French utility EDF revised their estimate for a start date and a price tag for the Hinkley Point C nuclear power plant project, announcing it would cost $25.4 billion to build and would not be operational until sometime in 2027.
Besides the estimates adds two years and close to $2 billion to the project, adding to a project that is already a massive public relations a headache.
Without even contemplating the more politically correct option of renewable power sources, EDF has negotiated with the British government a guaranteed price for electricity once the large reactors are up and running.
The company has a locked in price of $119.69 per megawatt hour, which was almost twice the price of wholesale electricity when the terms were agreed upon.
The difference between the market value of electricity and the agreed to price – a cost shouldered by ratepayers – was initially been estimated by Britain’s National Audit Office to about $7.7 billion. But the wholesale price of electricity has been dropping, pushing hard on the subsidy value, which has soared to $38.8 billion, according to current estimates.
EDF said, “the estimated additional costs result mainly from a better understanding of the design adapted to the requirements of the British regulators, the volume, and sequencing of work on site and the gradual implementation of supplier contracts.”
Releasing the figures this week appears to be a public relations gesture meant to appease fears of soaring costs. Recently, investment bank Barclays made estimates public that tagged the Hinkley Point C project as already $5.3 billion over budget and four years behind schedule.
The delays are also being matched against a remake made by EDF Chief Executive Officer Vincent de Rivaz, who is stepping down from his post in October. In 2007, de Rivaz said that Briton would be roasting their Christmas dinners with electricity provided by Hinkley Point C by 2018.
Financing and politics got in the way of that, and the remark gave tabloids a convenient starting point to refer to. Site work in Somerset did not begin until 2016 and the first concrete pouring – a significant construction milestone – did not start until March 2017. Technically, construction of the reactors themselves has not begun.
Between 2010 and 2017, the project hit significant roadblocks, not the least of which was the triple meltdown of a nuclear power plant in Japan in March 2011, which caused many nuclear power giants – Germany and South Korea to name two – to rethink their power generation options.
Construction was also delayed until financing could be secured, which did not happen until EDF tied its fate with that of the China General Nuclear Power Group (CGNPG).
The Chinese company is talking about a third of the shares for the project in return for the option of taking a more substantial stake in two other proposed nuclear power plants in Britain – another cause for public consternation.
Britain is now on its third prime minister since the project was conceived. When it was first proposed, Tony Blair was prime minister. It took his successor David Cameron to pave the way for possible Chinese involvement in the project.
Cameron was so pleased with the deal, and he announced Britain was entering a “golden era” in its relationship with China. Cameron, however, was replaced by Theresa May in 2017 and the new prime minister did not quite see things that way, announcing soon after taking office and shortly after the deal between EDF and CGNPG was finalized, that her administration would conduct a security review, based on concerns about a Chinese company having control of a nuclear power plant in Britain.
Perhaps the least of its problems, de Rivaz has announced he would step down in October, just as fears are growing that the Hinkley Point C project could develop into even more of a money pit than it already is.
His resignation, attributed to personal reasons, had nothing to do with Hinkley Point C, de Rivaz said.