The cost and timetable for the Hinkley Point C nuclear plant are subject to a “full review”, its developer EDF has admitted, after reports that the company expects the project to be years late and billions of pounds over budget. The French energy company has promised to deliver power from the £18 billion project in Somerset by the end of 2025 but Le Monde said that this was no longer seen as realistic by insiders, who said it would start up in 2027. The delays are expected to result in the cost of the project, funded jointly by EDF and CGN, China’s state nuclear company, increasing by up to 3 billion euros, it said. Yesterday EDF said that “a full review of the costs and schedule of the Hinkley Point C project is in progress” and the results would be disclosed “soon”. Further delays to Hinkley, which was once envisaged to be up and running this year, will raise more questions about the subsidy for the project, as well as Britain’s strategy to keep the lights on as old coal and nuclear plants shut. Yesterday EDF highlighted its annual report, published in March, which referred to the Hinkley review in the small print. At that stage the report said that “no material adverse impact has been identified on the project total cost or completion date”. It also confirmed that EDF and CGN were committed to fund a “contingency margin” of up to £2.7 billion, on top of the £18 billion budget. EDF is bracing itself for a decision by French safety regulators over whether it must replace part or all of a component in the European pressurised reactor it is building at Flamanville in France. It is expected to be told that it must replace the cover of the steel reactor vessel within a few years of the reactor starting up after it was found to contain too much carbon, making it weaker than planned. Flamanville is running six years late and is set to cost three times more than the original estimate. EDF set the 2025 start-up date for Hinkley Point in October 2015. It then suffered almost a year of delays after struggling to arrange its own financing for the project and then faced a review by Theresa May, but insisted the 2025 date still stood. EDF has however warned that Brexit could delay delivery of major energy projects in the UK.
Times 27th June 2017 read more »
French state-owned power company EDF said on Monday that it was still reviewing the costs and schedule of its planned Hinkley Point C power station in Britain, responding to a media report that said the project faced cost overruns. “As indicated in the 2016 annual financial report, a full review of the costs and schedule of the Hinkley Point C project is in progress following the financial investment decision and in accordance with the project company’s rules of governance,” EDF said in a statement. “EDF will disclose the results of this review as soon as it is completed,” it said. Le Monde newspaper reported over the weekend that Hinkley Point C would have a budget overrun of between 1-3 billion euros ($1.1-$3.4 billion) as its construction could be delayed by two years.
Reuters 26th June 2017 read more »
New York Times 26th June 2017 read more »
The lesson of the Hinkley Point C saga is not to repeat it. Contractors started pouring concrete for the Hinkley Point C power station three months ago and could be still at it in ten years’ time. By then, there is a chance that the economics of energy will have suffered a surprise upheaval making nuclear power genuinely affordable, but that chance is slim to vanishing. It is more likely that current trends driving down the cost of renewable and gas-fired power stations will continue. Hinkley Point C will meanwhile be vulnerable to the sort of delays and cost-overruns that have plagued every other reactor so far built to the same design, none of which is yet producing power. If experience is any guide, electricity from Hinkley Point will command more than twice the price of power from other sources, including low-carbon renewables. The value of subsidies to honour that “strike price”, which is meant to compensate the contractors for taking on the risk of the project, will have more than quintupled since being agreed. Hinkley Point C will create jobs but in a white elephant that will be technologically out of date before being connected to the grid. It is being built in part to keep the lights on without relying on highly polluting coal, but mainly because technology moves faster than bureaucracy. In complex matters politicians tend to rely on bureaucrats’ advice, and many backed the plan before Theresa May gave her final approval last year. Not one had the courage to cancel it when it was still possible to do so without exposing taxpayers to the risk of multibillion-pound compensation claims. Sources close to an internal review of the project under way at EDF, the lead contractor, say that its budget is already edging up towards £20 billion from last year’s £18 billion estimate. Its completion date is now expected to be 2027 rather than 2025. The value to EDF and its Chinese partner of the “contract for difference” agreed in the deal has risen from £6 billion to £30 billion as the price of gas and renewables, especially solar, has fallen. The most alarming figure in the NAO report is an estimate of £22 billion that investors in Hinkley Point C could claim in compensation were it to be scrapped.
Times 27th June 2017 read more »