23 Mar (NucNet): The Hinkley Point C nuclear project in the UK will “clearly and categorically” go ahead with a final investment decision at the beginning of May, EDF Energy chief executive officer Vincent de Rivaz told a parliamentary committee in London today.
Giving evidence to the UK parliament’s Energy and Climate Change Committee, Mr de Rivaz said: “It will go ahead because we have the expertise, the supply chain and our long-standing partners CGN [China General Nuclear]. We are confident in this project and in the EPR technology.”
Pushed by MPs to give a date for a final investment decision on the project to build two EPR units, Mr de Rivaz said he could not give a precise date, but the French minister of the economy has said early May and “I agree that it will be very soon”.
Mr de Rivaz said EDF is working to secure the financial situation of the group as a whole for the next decade. He said EDF has already invested £2.4bn (€3bn, $3.4bn) in Hinkley Point C and is facing huge investment in existing nuclear in France, in networks and in overseas projects. He confirmed the total cost of construction at Hinkley Point will be £18bn.
But he said the company is in the final stage of negotiations with its major shareholder, the French government, and this is why the minister was able to propose early May as a date for a final decision.
Mr de Rivaz said: “It’s a complex issue. Everybody is working in the final stage to make to happen. The project has the full support of the French and British governments.”
He said the solutions being discussed are between the French government and EDF and there will be no impact on the British taxpayer “in any shape or form”.
He would not give details of the discussions, but said they include issues such as capital, dividends and the disposal of non-strategic assets. “The solutions [being discussed] are to secure EDF’s future so we can go ahead with Hinkley Point,” he said.
Asked if the Hinkley Point contract for difference (CfD) represented a fair deal, Mr de Rivaz said the CfD has been scrutinised and challenged in the UK and in Brussels. He said the CfD is commensurate with the need to attract investors in a world where taxpayers will not contribute to the construction of nuclear plants.
The CfD, or strike price, is a guarantee from the UK government to EDF Energy on the price of electricity to be produced by the planned reactors. It was set at £92.50 per megawatt-hour, more than double the current wholesale price of electricity in the UK. This price will be guaranteed for 35 years after the proposed reactors begin operation and will increase in line with inflation. However, it would be reduced to £89.50 if EDF committed to go ahead with construction of a second nuclear station at Sizewell C in Suffolk.
Earlier, Peter Atherton, managing director at Jefferies investment bank, challenged the political process behind the decision to go ahead with Hinkley Point C, telling the committee that the project went ahead without any open tender because of the idea that Hinkley could “get done fast and kick-start the rest of the UK’s nuclear programme”. He said it was a political issue in the sense of trying to meet emissions targets and “if the UK cancels the project it could jeopardise all other nuclear projects in the pipeline”.
Mr Atherton said what the government should have done was what the United Arab Emirates did, which was to get various providers of nuclear and give them a cap. The winner then builds a series of reactors simultaneously within the given budget.
Mr Atherton said the UAE contract went to the South Koreans and the French were “very substantial overbidders”. He said: “This would have been the best time to launch a competitive auction for different technologies. The Japanese nuclear industry has no home orders and if we’d got the process right we could have bought competitively from them.”
Zhu Minhong, general manager of international nuclear business development department and general director of UK nuclear projects at China General Nuclear (CGN) said CGN was fully committed to Hinkley Point C. He said: “We have made huge progress and our discussions are almost complete. From CGN’s side we are confident to say this project will go ahead.”