What is bad news for the French government could be good news for the British one.
News is just in from EDF that scheduled completion of the 1,650 MW third EPR unit being built at Flamanville overlooking the Channel Islands has been pushed back yet again. Originally set to be up and running by 2012 at a cost of €3 billion, loading of nuclear fuel is now scheduled for Q4 2019 and the cost is up to €10.9 billion … with perhaps further slippage to come. Apparently, of the 148 out of 150 welds so far inspected in the main secondary system, 33 will have to be repaired and 20 reworked; then the reactor pressure vessel will need to be replaced by 2024 anyway. No, I don’t understand that either but it doesn’t sound good. The nuclear bits come from Areva whose only other EPR under construction, at Olkiluoto in Finland, is also hugely delayed and over budget with completion now scheduled for September 2019 (maybe) so that doesn’t engender confidence either.
Further north, EDF and Areva, this time together with China General Nuclear Power Corporation, have begun building two such units at the controversial 3,200 MW Hinkley Point C in Somerset, UK. Here, more exotic risks include how to relocate local residents such as badgers and barbastelle bats. But the cost is already estimated at £25 billion and the CfD strike price at which it will sell its power to the Government is an astonishing £92.50 / MWh (already three times the cost of power from competing sources) in 2012 prices to be adjusted for inflation through the construction period and for the next 35 years of operations (that means an eventual price of perhaps £300 / MWh). Even that may not be enough: in 2016, Thomas Piquemal, EDF’s CFO, resigned in protest at the amount of risk that the French were taking on.
Both EDF and Areva are owned by the French government so, just as Jules Rimet went to a different home, it looks like the British taxpayer is set to lose out to his French counterpart.
However, this latest news may present an opportunity for the Brits to move the goal posts, as it were. British government loan guarantees in support of Hinkley Point are reportedly contingent on Flamanville being up and running by 2020. If yet further delays at Flamanville do indeed run into 2020, will Greg Clark and Claire Perry have the courage to invoke this condition and amend / cancel the current arrangements for Hinkley?
How the UK then generated 7% of its power or which unsavoury characters this required doing business with would be questions for another day but at least the cost could be reset to sensible.
