Hinkley plant could cost 30 billion pounds in electricity payment top-ups
LONDON – Britain’s deal with EDF to build the Hinkley Point C nuclear plant is risky and could lead to requests for more cash and electricity payment top-ups worth 30 billion pounds, a parliamentary watchdog said on Friday.
“Delays have pushed back the nuclear power plant’s construction, and the expected cost of top-up payments … has increased from 6 billion pounds 30 billion pounds,” the report from the National Audit Office (NAO) said.
The NAO is publishing its report just as the government has committed to help to curb energy costs as part of its new policy objectives.
Hinkley Point C is Britain’s first new nuclear plant to be built in decades. It has been plagued by delays and criticised for its guaranteed price for electricity, which is higher than current market prices.
EDF’s UK arm EDF Energy is building the 18 billion pound plant in southwest England with China General Nuclear Power Corporation (CGN), which has a 33.5 percent stake.
Britain awarded the project a minimum price guarantee of 92.5 pounds per megawatt hour (MWh), inflation linked, for 35 years.
Under the contract, the government will pay the difference between the wholesale electricity price and the minimum it has promised – so-called top-up payments.
British spot wholesale electricity prices have fallen since the deal was struck in 2013, and currently trade around 40 pounds per MWh.
A spokeswoman for the Department for Business, Energy and Industrial Strategy (BEIS) said the project would ensure nuclear is part of a diverse energy mix in Britain.
“Consumers won’t pay a penny until Hinkley is built; it will provide clean, reliable electricity powering six million homes and creating more than 26,000 jobs and apprenticeships,” she said.
The plant, which EDF initially promised would be powering ovens to cook Britons’ Christmas dinner in 2017, is expected to start generating electricity in 2025.
BEIS said the project would add 10-15 pounds annually to household electricity bills up to 2030. But the watchdog’s report criticised the government for failing to fully consider the impact on bills beyond 2030.
The NAO also said there was a risk the project would need further financial support. “The UK government could come under pressure to provide more support or take on additional risk, particularly given (Hinkley’s) potential importance for ensuring energy security,” it said. When built Hinkley Point C is expected to generate around 7 percent of Britain’s electricity, and will help to replace the country’s ageing nuclear fleet, and closing coal plants.
EDF Energy said the NAO report showed the project was good value compared with other low-carbon energy alternatives, and that EDF Energy and CGN bear the construction risk of the project. “Relaunching the UK nuclear new build industry at Hinkley Point C will enable costs for future projects, in particular Sizewell C, to be lower,” an EDF Energy spokesman said. EDF and CGN also plan to build two more reactors at Sizewell in eastern England. -Reuters