The Times - UK (2021-11-11)

50 Thursday November 11 2021 | the times

Business

5

France’s state electricity group says
that it is ready to build six new nuclear
reactors at an estimated cost of €46 bil-
lion after President Macron re-
launched the country’s atomic energy
programme.
“We are ready,” Jean-Bernard Lévy,
the chief executive of EDF, said at a
parliamentary hearing at the Senate in
Paris. “We have proposed that the first

EDF ‘ready’ to build six reactors as Macron revives nuclear power

Adam Sage Paris step would be to build six reactors on
three sites.”
Two sites have been earmarked, at
Penly near Dieppe and Gravelines near
Dunkirk, both on the Channel coast,
while a third is planned in the Lyons
region of central France.
EDF is working on the development
of an “improved” version of the Euro-
pean pressurised reactor under con-
struction at Hinkley Point in Somerset.
Lévy was speaking yesterday after

Macron announced a nuclear relaunch

during a televised address on Tuesday

that covered a range of themes from

Covid-19 to pension reform. “We are

going, for the first time for decades, to

relaunch the construction of nuclear

reactors in our country and to continue

to develop renewable energies,” he said.

France is one of the world’s most

nuclear-dependent countries, with 56

reactors producing 70.6 per cent of its

electricity. With many nearing the end

of their lives, a debate is under way

between the pro-nuclear camp, which

wants to replace them, and ecologists

pressing for renewable energy.

Macron has said previously that 14

ageing reactors would be shut down by

2035 and that he wanted to reduce the

proportion of nuclear power in French

electricity output to half by 2050.

One European pressurised reactor is

under construction in France at Fla-

manville in Normandy. The project was

launched in 2005, with the reactor orig-

inally due to be operational in 2012 at a

cost of €3.3 billion. EDF now hopes that

the reactor will come on stream at the

end of next year. The Cour des comptes,

the French equivalent of the public ac-

counts committee, says that the final

cost will be €19 billion.

EDF hopes that by building at least

six reactors it will reduce the cost. The

Cour des comptes said that the six were

likely to cost €46 billion.

European banks are set to be able to use
City of London clearing houses beyond
next June in an attempt to reduce the
risk of market disruption.
The European Union’s financial
services chief said yesterday that the
bloc planned to extend the deadline for
banks and other financial companies to
move euro-denominated contracts out
of the City.
Lobbying groups for banks, hedge
funds and investment managers had
called on the European Commission to
extend their access to London beyond
the existing June 2022 deadline, warn-
ing of market disruption.
Mairead McGuinness, the financial
services commissioner, said that more
time was needed to increase clearing
capacity in the EU to cope with a re-
location of euro-denominated business

City reprieve for euro contracts

amid fears of market disruption

from London to the bloc. “That is why

I will propose an extension of the

equivalence decision for UK central

counterparties in early 2022,” she said.

She did not say for how long it would be

extended.

Clearing houses sit between deals

and try to prevent defaults spreading

through the market. They support

banking, legal and technology jobs

across the City. The London Stock

Exchange’s LCH is one of the biggest

clearing houses in the world, clearing a

large portion of euro-denominated

swaps. The European Commission set

up a working group this year to look at

how a large amount of this activity

could be moved to the Deutsche Börse

in Frankfurt for direct EU supervision.

ICE and the London Metal Exchange

also have clearing operations in

London used by European customers.

Andrew Bailey, the Bank of England

governor, warned in September that

any upheaval posed “a real threat” to

financial stability. “I think if they want

to take a decision to break the system

up, then it’s important to consider the

risks to financial stability that come

with fragmentation,” he told Bloom-

berg.

McGuinness said that the extension

should be long enough to allow the EU

to update its supervisory system for

clearers and to avoid short-term stabi-

lity risks from an interruption in access.

She said that an over-reliance on UK

clearers for some activities posed a

financial stability risk in the medium

term.

Banks have warned that splitting

clearing between London and Frank-

furt would increase costs and fragment

a global market. They argued that forc-

ing a relocation of clearing could see it

move to the United States rather than

Germany, as American clearers have

long-term equivalence.

An LCH spokeswoman said: “We will

continue to engage and co-operate

with the relevant regulatory authorities

in order to continue offering all clearing

services to our customers.”

This week, the Bank unveiled plans

to monitor overseas clearing houses

that affect UK financial stability.

Christina Segal-Knowles, its executive

director for financial market infra-

structure, said: “It’s important these

things are not politicised. We want to

make sure that’s done in a very techno-

cratic and predictable way, it’s not a tit-

for-tat.”

Conor Lawlor, director of capital

markets and wholesale at UK Finance

said: “It is important any decision

achieves the best outcomes for custom-

ers and clients in the EU, the UK and

globally.”

