EDF says UK nuclear power station project could be £2.2bn over budget and months behind schedule
03 July 2017
French energy group EDF has estimated that the cost of completing the new Hinkley Point C nuclear power plant will be nearly 8% more than expected. The French state-owned utility, the project's main backer, said the total cost of the power station was likely to rise by £1.5bn to £19.6bn. The group is building two new-design EPR reactors with a combined output of 3.2 megawatts at the Somerset site.
An EDF review also found the first of the two planned reactors could be delayed by up to 15 months and the second by nine months. The group said that would result in an extra £700m in costs, bringing the total to £20.3bn ($26.28bn), but that it hoped to avoid delays and finish the first nuclear reactor by the end of 2025.
Hinkley Point C will be the UK's first new nuclear plant since the 1980s. In 2015 the estimated cost climbed from £16bn to £18bn, reflecting the impact of inflation. The company said that the latest increase was due to a better understanding of the construction work needed and UK regulatory requirements.
EDF has a 66% stake in the project alongside the Chinese General Nuclear Power Group, which has the remaining third. The group said that if the £2.2bn cost increase came to pass, its rate of return on the project would drop from 9% to 8.2%.
This latest news about Hinkley comes a week after the Government’s public spending watchdog, the NAO, condemned the government for locking consumers into an “expensive and risky” project by signing a subsidy deal to pay for the reactors.
Delays at the plant and falling wholesale prices meant the total costs to electricity consumers for the 35-year deal rose from £6bn in 2013 to £30bn now, the NAO said. It also warned that Brexit and the Government’s decision to leave the Euratom consortium could mean an upward adjustment of the £92.50 cost per megawatt hour agreed with EDF, which is over double the current wholesale price of electricity in the UK.
Another problem is that the two other major nuclear power stations using the same EPR design are both years behind schedule and heavily over budget.
Dr Paul Dorfman of University College London’s Energy Institute said this news showed that lessons had not been learned from the EPRs being built at Flamanville in France and Olkiluoto in Finland.
“On top of the National Audit Office [report], on top of the fiasco of Flamanville and Olkiluoto, on top of the deal itself which has been universally slated by every financial expert, now we see another £2bn on the top,” he told The Guardian.
Jenifer Baxter, head of energy at the Institution of Mechanical Engineers, said the possibility of a delay meant that it was possible that some existing power stations would require further life extensions. Any gap in electricity generation would need to be filled with gas power stations and other technologies, she said.
The Department for Business, Energy and Industrial Strategy said: “As the developer has made clear the project remains on track to meet its first major milestone in 2019. The UK government negotiated a competitive deal which protects consumers and ensures that all of the cost of construction, including any overruns, sits with the contractor.”