EDF ready for final investment decision on Hinkley

12 July 2016

A consultation with EDF's Central Works Council on 4 July has cleared the way for a final investment decision (FID) to be made on construction of the Hinkley Point C NPP in the UK. The plant is scheduled to begin operating in 2025,and under a deal agreed last October, China General Nuclear (CGN) will take a 33.5% stake in the project. In addition, the two companies plan to develop projects to build new plants at Sizewell in Suffolk and Bradwell in Essex, the latter using Chinese reactor technology.

In a statement following the meeting, EDF said employee representatives from the trades unions CGT, FO and CFE-CGC had "supported a resolution stating they are not in a position to give their opinion about the project". The representatives from CFDT union abstained from voting. The works council last month began legal action to try to force EDF to release documents relating the project, including all the contracts it has signed with the British government and CGN. The case will he heard by a Paris court on 22 September.

The Central Works Council had met "in order to receive an opinion" about the terms of EDF's UK subsidiary, EDF Energy's partnership with CGN to undertake the project to build two EPR reactors at the Hinkley site. EDF said the meeting ended "seven months of fruitful exchange and sharing of substantial information with the employees' representatives". The company had been "determined to hold a process of meaningful social dialogue" and had therefore decided on 22 April to consult the Central Works Council, a process which began on 2 May.

At hearings on 9 May and in the run-up to the 4 July meeting, EDF said it had "also made every effort to answer accurately" all the written questions from the employees' representatives and their appointed experts so that they would be able to give an informed opinion. EDF said it can now proceed to make a FID, which is to be approved by a vote of its board in September.

With respect to the British vote on 23 June to leave the European Union, known as 'Brexit', EDF said it "relies on existing sensitivity studies which had already been communicated to the employee representatives and considers that the vote does not change the fundamental features of the project nor the willingness of those involved to go ahead with it." EDF CEO Jean-Bernard Lévy had said on 24 June, the day the result of the referendum became known, that the UK's decision to leave the EU will have no impact on EDF Energy's strategy to build Hinkley Point C.

EDF's statement was welcomed by the UK's Nuclear Industry Association (NIA) and UK trades unions. NIA CEO Tom Greatrex noted that, on 1 July, the general secretaries of the GMB, Unite, Ucatt and Prospect unions had issued a joint statement underlining their support for Hinkley Point C, and the importance of new generation capacity for the UK to provide secure and low carbon power to homes and businesses.

In a statement on 1 July, GMB described the Hinkley project as a "litmus test" on post-Brexit investment in large infrastructure projects in the UK. It said: "The UK is already at growing risk of power shortages from our over-reliance on unpredictable renewables and our energy needs have not changed since [the EU referendum]."

Meanwhile, the total budgeted lifetime cost for Hinkley Point C  is now estimated at close to GBP37bn $48bn), according to an assessment of major projects published on 7 July by the UK Department of Energy & Climate Change (DECC). The document, based on data from September 2015 said the total lifetime cost for the project is determined by the difference between the strike price for Hinkley Point C and the long-term wholesale electricity price on the market. The current Hinkley Point contract for difference (CfD) guarantees a strike price of GBP92.50 per megawatt-hour, higher than the average wholesale price of electricity in the UK. DECC said they expect the total lifetime cost of the project to vary year on year due to market fluctuations.

DECC also said that from 2014 to 2015 their projections of wholesale electricity prices fell due to underlying low fossil fuel prices and this resulted in a hike of the total lifetime cost for Hinkley Point C. According to reports in local media, unnamed officials at DECC have said that the GBP37bn figure was provisional and based on the low set in wholesale power prices in September 2015. The Guardian quotes a DECC spokesperson as saying that the report “does not suggest that the lifetime costs of Hinkley have increased”, but represents a “snapshot of the position at the end of September 2015”. 



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