ALEX BRUMMER: Britain needs a nuclear future to keep the lights on in the post Cop-26 era
As Britain makes its transition to an electricity future, National Grid and French-controlled EDF, owner of the UK’s nuclear fleet, will be key players.
First half results from National Grid show that it’s an ill wind that blows nobody any good.
Energy prices for consumers and businesses may be surging but the bidding war for electricity travelling through the interconnectors from the Continent is forecast to deliver an extra £100million of profits.
High demand: Energy prices may be surging but the bidding war for electricity travelling through the interconnectors from the Continent is forecast to deliver an extra £100m of profits
This in spite of the fact that at the point of the greatest strain in the system in September, a fire in the main sub-sea cable to France was a contributor to soaring energy prices and shortages.
National Grid’s chief executive John Pettigrew might face criticism if he tried to deliver too much of the upside to shareholders, but fortunately he is prioritising capital investment and bringing down debt levels.
The firm is also benefiting hugely from a big uplift in the earnings of its New York and New England enterprises, helping to boost overall profits by 55 per cent to £1.49billion.
The bigger question for the UK’s energy future, in the post-Cop26 era, is how is the country going to secure supplies.
The interconnectors are useful as boosters when the wind fails to blow or the sun doesn’t shine, but between random breakdowns and geopolitics, they cannot be relied upon.
The UK needs a baseload of electricity which can keep the lights on and trains and electricity vehicles running. That means a nuclear future.
The two strands to this are the mega-power stations being built by EDF using British suppliers for components and the Rolls-Royce-designed small modular reactors (SMRs).
Hinkley Point in Somerset is criticised for its cost over-runs and what has been perceived as a ridiculously high strike price for electricity, agreed by George Osborne.
As energy and electricity prices rise globally that strike price – if and when Hinkley is up and running – may look much less ridiculous. Chancellor Rishi Sunak also has agreed to put £1.7billion behind a second super-reactor at Sizewell with EDF providing matching funds.
The Commons is completing the passage of a nuclear finance bill which will allow Sizewell C to be funded by a Regulatory Asset Base blueprint under which (as with the London’s super-sewer) the investors are assured of regular dividend payments during construction.
The hope is that liberalisation of pension fund investment rules will make it easier for UK asset managers to be part of such projects so that not all the cash escapes overseas to sovereign wealth funds.
As ageing nuclear plants are mothballed and decommissioned, a sensible goal would be a baseload of 25 per cent.
Sizewell will be part of that, as could Rolls-Royce’s SMRs which, in spite of the name, are not small at all and could generate 470 megawatts of power, which is not far off the 550mw output of the nuclear power station at Hartlepool.
All this is highly dependent on green activists accepting that nuclear is a critical part of the UK’s carbon-neutral future, and planning authorities recognising the case for new nuclear on existing atomic power sites. Those are still big ifs.
Alan Jope has recently faced some tough questions about under-performance. His response has been to push Unilever deeper into health and beauty, with vitamins and digital beauty brand Paula’s Choice.
Inside something as large and diverse as the Ben & Jerry’s-to-Dove-soap group, it is hard to make much of a dent in performance with add-ons.
The sale of most of its black and trendy tea offshoots to private equity outfit CVC will line Unilever’s war chest with £3.8billion, which is a tad better than expected. It also takes off the table some historical criticism of plantation-style working conditions.
It is not enough for the kind of transformative deal which some investors would like to see. But every cuppa helps.
The now three-way race for Israeli gaming-tech outfit Playtech should come as no surprise. Most of the intellectual property (IP) which has driven Entain, owner of Ladbroke and Coral, to dizzy global heights, was developed by the Israeli company.
The surprise is that the American casino giants haven’t seen Playtech as the short cut to sports betting, and are letting upstarts such as Formula One innovator Eddie Jordan and Australia’s Aristocrat make the running.
The £3billion bid price could be a steal if the IP is still intact.