid submitted by French or Belgian contractors. Naturally the price is then inflated by 30 - 50 percent, the extra to be paid back into the bank account of the minister who signs the contract. Chinese contractor turns up with thousands of Chinese workers and finishes the job in record time. At the end of the job the workers, who are all convicts from Chinese prisons, are free to go. They disappear into the local population, learn the language, marry and start small businesses. China rids herself of a few thousand convicts and in return for doing the job "at cost" gets unhindered access to all The Congo's cobalt (important for electonics, 80% of it comes from the DRC) as well as all the other valuable minerals exposed by the Rift valley. Thus most of Africa is being mortgaged to China in exchange for a few million dollars in some ministers' bank accounts.

Now ask yourself why Britain is relaxing the visa rules for Chinese visitors.

was about to start putting together a very very cheap tennis table table from china - but find I've got one panel which is a duplicate and shouldn't be - no big deal but the holes for the safety catch are on the bit I'm missing - ominous I think

I'm liking the idea of the nuclear power station arriving as a flat-pack from China.

[i]Insert fuel rod A into reaction chamber B (you may need someone to help you at this point)[/i]

I'm liking the idea of the nuclear power station arriving as a flat-pack from China.

but what happens if all the polystyrene packaging doesn't fit in the bin - suppose could sneak it in other peoples bins? - think this is probably the best way to sort out the waste problem - actually maybe not sneak it in - give everybody some to deal with as they feel fit - keep it in the garage, give to the Scouts, scatter in a favourite place...

Now ask yourself why Britain is relaxing the visa rules for Chinese visitors.

Is it so they can bring over thousands of convicts who then disappear into the local population, learn the language, marry and start small businesses ?

Except that China General Nuclear Power Group is a state owned company as is EDF. So it's a case of the profit being foreign state owned, and the loss British state owned.

British consumers will be handing over money to the French and Chinese governments whilst also subsiding them.

Has anyone considered the possibility that there was a Chinese communist sleeper cell at Eton some 30 years ago, and now it's efforts are coming to fruition

nick1962 - Member
Whoever builds the next wave of nuclear power stations it will surely be just another example of the profit being privatised and the liability nationalised.

It's the principle the UK's thriving Financial Sector is built on....lets make it work for utilities

now it's efforts are coming to fruition

And according to globalti's interpretation of Chinese business strategy Osborne stands to get the equivalent of 30 - 50 percent of the bid for the Hinkley Point power station paid into his bank account. Nice work if you can get it.

We're all special fried.

Get used to it guys. China is the new super power. They're going to have more and more power and influence over world affairs and the way thing go from now. Also the Indians and the Russians. The USA is on the wain, we're still punching above our weight but not for long.

Things like Nuclear Power Stations are long term project with long term returns, like any long term major infrastructure project. You're not going to find a long string of investors queuing up to chuck billions of pounds into something and not see anything back for decades.

Also there is no way the taxpayer can fund such projects, so if the energy companies were still nationalised then we'd still need outside investment which means government tenders which often leads to the UK getting ripped off just like the new Wembley Stadium and the new Aircraft Carrier debacle. I really don't understand why people think thing would be better under government ownership. They can't organise a pi$$ up in a brewery.

Also there is no way the taxpayer can fund such projects

So who do you think built Britain's nuclear power stations ? As far as I'm aware there has never been a nuclear industry anywhere in the world which has been profitable without receiving government subsidy.

I really don't understand why people think thing would be better under government ownership. They can't organise a pi$$ up in a brewery.

And I can't understand why you don't seem to understand that EDF and the China General Nuclear Power Group are owned by governments.

ernie_lynch - Member

Now ask yourself why Britain is relaxing the visa rules for Chinese visitors.

Is it so they can bring over thousands of convicts who then disappear into the local population, learn the language, marry and start small businesses ?

😆 Govt wants Chinese money?

Mind you many still think China is a very backward country but not for long ... 😆

And according to the news this morning, double the current rate per KW for the electricity provided has been agreed, which is nice for EDF.

Nice for the Chinese government too.

And the strike price is fully indexed to consumer price inflation. So there are absolutely no risks involved. The French and Chinese governments are guaranteed to make money from British consumers.

What a lovely state of affairs for a country which was the first in the world to have a civil nuclear industry.

So it's being built by the French state, financed by the Chinese state, and the profits are being provided to them by the UK taxpayer. Genius.

Given EDF's lamentable track record of cost and time overruns, I wonder what the final cost to us will be?

What a lovely state of affairs for a country which was the first in the world to have a civil nuclear industry

This

Why aren't we building it ourselves?

Capital expenditure is investment and helps economic growth - real growth not housing speculation pretending to be growth.

The EDF / China agreement makes as much sense in the long term as the government borrowing the money from Wonga.com

Why aren't we building it ourselves?

Because political ideology is preventing it. Nothing else.

