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.

 

More on This Story

The BBC is not responsible for the content of external Internet sites

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • 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.

 

Comments 5 of 8

 

More Business stories

RSS

BBC Business Live

  1.  
    YELLEN SPEECH 09:34: BBC Radio 4
    Janet Yellen

    All eyes will be on US Federal Reserve chair Janet Yellen later when she addresses a gathering of central bankers and other policymakers at Jackson Hole, Wyoming. Analysts will be studying the speech for clues as to when the US might raise rates. James Bevan at CCLA Investment Management tells Today that she wants to see wage inflation picking up before taking action.

     
  2.  
    LONDON STOCK EXCHANGE 09:19:

    In addition to setting out plans for a rights issue, the London Stock Exchange has also announced a big rise in quarterly profits following a "resurgence in the IPO market". The surge in the number of firms floating shares on the market helped to push pre-tax profits for the three months to June to £83.6m, up 40% from a year earlier.

     
  3.  
    AIRPORT SURVEY 09:05: BBC Breakfast
    BBC Breakfast

    Some of Britain's biggest and busiest airports have been named as the worst for customer satisfaction by the consumer group Which?. Smaller airports did much better, including Doncaster Sheffield airport, where Dominic Laurie is for BBC Breakfast. Aviation analyst Laurie Price says smaller airports have a great opportunity but are hard pressed to compete with bigger airports which have the greater volume of flights.

     
  4.  
    MARKET UPDATE 08:50:

    European stocks are largely up before a key speech from US Federal Reserve chief Janet Yellen. She is due to speak at a gathering of central bankers in Jackson Hole, Wyoming, as investors continue to speculate on the direction of US interest rates.

    • London's benchmark FTSE 100 index rose 0.04% to 6,780.08 points
    • Frankfurt's Dax gained 0.12% to 9,390.29
    • The CAC 40 index in Paris fell 0.04% to 4,291.06
     
  5.  
    EDF ENERGY 08:36:
    Gas rings

    "We recognise that for a period of time the service to our customers was not up to the standards they deserve," says Beatrice Bigois from EDF Energy following this morning's announcement from Ofgem that it will pay out £3m. "We apologise to those customers who were impacted during this period. We have co-operated fully with Ofgem and have taken this matter very seriously."

     
  6.  
    MARKET UPDATE 08:17:

    After nine consecutive days of gains, Japan's Nikkei share index has closed lower. The benchmark index ended the day down 47.01 points at 15,539.19. In Hong Kong, the Hang Seng is up 104.96 points at 25,099.06.

     
  7.  
    CO-OP BANK RESULTS 08:08: Radio 5 live

    Chris Wheeler, a banking analyst at Mediobanca, is on 5 live talking about the Co-op Bank results. He says "there are signs of progress" but still "problems they have to deal with," including a drop in deposits. A reduction in money set aside for bad debts "flattered" the profit figures, he said.

     
  8.  
    BANK OF AMERICA 08:01: Radio 5 live

    Bank of America can easily afford the record $16.7bn (£10bn) settlement with US authorities for misleading investors about the quality of loans it sold, US investment expert George Conboy tells Radio 5 live. He says the bank is likely to make $10-15bn over the next 12 months.

     
  9.  
    CO-OP BANK RESULTS 07:54:

    An offer of shares to the public via a stock market listing is "logistically unlikely" before the end of 2014, the Co-op Bank says. It is setting up a committee to work out when it will do that. The Prudential Regulation Authority "has indicated it would be concerned if an IPO were to distract focus from the primary goal of delivering the Bank's Turnaround Plan," it said.

     
  10.  
    ARGENTINA DEBT 07:46: BBC Radio 4

    Argentina risks becoming an "international financial pariah" again over its latest debt row, James Bevan, chief investment officer at CCLA Investment Management tells the Today programme. "The problem is that investors won't trust them, [so] they won't provide money," he says.

     
  11.  
     
  12.  
    LSE RIGHTS ISSUE 07:35:
    LSE sign

    The London Stock Exchange has said it plans to raise £938m through a rights issue. The money is to be used to part-fund the acquisition of Frank Russell Company. The LSE announced in June it was buying the US asset manager for $2.7bn (£1.6bn).

