EDF’s plan to build a nuclear reactor in Somerset has been frustrated from the offset with worries about the sky high costs and potential problems with the European Pressurised Reactor (EPR) design coming from various sides.
The plan to build the plant, called Hinkley Point C, seemed to get something of a green light a few days ago when the British government, off the back of deals made with China, guaranteed an investment of £2 billion to contribute towards the estimated overall cost of £25 billion. China stand to make a return on investments as part of a deal that George Osborne struck during his on-going visit to the nation. Osborne also announced a further £50 million joint nuclear research venture with China. This and the Hinkley investment deal “pave the way for Chinese investment in UK nuclear” said Osborne, hoping to help supply “secure, reliable, low carbon electricity for decades to come.”
Scepticism from Investors
While EDF were of course happy to receive this guarantee, even that was not enough to fully push the project ahead, as investors all over Europe have expressed scepticism with regard to the proposed EPR design after problems with it persisted. Delays, escalating costs and repeated overruns in the design and build process of EPRs that are already under construction do not bode well for the progress of the Hinkley Point C plant.
EDF chief executive Jean-Bernard Levy said “For third parties observing the announcement of delays and cost overruns for the EPRs under construction, it is difficult to commit”. He was keen to emphasise though that the Chinese backing the project have not lost confidence.
Defending High Costs
Vincent de Rivaz, CEO of subsidiary EDF Energy who are running the project has defended its high costs, claiming that if it all goes ahead, the Hinkley plant could reduce the average customer bills by as much as 10% by 2026. He compared the building of this plant to the purchasing of a new car which, as he said, would be “more expensive, but you [would] get a much better car.”
Having come further criticism regarding the fact that EDF stand to more or less double their profits on energy per megawatt hour once the plant is built, he said: “you cannot compare the price in the next decade with the price of today, which is being depressed by the current low price of gas. We have to protect our self against volatility”.
To the charge that it would be more cost effective to instead build more gas power plants, he rebutted by citing national independence and the fact that were we to continue relying on gas or even coal, we would be leaving ourselves at the mercy of international business and geopolitics.
An end in sight?
Despite worries and shunning from investors, EDF have announced two new proposed contracts, together worth around £100 million, as preparations for final investments seemingly get ever closer to the fingertips of the French energy giant.
The first of these contracts, worth £25 million involves Rolls-Royce providing the heat exchangers that will be used at the Somerset plant. The second, this time with a Rolls-Royce – Nuvia partnership commissioning two systems designed to treat the reactor coolant, and to process the associated waste. These commissions have not been finalised but EDF have announced Rolls-Royce and Rolls Royce – Nuvia as their preferred bidders for the respective contracts and new build and nuclear project president at Rolls-Royce, Jonathan Brown has already announce that he is “delighted to be selected by EDF energy”. He went on to say that “Rolls-Royce is committed to delivering a high value added design, manufacturing and systems capability for the UK New Build programme.”
The exact outcome of all of this remains to be seen but, it seems that despite investor scepticism and constant hurdles, the rocky road to Hinkley Point C does have an end in sight, though whether this is anywhere near the very first estimated completion date of 2023 is very much up for debate.