I just can't believe that was what I was hearing this morning. Every household in the UK will pay an £8 levy to pay for the costs. Surely the whole point of building a new nuclear power station was to reduce reliance on not always friendly countries?

The forests about 15 miles from me were logged last couple of years and were French owned. They used French machinery, French haulage, French workmen. Left the usual scar and other than a rise in the hotel takings, the locals got no benefit at all from what was a pretty big operation for two years in an area where there is very little work. I would be surprised if there is much work in a 17 billion construction project for locals here either.

.... makes as much sense in the long term as the government borrowing the money from Wonga.com

And why wouldn't they ? This government has a very cosy relationship with Wonga.com.

[url= http://www.telegraph.co.uk/finance/personalfinance/borrowing/loans/9613729/Loan-firms-wonga-buys-the-ears-of-ministers.html ]Loan firm’s wonga buys the ears of ministers[/url]

[i]Conservative ministers agreed to hold meetings with the controversial payday loans company Wonga in exchange for payments to the party, The Daily Telegraph has learnt.[/i]

Why aren't we building it ourselves?

Because we no longer possess the skill set to be able to do it.

My dad worked for BNFL for 30 years as a design engineer. The company was systematically dismantled in the usual short-sighted ideological fashion. My dad said at the time (10 years ago) that it was a completely bonkers thing to do, as we'd have no option but to build new nuclear power stations to meet our long term energy needs. But now that they'd destroyed the British company capable of doing it, and lost the skills needed to do it, we'd be left with no option but to get the French to do it for us, as they'd not been so stupid as to close down their nuclear programme in the first place

He was bang on. Though I doubt he's gained much satisfaction from being proved right.

But now that they'd destroyed the British company capable of doing it, and lost the skills needed to do it,

The electrical distribution industry has been pretty shorted sighted in private hands(there's a thing), there is a distinct lack of trained engineers to do the job, that coupled with an rather antiquated distribution network...

A simular thing happened when the railways were privatised. When the franchises went out to tender the only company specifically and legally barred from tendering was British Rail, which happened to be the only company in the UK with any experience in running railways.

Today German and French state railways own large chunks of our railways.

What a lovely state of affairs for a country which was the first in the world to have railways.

Seems there are quite a few misunderstandings on this deal so let’s put a few things to bed:

- The cost (and risk) are being borne by a third party, so the UK receives inward investment and new jobs for no up front cost and also doesn’t act as final guarantor – which means that the £13Bn it would have cost us to build it (more if it over runs) can now be invested in other things or used to avoid the tax raises that would otherwise be required.

- The strike price for electricity produced is twice the cost of current energy (so appears expensive) but half the cost of the strike price given to renewables by Chris Huhne a few years back – renewables typically require less capital and carry less risk (bigger construction projects that are more complex cost a lot more if they go off track) so by that standard this is a good deal i.e. half the payback for a more expensive project that won’t earn anything for 10 years (possibly 15). We also need to take into account the cost of financing the project for 10+ years with no initial return; if there was no profit in the job it wouldn't get built.

- We have to take into account the time value of money on the strike price per megawatt hour – it will potentially be 15 years before the plant comes on stream, by which point carbon based energy costs will be 3.7 times today’s cost assuming rises of around 10% a year. By that comparator a guarantee of future energy at only twice today’s cost represents a 50% saving per megawatt hour and more than that moving forward over the 30 year service life even with the annual increments that are baked into the contract.

- The French are the contractors with China providing capital but much of the Labour will be British – it doesn’t give the Chinese any additional control of the asset-it’s like the many building and infrastructure projects overseas that are financed with capital from the UK.

The strike price for electricity produced is twice the cost of current energy (so appears expensive)

And let's hope it stays expensive, because if the price of electricity falls then the taxpayer will have to make up the shortfall to EDF.

If the price of electricity remains high enough the taxpayer won't have to subsidies EDF.

Either way the only losers are the consumers and the guaranteed winners are EDF.

This is the "free market" in energy and how it drives prices "down" for the consumers.

BTW it's funny how an energy company can be happy with a 35 year price freeze but a 20 month price freeze is out of the question.

It's almost as if a price freeze which benefits them is a good idea but a price freeze which benefits the consumer is a terrible idea.

robdixon I don't think you can compare the strike price announced today for nuclear to the strike prices for renewables, totally different time periods.

The cost (and risk) are being borne by a third party, so the UK receives inward investment and new jobs for no up front cost and also doesn’t act as final guarantor – which means that the £13Bn it would have cost us to build it (more if it over runs) can now be invested in other things or used to avoid the tax raises that would otherwise be required.

another way of spinning it is to point out that a private company will now profit from us all paying higher electricity,to them rather than back to us, for the production of the electricity till the end of this century.
Its investing in it because it knows it will make a profit- which is another way of saying this deals costs us more in the long run than doing it ourselves
Its like getting a 60 year mortgage when you could buy the house outright - it only makes short term sense and will cost you more in the long run