A union group representing senior managers at EDF has called for a final investment decision on the Hinkely Point project to be further delayed, as former energy committee chair Tim Yeo urges to government to prepare a plan B.
The latest official word from EDF regarding the final investment decision for the Hinkley plant is that it will now be delayed at least until September, but persisting financial and engineering issues mean that many in the company still have their doubts about the entire project.
One of the major issues highlighted is that the company responsible for the design of the European Pressurised Reactor (EPR) at the core of the Hinkley plant is “currently facing a difficult situation.”
Areva Facing Difficulties
The company, Areva, made the decision earlier this week to split up into three separate parts in order to stem losses and to isolate a problematic nuclear project it is working on in Olkiluoto in Finland.
The construction of the final unit at the Olkiluoto plant, which is using the EPR design, is currently running years behind schedule and billions of euros over budget.
French government ministers had originally wanted 85% state-owned EDF to purchase Areva (which is itself 87% state-owned) outright, although the energy company raised serious doubts and said that at the very least they would not do so unless they could relinquish all financial responsibility for the Olkiluoto project.
Areva had previously owned a 10% equity stake in the Hinkley project, but this has since been let go and the project is currently wholly owned by EDF and Chinese state-owned nuclear company CGN, who own a 35% stake.
Problems with the Finnish project, and financial issues generally including the posting of a €2 billion loss last year have led Areva to commit to restructuring, though a spokesperson for the company said that is was “not intrinsically linked” to the Hinkley project.
The spokesperson said: “The company’s restructuring programme, which includes the sale of NP’s [Areva NP is the part of the business responsible for the reactor designs] operations to EDF, is a positive step forward that will make the whole business and industry stronger.”
Nonetheless, Areva’s persisting financial problems, and a series of engineering failures with their EPR reactors, have not inspired confidence in the company, nor has the fact that EDF’s actual offer to purchase the company expired on the 31st of March.
FNCS Advise Further Delays
All of these things were highlighted in a letter from the Fédération Nationale des Cadres Supérieurs de l’Énergie (FNCS) to Angus MacNeil, chairman of the commons energy and climate change committee.
Regarding the expiration of EDF’s offer to purchase Avreva specifically, the letter, penned by the head of the FNCS, Norbert Tangy, said: “Since this date, no further information has been published on this matter. This no-decision situation adds governance uncertainties upon the implementation of the Hinkley Point C project.”
In conclusion, the letter says: “With respect to the Hinkley Point C project, the Fédération Nationale des Cadres Supérieurs de l’Énergie then advises to delay the FID [final investment decision] until better upfront industrial visibility is evidenced.”
EDF Energy’s chief executive, Vincent de Rivaz, did not respond directly to questions about the letter’s contents but has repeatedly clashed with unions, engineers and executives alike over the future of the Hinkley project.
He has been called before MPs twice now to defend his company’s position, but has remained solidly of the opinion that construction should go ahead and that a final investment decision should be reached as soon as possible.
He said, back in May, when last called before the committee of MPs: “The current position of some of the French trade unions is to postpone the project for two to three years. Our position is that there is no need for a delay because the project is ready.”
Tim Yeo: DECC Should Have a Plan B
Meanwhile, the former chairman of the commons energy and climate change committee, and the current chairman of interest group New Nuclear Watch Europe, said that the succession of obstacles in the way of Hinkley’s completion mean that the government should seriously be considering other options in the meantime.
A secure energy supply can be achieved using nuclear power, without resorting to more polluting forms of power generation, and without having to wholly rely on the uncertain future of Hinkley Point C, said Tim Yeo.
He advises fast-tracking other nuclear projects currently in the pipeline in the UK such as the plant at Bradwell in Essex.
Mounting costs, coupled with EDF’s poor financial situation at the moment, along with the various issues already mentioned, mean that the likelihood that Hinkley will be completed on time is growing ever smaller, and contingency plans must be put in place, Yeo argued.
He said: “There is a risk of further delays at Hinkley and, because of that, Decc (the Department of Energy and Climate Change) should have a plan B.
“If another two to three years had passed before progress had been made, it would have an impact on our ability to meet carbon targets and on our energy security.”
Yeo also proposed that looking further afield for reactor technology, and involving countries like China, Korea and Russia, could prove effective, so long as the work is ultimately completed using British consortium.
In particular, Russian nuclear company Rosatom should be considered, given a proven track record of working reactors. And Kepco, a nuclear company based in Korea, has an equally proven track record.
The politics are what makes such cooperation difficult with Russia, Yeo conceded, but maintained that there is a way for such barriers to be overcome.
He said: “The Great British public is cautious and the unions sceptical of China, but if there was a UK/EU-based group involving, say, Rolls Royce, it might reduce concern about where the technology came from.”
Yeo also argued that direct involvement from the British Government would be important, particularly in keeping costs down for bill payers, so long as they overcome staunch opposition to borrowing.
He said: “Nuclear projects involve huge upfront costs. If you can shave off 1% from the cost of capital, that will go straight through to the cost of energy,” Yeo said. “The UK government has one of the best credit ratings in the world. There is an opportunity there, despite the Treasury’s almost Jesuitical opposition to borrowing.”
