EDF: Hinkley Point C is “shovel-ready” despite Centrica exit

Posted on 6 Feb 2013 by Tim Brown

Momentum behind EDF Energy’s new nuclear project at Hinkley Point C in Somerset remains strong says the company regardless of potential partner Centrica’s decision to exit the nuclear new build programme.

EDF Energy said it was prepared for Centrica’s decision and understands that the profile and scale of this investment may not have met Centrica’s shareholders’ current expectations and priorities.

However, aiming to allay fears that the UK nuclear new build programme was in tatters, EDF described its first nuclear new build project at Hinkley Point C as “shovel-ready” with a “world-class team ready to deliver a project as large as the Olympics”.

However, EDF boss Henri Proglio cautioned that the company would walk away from the project if the UK government’s revenue guarantee on each unit of electricity sold is too low.

“I won’t qualify myself as confident, but rather conscious that an agreement can be reached,” on prices, he said, speaking to Bloomberg.

In the absence of confidence, the company is still carrying out what it calls “detailed” work to prepare UK suppliers to make the biggest possible contribution to the nuclear projects and training facilities have been opened to develop the skills needed to build the project.

According to EDF, the Hinkley Point C project will create up to 25,000 roles for people at site over the course of construction with 5,600 people on site at peak. Nine hundred permanent jobs will also be required over the 60-year life of the station.

In response to questions about the possible partnership with China Guangdong Nuclear Power, a spokesperson for EDF said: “We have said for some time that we were open to the idea of other investment partners and as we approach our final investment decision, it is right to consider funding options. The project is advancing well and has achieved a level of maturity to make it attractive to potential new investors; however it is too early to say anything about the outcome.”

EDF’s French nuclear partner, Areva, announced in December 2012 that it had signed memoranda of understanding (MOU) with 25 UK-based companies for the supply of components and services for new European Pressurised Reactors planned for the UK. These companies cover a wide range of products and services, including forgings, valves, pumps, cranes, electronics, piping, tanking and refrigeration units. Together with agreements already announced with Rolls-Royce, the scope of work could be worth up to £400m to British industry.

In all, Areva has already identified 50 companies based in the UK with potential capability to meet the scope. Of these 50, the 25 companies who have signed MOUs are pre-qualified and for the other 25, Areva is committed to start a prequalification process once it receives a firm order from EDF Energy.

The Government backed Nuclear Advanced Manufacturing Research Centre has agreed to support all 50 UK companies, to pre-qualify, qualify and then bid for work.

At the time of Areva’s announcement Business Minister, Lord Marland, said: “Areva’s announcement that it plans to grow its commercial relationship with companies in the UK is good news for the nuclear industry and supply chain. There are important commercial opportunities in the sector which we will work in partnership with industry to develop.

Humphrey Cadoux-Hudson, managing director of New Build at EDF Energy said the announcement of the 50 UK companies demonstrated the scale of the economic benefits which our project can bring to the UK. “We remain committed to helping UK suppliers make the most of the opportunities presented by the project, which will deliver safe, reliable and affordable low carbon electricity for the UK, subject to our final decision to invest,” he said.

The French nuclear groups have recently defended the cost of new nuclear projects following cost overruns of €2bn on their flagship next-generation reactor at Flamanville in Normandy.

The FT reported that the first built in France for 15 years, is expected to cost €8.5bn rather than the €3.3bn first forecast and has raised questions about whether nuclear power remains affordable.

But speaking in Paris last month as he unveiled the latest Flamanville overruns, Hervé Machenaud, EDF’s engineering director, shot back at sceptics: “Do you know of a medium of production more economic than nuclear on the European scale?”

The decision to begin construction of the Hinkley plant will be made by the Planning Inspectorate in Westminster before March 27. This date will be the maximum three months from when Secretary of State for Energy Ed Davey pledged to provide the final planning decision.