French power company EDF said on 25 September the Hinkley Point C NPP under construction in Somerset in the UK will cost up to £2.9bn ($3.58bn) more than previously estimated, putting the total cost at £21.5-22.5bn.
EDF said in a statement: "Cost increases reflect challenging ground conditions which made earthworks more expensive than anticipated, revised action plan targets and extra costs needed to implement the completed functional design, which has been adapted for a first-of-a-kind application in the UK context."
EDF Energy is building two 1600MWe Areva-designed European Pressurised Reactors (EPRs) at Hinkley Point C. Preparatory work began after a final agreement on the project was signed in September 2016. The initial cost had been put at £16bn, but was revised to £18bn in 2015, to reflect inflation. In 2017, following a planned assessment of the project, EDF said Hinkley Point C was running over budget, more than a year behind schedule and raised its estimate for the project by a further £1.5bn.
In its latest statement, EDF also notes the increased risk of the project being 15 months late. Although EDF and its partner China General Nuclear Power Corp (CGN) still aim to finish construction in 2025, this may now be pushed back to 2026. Because of the way that the project is being funded, taxpayers and customers will not foot the bill for the increase in costs, which will be borne by EDF and CGN, which has a 33.5% stake in the plant. The project has a government contract for difference agreement, that guarantees a set price of £92.50/MWh and was “designed with the risks of a first-of-a-kind project in mind”, said EDF Energy CEO Simone Rossi in a letter to staff.
The cost increase brings EDF Energy’s internal rate of return down to between 7.6% and 7.8%. The project originally offered a 9% return on investment, which slipped to 8.5% after the 2017 cost review. However, this has raised doubts about plans to change the funding method for the planned Sizewell C to a regulated asset base model which would shift the risk of rising costs from the developer to consumers.
Cost overruns and delays have also affected other EPR projects. EPRs under construction at Flamanville 3 in northern France, at Olkiluoto 3 in Finland are both facing delays and cost overruns.
The first two operating EPRs are at Taishan NPP in China. Construction of Taishan 1 and 2 started in 2009 and 2010, respectively and they began operation in 2018 and 2019, some five years behind schedule.