     
  13.  
    PPI SPENDING 07:25: Radio 5 live

    Consumers have about £23bn of payment protection insurance redress from banks, says James Bevan, Chief Investment Officer at CCLA Investment Management on Wake Up to Money. When that dries up, it may have an effect on spending, he says.

     
  14.  
    EDF ENERGY PENALTY 07:15:

    Ofgem said it found that between May 2011 and January 2012, "EDF Energy did not have appropriate procedures in place to properly receive, record and process all customers' complaints in accordance with complaints handling rules". However, it adds EDF took action quickly to rectify the problems. It also says EDF "has acknowledged that their customers were caused significant disruption" and has apologised.

     
  15.  
    CO-OP BANK RESULTS 07:09:
    bank

    Co-operative Bank has reported a loss of £75.8m for the six months to the end of June. That compares with a loss of £845m the year earlier. The bank says it has cut staff numbers by 21% from a year earlier to 5,860.

     
  16.  
    EDF ENERGY PENALTY Breaking News
    EDF bill

    EDF Energy is to pay £3m after an investigation by energy regulator Ofgem found that the company breached complaint-handling rules. The company will pay the money "to benefit vulnerable customers", Ofgem says.

     
  17.  
    BANK OF AMERICA 06:55: BBC Radio 4

    Chris Wheeler, an analyst at Mediobanca, has been discussing Bank of America's massive $16.7bn settlement with US authorities. He told the Today programme that while banks were at fault, investors were also "in a hurry" at the time, and failed to carry out proper credit analysis of what they were buying.

     
  18.  
    EUROZONE 06:44: Radio 5 live
    ECB headquarters

    James Bevan is chief investment officer at CCLA Investment Management and he's on Wake Up to Money talking about the eurozone's performance. "Interest rates are so low" in some of the countries that when you factor in the risk of investing the rates are negative, he says. Sustainable growth in the UK hasn't yet been seen either, he says. with house price growth and PPI repayments from banks driving consumer spending.

     
  19.  
    GAP IN INDIA 06:30:
    Gap logo

    US clothing store Gap is bringing its brand to India, aiming to open 40 outlets. It will launch its first two stores there early next year in Mumbai and the capital Delhi - India's biggest and busiest cities.

     
  20.  
    BANK OF AMERICA 06:20: Radio 5 live
    Bank of America

    Chris Orndorff, a fund manager at Western Asset Management is on Wake Up to Money talking about Bank of America's record $16.7bn settlement. The penalty dates back to the behaviour of a company it purchased, Countrywide. "The timing of the Countrywide purchase has to be one of the worst in history," he says. The fine wipes out the cumulative net income of the bank for the last three years. The bank is very safe though, he says.

     
  21.  
    ARGENTINA DEBT 06:06:

    Argentina's plan to exit its debt default by asking investors holding defaulted bonds to swap them for new locally issued debt has been ruled "illegal" by a US court. New York Judge Thomas Griesa said the plan was "lawless". Argentina was trying to get around an earlier court ruling banning it from paying interest to investors who had accepted restructured bonds.

     
  22.  
    OIL PRICE 06:00: Radio 5 live
    Oil barrels

    After rising sharply in June, oil prices have now slipped back to 14-month lows. Amrita Sen from Energy Aspects tells Wake Up to Money. She says that "the initial price rise was on the back of the fears should any disruptions come at peak demand". However, despite geopolitical risks, supply has remained undisrupted while demand has fallen.

     
  23.  
    06:00: Nick Edser, Business reporter

    Good morning. Get in touch with us via email: bizlivepage@bbc.co.uk or on twitter @BBCBusiness.

     
  24.  
    06:00: Howard Mustoe, Business Reporter

    Hello! We'll be bringing you all the latest business news, data and analysis. Stay with us.

     

Features

From BBC Capital

Programmes

  • A bird of prey in a Tokyo animal cafeThe Travel Show Watch

    From cats to rabbits and birds of prey – Tokyo’s flourishing animal cafe scene

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.