nuclear-news

UK government headed for huge costs, and a major row with China over Hinkley C nuclear power station.

The Government is likely to become responsible for a huge bill for building Hinkley C power station. This is despite an insistence by the UK Government since they signed a deal with EDF to build Hinkley C in 2012
that electricity consumers will not have to pay for cost overruns for the project.

Yet it is now looking increasingly likely that this will end up being the case. When the deal was signed in 2012 the Government agreed to pay a much higher than expected £92.50 per MWh (in 2012 prices), this
price to be paid by consumers in their electricity bills (over twice the price given to recent offshore wind projects).

The Government claimed that there would be no bail-out if the project experienced large cost overruns
since the risk was borne by the holders of the share capital, EDF and also the Chinese state nuclear company, CGN. CGN holds around one third of the equity in Hinkley C.

But now there are mounting pressures on the Government to ensure that, for political and security reasons, China (through CGN) is not allowed to build its own nuclear design at Bradwell in Essex. Yet CNG only agreed to finance Hinkley C (and also in a similar fashion the planned Sizewell C project in Sufflok) on the basis that it was going to get the chance to showcase its own ‘Hualong’ nuclear plant at Bradwell.

If China’s Bradwell ambitions are thwarted then they will certainly pull out of the Sizewell C project and also do as much as is legally possible to forshorten their risks and responsibilities at Hinkley C. The Government is likely to have to take on big liabilities in the case of Hinkley C – that is against a long succession of pronouncements by Government ministers over the past nine years. Some are even urging the Government to take over all of CGN’s shareholdings in Hinkley C.

But even if the Chinese company cannot reclaim the money it will have spent on the project so far, if CGN is denied the opportunity to build at Bradwell they are very likely to refuse to pay for any cost overruns at Hinkley C (as well as pull out of Sizewell C). This means that the UK Government will have to take on the liability of future cost overruns, and maybe end up in a major row with China about financial compensation.

 100% Renewables 28thy July 2021

July 29, 2021 - Posted by Christina Macpherson | business and costs, politics international, UK