©PA A model of the proposed Hinkley Point C power station. The project to build the reactor is expected to cost £18bn Britain could save £1bn a year by pursuing cheaper alternatives to the proposed Hinkley Point nuclear power station, according to a report that says the Franco-Chinese project is not essential to keeping Britain’s lights on. As few as four big offshore wind farms could provide as much electricity as the 3.2 gigawatts expected from Hinkley, with additional gas-fired power and interconnectors with other countries also helping to fill the gap if the Somerset plant is scrapped. More On this topic IN UK Politics & Policy The findings from the Energy and Climate Intelligence Unit follows the decision by Theresa May, prime minister, to put Hinkley on hold pending a review, with a decision expected next month. Critics say that the £18bn project is too expensive and risky. Richard Black, director of the ECIU, said the think-tank set out to determine whether it was possible for the UK to maintain adequate electricity supplies without Hinkley while keeping carbon emissions and energy bills in check. “Our conclusion is that [Hinkley is] not essential; using tried and tested technologies, with nothing unproven or futuristic, Britain can meet all its targets and do so at lower cost,” he said. “If Mrs May decides to go ahead with Hinkley, all well and good — if she decides not to, or if the project stumbles at a later stage, we have alternatives.” The report said that replacing Hinkley with more offshore wind power could shave £10-£20 per year off the average household energy bill, while greater use of gas-fired power to meet peak-time demand would save £16bn in infrastructure costs. ©Bloomberg Turbines in the London Array, the world’s largest offshore wind farm, situated in the Thames Estuary A combination of these alternatives, together with more cross-border interconnectors and measures to reduce electricity demand, would produce an annual saving to the UK economy of £1bn compared with the cost if Hinkley goes ahead, the report said. The claims were seized on by critics of Hinkley, such as Paul Massara, chief executive of North Star Solar, a renewable power company, who said that it would be “madness” to proceed when there were cheaper, more flexible alternatives. EDF, the French state-controlled company planning to build Hinkley with Chinese financial backing, said that the scenarios set out by the ECIU were “not credible” and highlighted the greater reliability of nuclear power compared with wind and solar. “[Hinkley’s] cost is competitive with other large-scale low carbon technologies. It will generate electricity steadily even on foggy and still winter days across northern Europe.” EDF will receive £92.50 for each megawatt hour of electricity — double the current wholesale price — for 35 years if the plant is approved. Advocates say that the high price was needed to incentivise EDF to invest in a project expected to meet about 7 per cent of UK electricity demand. Responding to the ECIU report, the Department for Business, Energy & Industrial Strategy, said that the UK needed “a diverse and reliable mix of energy sources including nuclear, renewable energy and gas”. The government was “considering all component parts of the Hinkley project and will make its decision in early autumn”, it added. Peter Haslam, head of policy at the Nuclear Industry Association, an industry group, said that nuclear power had a crucial role in replacing the 65 per cent of UK electricity generation capacity expected to have disappeared between 2010 and 2030 as coal-fired power is phased out and old nuclear reactors are decommissioned. He said: “The debate shouldn’t be about nuclear versus other technologies, but how the UK can replace its ageing infrastructure with low carbon and reliable power.” Copyright The Financial Times Limited 2016. You may share using our article tools. Please don’t cut articles from FT.com and redistribute by email or post to the web. Source link

Chinese producers of the lightweight metal push to supply automotive and aerospace industries ©FT Graphic / Bloomberg Aluminium smelting inside a China Hongqiao factory in Zouping, Shandong province China Hongqiao, the world’s largest producer of aluminium by output, used its latest annual report to warn that fierce competition in its home market would lead to “survival of the fittest”. At the vanguard of China’s dominance of the global aluminium industry, Hongqiao appears to be thriving: in March the privately owned company set out plans to expand production capacity to 6m tonnes by the end of this year — 33 per cent more than the combined output of its US rivals in 2015. These ambitious plans help explain why US and European aluminium producers fear their Chinese competitors could undermine a tentative recovery in the price of the lightweight metal this year. This is because western producers say excess production by Chinese rivals was a key factor behind falling prices between 2011 and last year. Any fresh deterioration in the aluminium market — the rebound has been attributed to a limited increase in demand allied to some cuts in production in certain countries including China — would