Louisa Clarence-Smith

Russia starts

pumping gas

and driving

down price

Emily Gosden Energy Editor

Gas prices fell across Europe yesterday

after Russia started pumping more gas,

easing fears of a winter supply crisis.

Benchmark UK month-ahead gas

prices fell by as much as 11 per cent at

one stage and were down about 4 per

cent at about 180p a therm by late after-

noon, Refinitiv data showed, having

risen above 200p a therm on Monday

amid concerns that hoped-for Russian

gas would not be forthcoming.

UK day-ahead gas prices are down by

about 13 per cent over the past two days

and were at about 160p a therm in the

afternoon, according to Icis, the price

reporting agency. However, prices are

well above historical levels, with the

day-ahead price at least four times

higher than they were a year ago, when

they were less than 40p a therm.

A global shortage of gas as demand

rebounds from the pandemic have

driven prices to record highs in Britain

and Europe in recent weeks. Storage

levels are unusually low after a long,

cold winter last year and the region is

competing with Asia for scarce cargoes

of liquefied natural gas amid disruption

at a number of LNG production sites.

The squeeze in Europe has been

compounded by lower supplies of

pipeline gas from Russia than had been

expected, sparking accusations that

Moscow may have been deliberately

withholding supplies for political

leverage.

Prices in Britain leapt as high as 400p

a therm early last month before dra-

matically falling back after President

Putin said that Russia was ready to help

to “stabilise” the market.

Thomas Rodgers, of Icis, said: “What

we have seen in the market over the last

couple of days is a significant slump in

gas prices following increased supply

from Russia. President Putin last

month said that from November 8 Gaz-

prom would start prioritising refilling

stocks at its European storage sites.

“While not explicitly saying this

would mean higher supply coming to

the market, some traders had made that

interpretation. Monday passed with

little movement, but on Tuesday and

[yesterday] we have seen a step change

in Russian flows via the Yamal-Europe

pipeline and via Ukraine.”

He said the latest data showed that

commercial flows of gas from Gaz-

prom, the Russian state gas group, to

western Europe were together 14 per

cent higher today than on Monday, but

still more than 20 per cent down on

flows at the same time last year.

Emily McClain, an analyst at Rystad

Energy, a consultancy, said that with

temperatures forecast to trend at or

below normal, “risks are skewed to the

upside if volumes from Russia turn out

to be inconsistent”.

F

loating wind farms big

enough to power

almost four million

homes could be built in the

Celtic Sea under plans set

out by the Crown Estate

(Emily Gosden writes).

The organisation,

responsible for managing

the seabed around England

and Wales on behalf of the

Queen, said that it intended

to award leases by the end

of 2023 for four gigawatts of

floating wind farms. The

first could be generating

electricity before the end of

this decade.

Floating wind technology

is in its infancy, with only a

handful of small-scale

projects in operation,

including two off Scotland.

However, it is seen as an

important solution to

harness wind power in

areas where the sea is too

deep to install turbines with

conventional foundations.

The government wants

1GW of floating wind

generation operating in UK

waters by 2030, up from

80 megawatts today.

The leasing round would

give rise to the first projects

of commercial scale off

England and Wales, with

locations to be determined

through consultation.

Three smaller projects are

being assessed for the Celtic

Sea and companies have

submitted bids for larger

projects off Scotland.

Huub den Rooijen,

Crown Estate managing

director of marine, said that

the Celtic Sea was

“eminently suitable for

floating wind because it is

deep”. He said that the

Crown Estate would ensure

the development of a UK

supply chain for floating

wind, after criticism of the

low share of offshore wind

manufacturing in Britain.

“We have learnt that you

need to invest early on in

industrial capability for

these industries to compete

successfully,” he said.

Leases would be awarded

based on “broad value

creation, including social

and environmental value”,

he said, not simply to the

highest bidders, as they

were in an auction in

February that was criticised

for fuelling cost inflation

while bolstering the Crown

Estate’s revenues.

Den Rooijen said that a

floating wind turbine could

comprise a 200m-diameter

rotor atop a 150m tower

and that “each of those

foundations is an ocean-

going vessel anchored on

location on seabed”. A UK

supply chain was

particularly important since

such floating turbines could

otherwise “be towed in

from other locations”.

The Crown Estate said it

would work with National

Grid on a co-ordinated

approach, such as projects

sharing power cables to

shore, to try to avoid

running into opposition in

areas such as Cornwall,

Devon and Wales.

Crown Estate

floats plans

for Celtic Sea

wind farms

The Crown Estate intends to award leases by the end of 2023 for four gigawatts of floating wind farms suitable for deeper waters

AKER OFFSHORE WIND

CELTIC

SEA

Llyr 2

Wave Hub

50 miles

IRELAND

UK

White Cross

Erebus

Llyr 1

Renewable energy zone limit

and UK Continental Shelf