EDF have implicitly admitted that the construction of Hinkley C may take at least 11 years to finish signalling cost overruns of 70 per cent or more.
Bloomberg reports that EDF is requesting the Government that EDF be given another 15 months to complete the plant and be fully generating beyond 2029. Under the terms of EDF’s contract with the UK Government if Hinkley C fails to generate power by 2029 it will start losing the amount of subsidy it can claim. Adding 15 months to this as requested (under a ‘force majeure’ clause) will take us into 2030.
Hinkley C construction was begun seriously in early 2019, meaning a total construction period of over 11 years. The plant was supposed to be operating by the end of 2025 according the EDF’ earlier plans. Using the rule of thumb that construction cost is directly proportional to the length of construction time this would imply a 70% cost overrun. That could mean a cost rise, in today’s prices from around the original £20 bn to £34 billion. However, one should in no way assume this will be all the time that is needed. Things may well get worse.
The amount that EDF will get paid for power generated from Hinkley C is pegged at £92.50 per MWh in 2012 prices or around £110 per MWh in today’s prices. Under the agreed contract the premium price, which is payable for 35 years, can start no later than the beginning of 2029.
This also means that it will have to be the French Government who picks up the costs of the costs overruns, especially since EDF is soon to be fully taken into French state ownership. But France will have its revenge yet when, under the financing deal being discussed, it will be the British energy consumers and state who will pay for the cost overruns from the planned Sizewell C power plant. Delays with building Hinkley C will have a knock-on effect on Sizewell C since there will not be enough relevant workers (or supply chains!) to build two projects at once. This is likely to mean that Sizewell C is unlikely to be completed until after 2040.
EDF bases its force majeure claims, according to Bloomberg, on supply chain difficulties resulting from Covid and the war in Ukraine. Cynics may say that every nuclear construction is just once big force majeure waiting to happen. Who is surprised by this turn of events? Not me, that’s for sure!
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