European inquiry delays start to bite at Hinkley

David David
23 April 2014

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Nuclear

Contract awards at Britain's first new nuclear plant for 20 years are on a go slow, writes David Fowler.

Any announcement on award of the Hinkley Point C nuclear power station main electrical contract, worth around £1bn to the successful bidder, has been put on hold until the outcome of a European Commission inquiry, promoter EDF Energy has said.   News on progress on  the major deal had been expected this week.

Equally the power company will not be announcing any other contract wins for the UK’s first nuclear plant for 20 years, until the EC reports.

The EC is investigating whether a minimum electricity price agreement and a deal giving EDF access to Treasury guaranteed debt constitutes state aid. The inquiry, launched in December, means a crucial July deadline when EDF and its partners had planned to take the final investment decision on the project is now expected to be missed.

That anticipated delay is now directly impacting the procurement programme for the plant.

Aim of the government’s deal with EDF was to remove the last remaining doubts of investors and kick start construction with the intention that the plant would be commissioned and generating electricity by 2023. This would be just in time to fill in the gap in energy generation created when the oldest advanced gas cooled reactors, Hinkley Point B and Hunterston face being taken off line as they near the end of their lives.

The UK and French governments have said they will work together to persuade the commission that the agreement is within the rules and that work is progressing satisfactorily.  But industry experts say there is a risk that the Commission could require a shorter contract or set conditions on the loan guarantee which might make the project unfinanceable.

The fate of Hinkley’s deal will affect viability of the UK’s three other planned nuclear plants at Wylfa, Sellafield (Moorside) and Sizewell C which would follow a construction start at Hinkley.

Hinkley in brief

Investors currently are: EDF Group (45-50% stake); Areva (10%), China General Nuclear Corporation and China National Nuclear Corporation (30-40%). Other interested parties may take a stake up to 15%.

Areva has won the contract for nuclear steam supply equipment, instrumentation and control, and fuel.

Alstom is to supply two 1,750MW steam turbines.

A joint venture of Bouygues and Laing O’Rourke has won the £2bn main civils contract.

Deal for the cooling water outfalls, consisting of three marine tunnels of 7m diameter and totalling 11km in length.

A joint venture of Kier and BAM has been awarded the contract for site preparation works.