France's EDF said on 26 June that it was carrying out a "full review" of the costs and schedule of the Hinkley Point NPP project in the UK. EDF said "a full review of the costs and schedule of the Hinkley Point C project is in progress", as had already been indicated in the company's annual financial report. According to France's Le Monde, the "first conclusions" of the review pointed to building costs exceeding the €21bn ($23.5bn) budget by €1-3bn. The internal review is also expected to confirm fears that the EDF will not be able to deliver Hinkley by 2025, with the start-up date more likely to be 2027. The review, led by EDF audit director Jean-Michel Quilichini, is expected to be made public later this summer.
Any increase in costs will not change the agreed “strike price”, which energy consumers must meet, but is likely to fuel concerns about the project’s viability. To guarantee the project’s revenue, the UK Former Department of Energy and Climate Change – now the Department for Business, Energy and Industrial Strategy (DBEIS) -- agreed to a contract for difference (CfD) whereby EDF will receive a top-up payment to ensure an income of GBP92.5 ($117.5) per megawatt-hour (more than double the current wholesale market rate) through a levy on energy bills. The EDF review comes just weeks after CEO Vincent de Rivaz announced that he will step down in September. In 2007, de Rivaz had said he hoped the Hinkley plant would be providing electricity for the UK by Christmas 2017. The NPP then had an estimated cost of GBP12.5bn ($15.9bn).
The cost of the project was also criticised on 23 June by the National Audit Office (NAO) which warned that consumers could be locked into paying a higher than expected price for a high-risk gamble and uncertain economic benefits. NAO said the CfD had locked consumers into a "risky and expensive project with uncertain strategic and economic benefits". It noted that the expected cost of top-up payments for the CfD had increased from GBP6bn to GBP30bn. NAO called on DBEIS to ensure that the proper oversight arrangements were in place to allow the contract to be managed to maximise value for customers and taxpayers. NAO noted that Brexit and the decision to leave Euratom could make the situation even worse, by triggering taxpayer compensation or a more generous deal for EDF.
NAO condemned the previous two UK governments for failing to consider alternative ways of financing the NPP, such as taking a stake in the construction. The coalition government had decided all the construction risk for the plant must lay with EDF and its partner, state-owned China General Nuclear Corporation. While taking a stake would have posed some risks because of delays to projects with the same reactor design in Finland and France, NAO said its analysis “suggests alternative approaches could have reduced the total project cost”. If the government had taken a 50% equity stake in the project it could have almost halved the guarantee power price to GBP48.5 per megawatt hour, NAO noted.
