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Hinkley delayed again amidst fund shortage, union challenge and safety fears

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Energy Desk

BRIDGWATER, ENGLAND - NOVEMBER 12: Hinkley Point A is seen behind barbed wire at the Electricite de France SA's (EDF) Hinkley Point nuclear power station site, near Bridgwater on November 12, 2013 in Somerset, England. EDF, who last month announced it was to construct a new plant at Hinkley Point after reaching a deal with the U.K. government, said today that energy bills will rise by 3.9 percent on average. (Photo by Matt Cardy/Getty Images)

BRIDGWATER, ENGLAND – NOVEMBER 12: Hinkley Point A is seen behind barbed wire at the Electricite de France SA’s (EDF) Hinkley Point nuclear power station site, near Bridgwater on November 12, 2013 in Somerset, England. EDF, who last month announced it was to construct a new plant at Hinkley Point after reaching a deal with the U.K. government, said today that energy bills will rise by 3.9 percent on average. (Photo by Matt Cardy/Getty Images)

EDF has again been forced to delay its “final investment decision” on the Hinkley point nuclear plant in Somerset.

Reports in the British and French press suggested the firm is now likely to turn back to its major shareholder the French state for additional funds.

The delay comes after the firm was challenged by the normally moderate management union to justify the decision ahead of a crucial board meeting this week.

EDF, which has seen its share price plummet, is in the midst of an expensive merger with reactor manufacturer Areva and is also moving to slim down its workforce.

It is possible unions and others within EDF wanted to force the French state to up its support for the embattled utility.

15 questions

In a letter to the board the union raised 15 questions about the project, suggesting it would be difficult to complete on time and that financing it could threaten EDF’s survival.

When approached by the FT EDF made no comment.

Sources close to the board suggest the concerns go beyond the unions meaning the firm may not have sufficient support to make a decision.

Safety warnings

The news comes amidst warnings from France’s technical regulator that there could be further problems with EDF’s Flamanville plant, which is built to the same design as that planned for the UK.

Speaking to the French press, ASN chief Pierre-Frank Chevet warned the body was concerned by “anomalies” with the project which had not been spotted by EDF.

The authority is conducting further tests on the crisis stricken plant which could cause further delays – with a decision expected later this year.

Key union concerns

Building two new reactors in the same place is too ‘high risk’

There is little benefit to French industry

There is no evidence it can be built on time

What happens if other reactors fail to come online?

EDF is strapped for cash, so how will it be paid for?

Why are there no other investors interested?

What about the legal cases pending?

What happens in the UK government decides to look after consumer interest?

Why is EDF teaming up with a Chinese competitor?

Investment

The success of the French plant is a condition of loan guarantees being made available by the UK to EDF’s Chinese partners as inducements to fund the Hinkley plant.

EDF is also under pressure from investors.

The firm’s share price has fallen by more than 50% in the last 12 months and it’s been thrown out of the top tier of the French stock market, leading a French association of employee-shareholders (EAS) to suggest the scheme is so expensive and so risky that it puts the survival of the French utility at risk.

In its letter to the board the CFE union noted the EU had rated investment in Hinkley as “speculative”.

Infrastructure UK has given the project BB+ rating, which is below investment grade.

Delays

If it does go ahead Hinkley Point C would be the latest – and possibly final – attempt by EDF to build a reactor to its trouble-hit “EPR” design, which has been beset by construction difficulties and safety glitches.

Projects are currently running over-budget and over-time in China, Finland and France.

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  • Ian

    This puts the lie to IEA estimates of the LCOE for nuclear. They price nuclear as cheaper than coal, natural gas, wind and solar. If it were cheaper, this wouldn’t be a risky project and they wouldn’t have so much trouble getting investors. I hope the project gets canceled. It would be a huge boon to renewables in GB.

    • Jacob

      You could build a HVDC line from Iceland to Scotland.

      And there is a little island between the 2 nations.

      And get a lot of low pollution, low cost power into Britain.

      • Ronald Brakels

        At German, Italian, or Australian installation costs, rooftop solar can pay for itself in Britain. London receives about two-thirds the insolation that Sydney does and retail electricity prices are reasonably high, so there is plenty of opportunity for it, particularly as cost are going to continue to come down.

        At Australian installation costs and a 5% discount rate rooftop solar will produce electricity for about 10 pence a kilowatt-hour or less. Not as good as Australia, but a lot cheaper than Hinkley C which costs 10 pence wholesale and then will have the UK’s distribution cost of around 8 pence a kilowatt-hour added to it for a total of something like 18 pence.

        And even if things go well, it will be over a decade before Hinkley C comes online and we can be certain that solar power will be considerably cheaper by then.

        When rooftop solar can beat nuclear power on price in cloudy old England now and the members of government still push for nuclear capacity to be built, you can tell that on this matter they don’t have the interests of the country at heart. Or they’re extraodinarily thick. Either one.

        • Jacob

          What about after sunset.

          A couple of big railways are being built in England which will need a lot of power after sunset.

          • Ronald Brakels

            Well, you could drill a big hole though the earth so the sun will shine in from the other side. But I think, in the great scheme of things, it would probably be easier to use an energy source other than solar power at night.

          • Jacob

            Such as importing electrons from Iceland via a HVDC link.

          • Ronald Brakels

            That is one way to do it.

  • Coley

    I don’t think anybody outside of a small group of Tory loonspuds think Hinkley is remotely viable but the Tories are noted for not admitting they are wrong!