Hinkley Point C developer EDF has announced another cost hike and delay for the nuclear power station.
Project costs for the Somerset nuclear plant have spiked by a further £3bn, which pushes it £8bn above 2017 estimates. EDF has also announced a year delay to the project.
The latest increase has been attributed to the loss of work days due to COVID safety measures, adapting the reactor design and a rise in the cost of marine works.
Over the past decade, French state-owned EDF Energy, which is delivering the project, has incrementally announced an increase in costs. The latest figure is between £25bn and £26bn. The delivery timeline for the nuclear plant has also been extended to June 2027, representing a one-year delay.
Hinkley Point C managing director Stuart Crooks sent a message on the latest project update to all team members and contractor representatives.
He explained in the statement that the site, which employs 5,000 workers, lost in excess of 500,000 individual work days in civil construction alone in 2020 and 2021.
In April 2020, 180 suppliers shut down and, until early this year, 60 of these were operating with reduced productivity.
Crooks caveated this by saying: “In such a complex project, it wouldn’t be credible to say we can measure exactly how much of this is due to COVID-19 impact, but it is clearly in excess of 12 months.”
Aside from the pandemic, Crooks said the reactor had to be adapted according to UK regulations, which took up more engineering and materials than expected. Similarly, the cost of marine works also shot up.
Crooks went on to thank the team for their work during the pandemic and described the challenges as something that was beyond what could be controlled.
He said: “I have described the challenges facing our project, many of them beyond our control. I know how hard you are working to mitigate and overcome those challenges every day. I thank you for your sustained effort, purpose and solidarity.”
EDF has maintained that the latest cost increase will not affect UK consumers and taypayers.
The financing model used to pay for the site is called Contract for Difference (CfD), whereby the developer funds the cost of building the nuclear plant in return for an agreed-upon fixed price for when the plant is up and running. As per this model, consumers end up paying the difference between the wholesale price of electricity and the fixed price, and fund the project once it is in the operational phase.
In 2019, when the cost of Hinkley Point C was last raised, industry experts said it reflected a pricing issue, not a funding issue, and could also have an impact on the pricing of future nuclear plants.
The government has adopted a new funding model for future plants, including Sizewell C.