News analysis: British Hinkley Point power generation to be delayed due to costs concern

EDF, a France-based energy company, Friday confirmed that the Hinkley Point C nuclear plant will not start generating power in 2023 as scheduled, because the final investment decision hasn't been reached between shareholders of the project.

FINAL INVESTMENT DECISION

EDF said it will provide a revised timetable for the 24.5 billion pounds (or 37.2 billion U.S. dollars) plant when it takes a final investment decision (FID) on the project.

Jean-Bernard Levy, Chief Executive Officer at EDF, said: "Even though the FID has been pushed back from the initial forecasts, the construction time will stay the same, which means that the commissioning date will be updated at the point when FID is made."

Areva, the reactor maker, was expected to take 10 percent and other "interested parties" were expected to take up to 15 percent of the stake. But financial troubles at Areva have forced it to sell its nuclear business to EDF, and no other investors would be confirmed by the time of FID, reported the Telegraph, a UK-based newspaper.

Levy noted that the FID would be based on sole EDF and Chinese investment, and he added he still had "full confidence in the success of the Hinkley Point project."

On the same day, however, the International Energy Agency (IEA) and Nuclear Energy Agency (NEA) said in a report that new nuclear power in the UK would be more expensive than in any other country. The report was interpreted as one of the reasons for Hinkley Point C project production delay.

Hinkley Point C is Britain's first new nuclear plant in 25 years. In mid May, EDF signed agreements with Chinese firms which will supply equipment for two nuclear reactors EDF plans to build in Hinkley Point, which is located in Somerset, England.

Previously in October 2013, Chinese utilities company China General Nuclear Corporation and China National Nuclear Corporation signed an agreement with EDF to take a 30 to 40 percent stake in the consortium to build Hinkley Point. EDF said then it planned to retain only a 45 to 50 percent stake in the consortium.

CHEAP ALTERNATIVE

Hinkley Point once was supposed to be put into operation in late 2017 but has suffered numerous delays and setbacks.

The latest proposed delay of the power generation, however, might add pressure to British government, as the country's old coal-fired power plants will be forced to close before 2023 under European Union air quality rules. The gap shall require the alternative energy sources to be filled.

Data showed that, Britain has 16 reactors generating about 18 percent of its electricity and all but one of these will be retired by 2023.

Currently, a total of 11 new nuclear units are planned in the country, with a combined capacity of nearly 16 gigawatt (GW). The first of these was expected to be the Hinkley Point C project, a consortium led be EDF building European Pressurized Water Reactors (EPRs) with a total capacity of 3.2 GW.

David Elmes, professor at Warwick Business School, told Xinhua:" The UK has a history of meeting its energy needs through big projects giving more energy supply - big power stations, large offshore oil and gas developments in the North Sea and more recently the emphasis on the nuclear rebuild programme and large renewable projects such as offshore wind."

Elmes noted that there is certainly a need for some of these large, supply-focused projects, but the idea that large projects must be cheaper.

"One wishes that the companies and other parties involved (in Hinkey Point C) would have kept the costs and schedules of current new nuclear projects under control as nuclear offers energy with low emissions," he said.

"But we also need to consider the increasing opportunities for the more efficient use of energy, and look at more distributed solutions for the supply and use of energy, which show a better track record of reducing their costs as their they grow their share in our energy mix," he added. (1 pound = 1.52 U.S. dollars) Endit