De­lays, cost over­run seen in con­tested UK nu­clear plant

Kuwait Times - - BUSINESS -

PARIS: A project to build a nu­clear plant at Hink­ley Point in Bri­tain will over­run by £1.5 bil­lion ($1.95 bil­lion, 1.71 bil­lion eu­ros) and may face fur­ther de­lays, its main sup­plier said yes­ter­day. EDF, the state-run French com­pany that has the lion’s share of the con­tro­ver­sial scheme, made the an­nounce­ment af­ter a long re­view. EDF is part of a FrenchChi­nese con­sor­tium that was awarded the twore­ac­tor project last year de­spite crit­i­cism from green groups and cost warn­ings from ex­perts. “The fi­nal project costs are now es­ti­mated at £19.6 bil­lion at 2015 rates, an in­crease of £1.5 bil­lion,” EDF said in a state­ment.

The higher es­ti­mate de­rives from “bet­ter dis­cern­ment of the de­sign” and “the vol­ume and se­quenc­ing of work on site and the pro­gres­sive im­ple­men­ta­tion of sup­pli­ers’ con­tracts,” it said. It also warned of a pos­si­ble de­lay of 15 months in de­liv­er­ing the first re­ac­tor, and nine months for the sec­ond. If this risk is con­firmed, the deal would add “around £0.7 bil­lion” to costs, EDF said. The an­nounce­ment came af­ter EDF on June 26 ac­knowl­edged that it was car­ry­ing out a “full re­view” of costs and sched­ul­ing.

Named Hink­ley Point C, the project, built in the south­west­ern English county of Som­er­set, is be­ing show­cased as the first Bri­tish nu­clear power sta­tion to be built in more than two decades. It will pro­vide seven per­cent of Bri­tain’s power needs, re­plac­ing old, car­bon-emit­ting coal-fired plants, ac­cord­ing to the Bri­tish gov­ern­ment. But the costs and timetable have been re­peat­edly re­vised. In 2007, an EDF boss promised that, in 2017, Bri­tons would be able to cook their Christ­mas tur­keys us­ing elec­tric­ity from the fa­cil­ity.

Trou­bled project

Crit­ics have fo­cused on the pro­posed de­sign, which uses a novel EPR re­ac­tor that has run into huge prob­lems of cost over­runs and de­lays at sites in France and Fin­land. Yes­ter­day, EDF said that con­struc­tion work on the first re­ac­tor at Hink­ley Point was still sched­uled for “mid-2019.” How­ever, the date de­pended on the fi­nal de­sign of the re­ac­tor, it said. This de­ci­sion is ex­pected by the end of 2018, but “the sched­ule is tight,” it ad­mit­ted.

De­trac­tors also ques­tion an elec­tric­ity price guar­an­tee to EDF of £92.5 for ev­ery megawatt hour of power pro­duced by Hink­ley over the fol­low­ing 35 years, ris­ing with in­fla­tion, de­spite fall­ing en­ergy prices. On June 23, Bri­tain’s Na­tional Au­dit Of­fice (NAO) said the ex­pected cost of top-up pay­ments had bal­looned from £6 bil­lion to nearly £30 bil­lion. The deal “has locked con­sumers into a risky and ex­pen­sive project with un­cer­tain strate­gic and eco­nomic ben­e­fits,” the NAO said. En­vi­ron­men­tal­ists are also fiercely op­posed, urg­ing the gov­ern­ment to in­stead fo­cus on re­new­able sources like wind and so­lar power to meet Bri­tain’s en­ergy needs.

The 3,200-megawatt project, sched­uled un­der the deal to go online in 2025, has a de­signed op­er­a­tional life­time of 60 years. The deal was ap­proved by Prime Min­is­ter Theresa May’s gov­ern­ment only last Septem­ber, amid un­cer­tainty about the fu­ture of the Bri­tish econ­omy caused by Brexit. EDF, mainly owned by the French gov­ern­ment, is fund­ing around two-thirds of the cost and its Chi­nese part­ner, China Gen­eral Nu­clear Cor­po­ra­tion,is fi­nanc­ing the re­main­der.

Doubts within EDF

Con­struc­tion work on non-re­ac­tor struc­tures be­gan in March this year, and EDF has al­ready signed ma­jor con­tracts with sup­pli­ers such as the French gi­ants Bouygues and Areva and Gen­eral Elec­tric of the United States. In­ter­nal di­vi­sions sur­faced last year within EDF about push­ing ahead with Hink­ley Point while the firm strug­gled with a debt moun­tain of more than 37.4 bil­lion eu­ros and grap­pled with the merger of the re­ac­tor unit of French nu­clear builder Areva. The com­pany’s fi­nan­cial direc­tor, Ger­ard Magnin, quit in dis­agree­ment with the plan. The re­main­ing 17 mem­bers of the board ap­proved it by only 10 votes to seven at a crunch meet­ing on July 28.—AFP

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