EDF gives go-ahead for £18bn Hinkley Point but UK government signals further delay

After months of delay and uncertainty, the French energy company EDF has finally given the green light for the construction of a new £18bn nuclear power station at Hinkley Point in Somerset. However, soon after the decision to go ahead, the UK government postponed a final decision on the scheme until the early autumn.

Contracts on Hinkley were to be signed this Friday, but business secretary Greg Clark has said the government will "consider carefully" before backing it. According to reports, EDF's chief executive Vincent de Rivaz has now cancelled a trip to the UK this Friday following Clark's comments.

Earlier, at a meeting in Paris today, the EDF board approved the project by ten votes to seven, the closeness of the vote highlighting the divisions over the project amongst board members. These divisions were brought into even sharper relief before the board meeting when an EDF director opposed to the project resigned, claiming the project was “very risky”.

However, the infrastructure sector has welcomed the decision to proceed with a project which will create 25,000 construction jobs and is the UK’s first new nuclear plant in a generation.

Commenting on EDF’s decision to proceed with Hinkley, Nelson Ogunshakin, chief executive of the Association for Consultancy and Engineering, said: “We are pleased that EDF has taken the step towards ending the uncertainty around the first of the UK’s new generation of nuclear power plants and wishes to commit to its construction. While final papers were expected to be signed this Friday, the government's unexpected delay to further consider the project before deciding in the autumn will yet again prolong the wait for the UK's energy gap to be addressed.  

"Whilst the new government may wish to send a post Brexit decision message to the global market that Britain is open for  international investors, the government must  also strive to minimise delays in making such crucial decisions. Meanwhile, the UK continues to faces an unprecedented challenge to ensure energy supplies meet future demand and this will not be surmounted if projects continue to face the kind of uncertainty that has blighted Hinkley, which was due to begin generating electricity next year under the original plans.”

Commenting on the latest delay to the project, Tim Yeo, chairman of New Nuclear Watch Europe, said: “Last night's surprise intervention by the UK government has created uncertainty both in the nuclear industry and among investors. This needs to be resolved as soon as possible to minimise the potential damage to Britain's reputation as a business friendly country."  Yeo said that four immediate steps were needed by government:

1. Reassure the nuclear industry that, regardless of the outcome of this reconsideration of Hinkley, nuclear will remain part of the UK energy mix.
2. Confirm that the proposed reconsideration of the Hinkley project will include a careful assessment of the likely completion date, bearing in mind the continuing difficulties which are being experienced at Flamanville.
3. Confirm that foreign investment in the UK nuclear industry is still welcome.
4. Examine whether any alternative nuclear vendors can deliver new nuclear capacity more quickly and cheaply than EDF.

"The government must ensure that lessons are learned for future energy projects and unacceptable delays are minimised. Future projects cannot face the kind of uncertainty that has blighted Hinkley."
Nelson Ogunshakin, ACE chief executive

Welcoming the Hinkley news before the announcement of the government's delay, Angus Walker, head of the government and infrastructure team at law firm Bircham Dyson Bell, said: “This is a very significant moment for the future of the UK’s energy supply.  Although then secretary of state Amber Rudd said in April that the lights would stay on even if Hinkley did not go ahead, there must be considerable relief around the Cabinet table that an additional 7% of low carbon energy will be generated in the next ten years.

“This also means that EDF’s next project Sizewell will get going, and the prospect of an ‘energy crunch’ (demand outstripping supply) will have receded for the time being,” Walker said.

UK trade unions also welcomed the news. Kevin Coyne, Unite’s national officer for energy, said: “The cost of not doing so could result in the lights going out in Britain and the West Country missing out on the much-needed economic boost that this major infrastructure project would bring. Workers are shovel ready and raring to go.”

Hinkley Point C will provide 7% of the UK’s electricity over an estimated 60-year lifespan and is scheduled to go online in 2025, which is several years later than originally planned.

Many observers believe that the timetable is an optimistic one given that Hinkley will use the same reactor design as a plant in Flamanville, France, which is years behind schedule and more than three times over budget. 

The delay in approving Hinkley Point follows much-publicised concerns over EDF’s financial health. The company is 85% owned by the French government and trade unions there have warned that the Hinkley project could spell financial disaster for EDF. The company has found a partner to lessen the risk and the China General Nuclear Power Corporation is widely expected to take a 33% stake in the project.

The decision to proceed has been criticised by environmental groups, which have called for more investment in renewable energy sources. Speaking to the BBC today, Tom Burke from the green thinktank E3G, said that Hinkley Point was a huge waste of money. “There is no doubt we need the electricity,” said Burke. “We just don’t need electricity from Hinkley, at enormous cost, very unreliably. We’ve much better ways in which we could achieve the security of supply that we need at affordable cost and in a low-carbon way, without going to this sort of trouble,” he said

However, the news will be widely welcomed across government and the construction sector as a signal that large scale infrastructure projects are taking place, despite the economic uncertainty following the last month’s Brexit vote. The project is set to generate thousands of skilled jobs in the infrastructure sector and will help meet the UK’s energy needs for decades to come.

The industry will hope that the initial positive positive news on Hinkley will encourage the government to bring forward other infrastructure announcements like the decision on runway capacity in the south east and its regional transport plans for the north. The Hinkley decision is to be welcomed but pressure will continue to grow on government to defitively approve the project and then make further statements on infrastructure that will reassure the industry and give a boost to the economy.

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