EDF to miss its own deadline for Hinkley Point nuclear decision
French energy giant does not expect to take final investment decision on Britain’s first new nuclear plant in a generation until the autumn, missing its own target of July
EDF expects to miss its own deadline for deciding whether to build Britain’s first new nuclear plant in a generation, the Telegraph can disclose.
The French energy giant announced in October that it planned to take a final investment decision on the £16bn Hinkley Point C plant by July, after striking a landmark subsidy deal with government.
But it now believes that an ongoing European Commission investigation into whether the subsidies are illegal state aid will not be fully resolved until autumn, forcing its decision on the Somerset plant back until then.
The delay could threaten EDF’s plans to deliver first power from the plant in 2023 – a timescale it had said was “subject to a final investment decision by July 2014”.
It also pointed out many key details of the deal, including a £10bn-plus loan guarantee from the Treasury, could not be scrutinised as they were yet to be finalised. It is understood the loan guarantee may not be finalised until May.
Amid intense scrutiny of the Hinkley plan, EDF is also lobbying strongly against a long-term freeze of the UK’s rising carbon tax, which it fears would weaken the case for Hinkley by pushing up the bill for direct subsidies for the plant.
Under October’s deal, EDF has been guaranteed a price for the power the plant generates of £92.50/MWh, almost double the current market price for power, with the difference subsidised through levies on consumer energy bills.
A rising UK carbon tax would push up the market power price, reducing the total direct “top-up” subsidy to Hinkley and potentially making the deal more palatable to politicians and the EC alike.
But under pressure to tackle rising energy bills the Chancellor now is expected to announce a freeze of the carbon tax in next week’s Budget.
EDF – whose existing nuclear power plant fleet would also benefit significantly from the rising carbon tax – is understood to be urging the Chancellor to guarantee that any freeze would last no more than a two years and that the tax would then revert to its upwards trajectory.
The company, which is still in talks with potential investors to take stakes in the Hinkley Point project, also argues that a policy u-turn on the carbon tax would damage the UK’s attractiveness.
EDF has been at pains to insist it can deliver Hinkley “on time and on budget”, despite its Flamanville reactor in France being dogged by cost blowouts and years of delays.
However, it has already publicly set and then missed a string of deadlines for Hinkley, which was once supposed to be running by 2017, while the cost has “rocketed hugely”, according to former partner Centrica.
A damning 70-page critique published by the EC in January raised a series of concerns with the subsidy deal, arguing that it may be unnecessary, risked handing EDF excess profits and could severely distort competition.It said that total public subsidy could reach £17bn – more expensive than the plant itself.
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