Hinkley Point C delay and £3bn cost hike announced
Hinkley Point C developer EDF has announced further cost increases and a delay for the nuclear power station.
Costs for the Somerset nuclear power station project have risen by a further £3bn, pushing it to £8bn above 2017 estimates. EDF also announced a year’s delay on the project.
The latest increase was attributed to the loss of working days due to COVID safety measures, adaptation of the reactor design and an increase in the cost of maritime works.
Over the past decade, the French public company EDF Energy, which is carrying out the project, has gradually announced an increase in costs. The latest figure is between £25 billion and £26 billion. The delivery time for the nuclear power plant has also been extended to June 2027, a one-year delay.
Hinkley Point C Managing Director Stuart Crooks sent a message on the latest project update to all team members and contractor representatives.
He explained in the statement that the site, which employs 5,000 workers, lost more than 500,000 individual working days in civil construction alone in 2020 and 2021.
In April 2020, 180 suppliers closed and, until the beginning of this year, 60 of them were operating with reduced productivity.
Crooks cautioned this, saying: “In such a complex project, it would not be credible to say that we can measure exactly how much of this is due to the impact of COVID-19, but it clearly exceeds 12 months.
Apart from the pandemic, Crooks said the reactor needed to be adapted in accordance with UK regulations, which required more engineering and materials than expected. Likewise, the cost of maritime works has also skyrocketed.
Crooks then thanked the team for their work during the pandemic and described the challenges as something beyond what could be controlled.
He said, “I have described the challenges facing our project, many of which are beyond our control. I know how hard you work to mitigate and overcome these challenges every day. I thank you for your sustained efforts, your determination and your solidarity.
EDF maintained that the latest cost increase will not affect UK consumers and payers.
The financing model used to pay for the site is called Contract for Difference (CfD), whereby the developer funds the cost of constructing the nuclear power plant in exchange for a fixed price agreed upon for when the plant is operational. According to this model, consumers end up paying the difference between the wholesale price of electricity and the fixed price, and finance the project once it is in the operating phase.
In 2019, when the cost of Hinkley Point C was last discussed, industry experts said it reflected a pricing issue, not a funding issue, and could also impact the pricing of future nuclear power plants.
The government has adopted a new funding model for future power stations, including Sizewell C.