Further significant damage to the well tattered reputation of the UK’s infrastructure delivery capabilities is being delivered by news that Hinkley Point C will now cost nearer £50 billion at current prices than the £15 billion that was the first number the project’s supporters thought of when costs were first estimated at 2015 prices.
Latest date for bringing the plant into service is now 2030, which few would bet will not slip again. It should have been in service by the mid 2020’s and the delays leave a gap in UK energy supply policy – the plant could provide as much as 7% of UK domestic electricity demand.
It is actually not strictly speaking a UK failure as it is being delivered and financed by French state owned electricity provider EDF, but the mud will fly far and wide and a lot is likely to stick with the UK whose regulatory delays can be said to be the cause of at least some issues.
The French company said that the delays would create another hit to its accounts, this time to the tune of €2.5 billion, so it obviously has skin in the game. Reasons for the delays are not hard to find. The project has been beset by setbacks, including various supply chain issues and other disruptions related to the Covid-19 pandemic.
EDF almost certainly has justifiable complaints about delays created by 7,000 regulatory and technical design changes demanded by UK authorities for creating delays and increasing costs. Because of these the design had to accommodate some 35% more steel and concrete for example, at times when both costs were soaring, and materials hard to procure even at higher prices.
Labour costs have risen strongly in recent years and workers from previously reliable sources like Poland show a preference for working closer to home where they can now earn almost as well as they ever could in the UK.
The process of building a nuclear power station has also proven to be more complex than many suspected, even without the disruptive background of shortages and rising prices. Installing plants, cables and associated pipework has also proved to be more complex than envisaged. “Electromechanical work” is said to be behind the latest delay.
Well nobody said it was going to be easy, but EDF should have been prepared with contingency plans for almost any eventuality. The economic background now certainly justifies investment in increasing electricity supply with forecasts suggesting demand could double by 2050 due to power hungry data centres, electric vehicles and heat pumps.
Is the new timeline deliverable? The news came from EDF chief executive Bernard Fontana in Paris as he announced the company’s annual results, saying the new timeline was “more reasonable”. His future prospects hinge partly on the outcome of Hinkley as well as Sizewell C. The company manages 57 reactors in France but is being challenged to show it can manage reactor construction. Several other projects have been delayed recently and delivered hugely over budget.
At Sizewell C British consumers and taxpayers bear more of the risks if the final bill over-runs. As well as Sizewell C and Hinkley Point C, EDF is due to build at least six new reactors in France from 2038. Comparisons with the performances at Hinkley and Sizewell will be closely scrutinised.
Nick Barrett
Editor