The energy shortage that has been threatening for a decade is coming closer to reality
Transfixed as you were by Westminster chaos, did you also spot the news that Hitachi is about to cancel or suspend construction of the Wylfa nuclear power station in North Wales? The Japanese engineering giant has evidently failed to reach agreement on a guaranteed electricity price and terms for a UK government stake in the project; its decision follows that of its compatriot Toshiba, which in November pulled out of building a nuclear station at Moorside in Cumbria, largely because it disliked the Treasury’s favoured financing model that loads risk on to the contractor.
These two projects between them were intended to keep the lights on in 11 million UK homes, factories and offices. Theresa May’s talks last week with Shinzo Abe, her visiting opposite number from Tokyo, were too consumed by the threat of no deal to cover the question of whether future London trade talks with Japan will have to take place in the dark.
Business Secretary Greg Clark also last year rejected (against independent advice) the Swansea Bay tidal lagoon project, which if replicated at other coastal sites might have provided another useful percentage of national power. So the gap created by continuing closures of carbon-fuelled and old nuclear stations — a long-time theme of this column — looms wider than ever. The only alternative anyone talks about is unreliable offshore wind, and the only major onshore project still claiming to be on track is the most controversial of all: the Hinkley Point nuclear station, being built by the French company EDF with Chinese partners, and using a reactor design that has encountered serious problems elsewhere.
If Hinkley really comes on stream by 2025 as planned, it will sell electricity at a guaranteed price that is double the current market level, with the excess cost passed to every UK consumer. EDF might then move on to a similar new build at Sizewell in Suffolk, or we might find only the Chinese still willing to do business with us in a sector with such a troubled history. But the energy shortage that has been threatening for a decade is coming closer to reality — and when the Brexit hubbub finally subsides, it will be high on the list of issues with which distracted ministers have failed to deal.
The popular new narrative for the UK auto industry is that its troubles are only temporarily to do with Brexit and much more to do with misguided policies, wrong decisions and economic swings. There’s a sharp decline in demand for luxury models from pinched Chinese consumers, while diesel sales have slumped because regulators continue to penalise them despite cleaner engines, leaving manufacturers regretting model-range investments. The EU’s new emissions testing regime has caused production problems across the continent; electric vehicle sales won’t take off until governments provide more charging points; and as interest rates begin to rise, motorists are losing the appetite for buying new cars on credit.