In yet another development set to fuel those concerned with the viability of EDF’s Hinkley Point C nuclear project, the French energy company has now increased the overall estimate for the cost of the plant’s construction to nearly £21 billion.
The cost commitment is currently split between Chinese state nuclear company CGN, who are paying 33% of the project’s cost (for a 35% stake), and EDF themselves who, until (or unless) they find extra backing, are responsible for paying the remaining 67%.
As such, CGN’s financial commitment could then increase from £6 billion to £6.9 billion, and EDF’s will go up from £12 billion to £13.8 billion.
EDF have maintained that the extra cost is merely a contingency measure, in case of some unexpected catastrophe halting production. They said that the initial £18 billion estimate was too conservative in its lack of room for such measures.
Following this latest revised estimate, EDF said: “The partner’s equity commitment includes a contingency margin and could reach a total of £13.8 billion for the EDF group and £6.9 billion for CGN.”
EDF has also committed to provided financial guarantees to the Chinese company in the event delays or other unforeseen obstacles, but declined to give an exact value of such guarantees.
Any delays would, according to EDF’s figures, cut into the project’s overall projected rate of return, which is currently estimated at 9%, rather drastically.
EDF now claim to have finalised contract documents with CGN, having signed initial heads of agreements back in October. This marks an important step on the road to the project’s completion.
The 85% French government owned energy company’s chief executive, Jean-Bernard Lévy, made it clear that despite growing concerns of the project’s viability, it is still on track and that further, it is vital to the health of EDF.
“This project is essential for the credibility of the entire French nuclear industry” he said.
The final decision over the approval of the project is, after several delays, expected to come in September this year.