Home Business Hinkley Point C costs set to soar by another £3bn, warns EDF

Hinkley Point C costs set to soar by another £3bn, warns EDF

Hinkley Point C costs set to soar by another £3bn, warns EDF

France’s EDF has warned that the costs of the Hinkley Point C nuclear power plant under construction in the south-west of England could balloon by an additional £3bn, while it also warned of further delays because of supply chain problems arising from Covid-19 lockdowns.

In a statement released late on Thursday evening, the French state-backed utility estimated that the 3.2 gigawatt plant in Somerset could cost a total of £25bn-£26bn compared to an estimate of £18bn when it received the go-ahead in 2016.

It is now anticipated that the first of the two next-generation European Pressurised Reactors (EPR) being installed at Hinkley Point C will start generating electricity in June 2027 — a year later than previously scheduled — but EDF added that the “risk of further delay of the two units is assessed at 15 months”.

When it was seeking support for the project in 2007, EDF had originally said that Britons would be cooking their Christmas turkeys on electricity from Hinkley Point C in 2017.

EDF has been forced to revise up the costs of the project on numerous occasions. At the most recent revision in January 2021, it had estimated the total at £23bn. EDF quotes costs in 2015 prices in order to maintain consistency for the markets but the real bill will be even higher after accounting for inflation.

EDF stressed that the additional costs would not affect UK consumers. The construction costs are being met by EDF and its junior partner in the project, China’s CGN, in return for a 35-year contract that guarantees a price of £92.50 per megawatt hour of electricity produced, rising with inflation.

The latest setback comes at a time when the UK government is hoping to reboot the country’s nuclear power programme as part of efforts to reduce its reliance on energy imports, including from Russia.

It will probably provide further ammunition to environmental campaigners and nuclear sceptics, who argue that the technology is costly, takes too long to build and the UK has yet to work out how to deal with the nuclear industry’s legacy of highly toxic waste in the long term.

As part of an energy security of supply strategy published in April, prime minister Boris Johnson set a goal of building 24 gigawatts of new nuclear power by 2050. That is the equivalent of eight large atomic energy plants, although ministers are hoping also to encourage small modular reactors of the kind being developed by a consortium led by Rolls-Royce.

In a note sent to Hinkley Point C workers on Thursday, the project’s managing director Stuart Crooks blamed lockdowns during the pandemic, during which it had to reduce the number of staff who could safely operate on site from about 5,000 to 1,500.

“In civil construction alone, having fewer people than planned means we lost in excess of half a million individual days of critical work in 2020 and 2021,” he wrote.

“Our supply chain was also hit hard and is still impacted now. In April 2020, 180 suppliers were fully shut down, but even as late as February this year, more than 60 suppliers were operating with reduced productivity due to Covid.”

However, the further delays will not surprise critics of the company.

In France, EDF’s flagship Flamanville 3 plant, which will also use EPR technology, is running more than a decade behind schedule and costs have also spiralled, sparking at one point a rebuke by the French government as it ordered the group to address issues with project management and industrial skills.

At the same time as suffering problems with new projects, EDF faces outages at several existing reactors in France because of welding problems, sending nuclear output to its lowest level in decades.

That has come just as power supply in Europe is rocked by attempts to wean the region off Russian gas since the invasion of Ukraine and has further deepened financial turmoil at EDF, raising concerns over its ability to gear up to build new reactors.

EDF has been lobbying the UK government as it hopes to build another plant in England using EPR technology, at Sizewell C in Suffolk. A planning decision on the plant is expected in July.


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