Hinkley must be on time to benefit from CfDs, committee told

25 May 2016

The UK government has not given EDF a deadline for its final investment decision (FID) on Hinkley Point C, but the contract for difference (CfD) element of their contract would be cancelled if the project is delivered eight years later than planned, in 2033. This was the conclusion of British lawmakers who yesterday grilled the UK Minister of State for Energy and the lead negotiator in talks between the government and the French-owned utility.  

In addition, the UK parliament's Energy and Climate Change Committee heard that Austria's challenge to EU state aid approval of the project was politically-motivated rather than legally sound.

Vincent de Rivaz, the CEO of EDF Energy, had told the committee earlier in the session that he does not want to "prejudge" the outcome of the company's ongoing consultation with the Central Works Council, which needs to be completed before a FID on Hinkley Point C can be made.

Consisting of two European Pressurized Reactors in Somerset, England, Hinkley Point C will be the first new nuclear power station to be built in the UK in almost 20 years and will provide about 7% of the country's electricity. The first unit is currently expected to be commissioned in 2025-2026.

Andrea Leadsom told the committee: "We want to see a FID as soon as possible but we recognise that this is a commercial decision." After repeated questions from committee members as to whether the government had imposed a deadline on EDF, Leadsom said, "No, we haven't," but added that she had personally witnessed the "massive" amount of work being undertaken at the Hinkley site. "If they were downing tools waiting for a FID, we would be concerned, but they're not."

Asked if she was concerned that a FID after September would be impacted by the run-up to French elections next year, Leadsom said President François Hollande and Economy Minister Emmanuel Macron had both spoken on the record as being fully committed to the Hinkley project.

"EDF in their evidence to this committee have said there is no political angle to this, that it is a commercial decision and that it continues apace and so no, I'm not concerned," she said.

Hugo Robson, chief negotiator at the Department of Energy and Climate Change, confirmed that there is a time-limit on a CfD in the event a low-carbon-project, whether based on renewables or nuclear power technology, is late.

"From 2025-2029 they get a 35-year CfD. After 2029 the CfD is shortened by one year of delay up to 2033, after which it would be cancelled. They would be able to get revenues from the market, but not top-up revenues from the CfD," Robson said. "If there is a very significant delay, and we're talking about eight years, then at that point we are able to cancel the contract. As is the case for all CfDs, there is a back-stop date," he added.

On Austria's challenge to the project, Leadsom said: "We do not believe that the Austrian state aid challenge has any merit and we are very confident that the Hinkley Point C project will go ahead."

The minister confirmed that this was the legal advice that her department had been given. Robson added, "We believe the basis on which they are challenging is political, rather than anything that has merit."

Researched and written
by World Nuclear News