have significant repercussions for producers including Alcoa of the US, Norway’s Norsk Hydro and Russia’s Rusal. Furthermore, Chinese producers are set to become even more potent competitors by pushing into production of high quality aluminium for industries including aerospace and automotive. This area has so far been dominated by European and US producers. Jeremy Wrathall, analyst at Investec in London, suggests European and US aluminium producers are under severe pressure. “Does the west want an aluminium industry or not?,” he asks. “They’ve got to make a decision if it’s of strategic importance or not.” The high stakes were highlighted by how President Barack Obama discussed the issue of excess aluminium production by China with President Xi Jinping at a meeting of leaders of the G20 group of nations this month. “The US and China recognise that due to a weak global economic recovery and depressed market demand, the excess capacity of the . . . aluminium industry has increased and become a global issue requiring collective response,” said a White House statement. China overtook the US in aluminium production in 2003, and now, globally, produces half of the metal. Most of China’s production of primary aluminium — the basic, unworked metal — is consumed domestically due to an export tax levied because of the high energy costs of smelting. Companies such as Hongqiao deliver the metal in liquid form or cast ingots to Chinese customers that turn it into so-called semi-finished products. These include rolled products, such as aluminium sheet used to make drinks cans, and extruded items like girders for the construction industry. China’s exports of these products have soared over the past decade, reflecting how production far exceeds domestic demand. Little wonder that European aluminium producers are worried about China’s output, and the impact on prices. “Our concern is one word: overcapacity,” says Maximo Miccinilli, director of public affairs at European Aluminium, which represents the region’s producers. It estimates that China has excess aluminium capacity of 10m tonnes a year currently — five times the EU’s total output. “In the last 10 years [Europe has] lost one-third of our capacity,” adds Mr Miccinilli. “We had to shut down smelters in Europe and of those that are still operating, most are under serious risk.” Similar concerns exist in the US, where the aluminium industry has been in steady decline since the financial crisis. Production fell to its lowest level in more than 30 years in June. Western aluminium producers complain of unfair trade, alleging that some Chinese rivals receive subsidies for electricity costs — the largest single expense in smelting. They also claim Chinese producers are dumping aluminium on the global market at lowball prices. The China Nonferrous Metals Industry Association, which represents Chinese aluminium producers, declines to comment on these allegations. Western producers now face an additional challenge: Chinese rivals’ ambitions to expand into making higher quality aluminium products for use in aircraft and cars. “What China lacks is high-value added aluminium products for aviation,” says Laura Zhai, analyst at Fitch. “All Chinese companies would want to get a hold of that.” A company affiliated to China Zhongwang, the world’s second-largest producer of aluminium extrusions, last month agreed to buy Aleris of the US for $2.3bn including debt. Aleris specialises in rolled aluminium products for the aerospace and automotive industries, and the takeover “raises very serious concerns for the entire aluminium industry”, says the Aluminum Extruders Council, which represents US producers. “Zhongwang is a state-supported enterprise and has received large benefits and financing from the government of China,” it adds. But Lu Changqing, president of Zhongwang, says it has always been a private company and has not received any direct or intermediate investment from the Chinese state. “Zhongwang . . . has grown up and developed in a completely market-based process, and in this process, the company has had not special government support and has had no subsidies,” adds Mr Lu. Yet Zhongwang’s takeover of Aleris could lead other Chinese aluminium companies, both state and privately owned, to hunt for overseas assets, say analysts. “Chinese aluminium companies are looking outside China,” says Charlie Durant, analyst at CRU, a consultancy. One potential source of relief for western aluminium producers are signs since late last year the Chinese government is willing to tackle excess capacity in the domestic industry. Some analysts question Beijing’s commitment, but so far this year Chinese aluminium output has fallen by an estimated 3 per cent compared to 2015. Zhang Bo, Hongqiao’s chief executive, said in March the company would slow its capacity expansion or even suspend output of basic aluminium if demand faltered. However, since many Chinese aluminium producers focused on semi-finished products are privately owned, it could be difficult to control the country’s output of the metal, says Paul Adkins, founder of AZ China, a consultancy. “The opportunity for [Chinese industry] leadership and co-ordinated efforts