Proposed Hinkley Point C: Energy Giant EDF Faces £2bn Rise In Project Costs: An Update

‘The cost of building a new nuclear power station at Hinkley Point in Somerset could rise by nearly £2bn, piling more pressure on the over-stretched finances of the French energy giant EDF, according to a report seen by The Times. An independent analysis of the £18bn project claims that Areva, the French company that developed the EPR reactor earmarked for Hinkley, is re-pricing the technology before a final investment decision, which it expects to be signed by EDF and its Chinese partners in May. Michel Degryck, managing partner of the Paris-based corporate finance company Capitalmind and an expert on EDF who produced the report, said that Areva had in recent weeks been asking suppliers to resubmit detailed offers for key components of the Hinkley station. He said: “We understand that a number of costs were probably underestimated when they did their last pricing [of the reactor] in 2013. They will have to take into account new costs …The cost of the project could rise by 10%.” The updated cost of the station could be as high as 25.3bn euros (£19.8bn) according to the research. The development casts further doubt on the future of the project, under which two new reactors to be built at Hinkley are set to generate 7% of UK electricity once operational, probably in the late 20203. Mr. Degryck said the re-pricing exercise was continuing so a final figure for the updated cost of the project would not emerge for several weeks. About 90 companies, including Rolls-Royce, Balfour Beatty and Laing O’Rourke, are involved in the Hinkley project as “Tier 1″ suppliers. UK consumers are shielded from any further price rises because of an agreement signed in 2013.’ [but will it hold? -Ed.]

from The Times 31st March, 2016