The French energy company EDF is reportedly in talks with investors to raise up to £4bn to finish the delayed Hinkley Point C project in Somerset, Britain’s first new nuclear reactors in a generation.
The utilities company, owned by the French state, has approached investors to help cover the ballooning cost of constructing the nuclear plant, which is understood to have reached almost £50bn due in part to supply chain issues and struggles securing skilled engineers, according to Bloomberg.
EDF is reportedly engaged in talks with sovereign wealth funds and large infrastructure funds to raise the extra money through a bespoke financial instrument that would hand investors a stake in Hinkley while protecting them against the risk that the project is not finished.
Hinkley Point C is due to begin generating electricity by 2030, according to EDF – five years later than first planned and 12 years after construction began. The project’s costs have also spiralled, from £18bn when its contracts were signed in 2016 to £47.9bn in today’s money.
The cost overruns and delays are understood to be in part due to spending on extra safety measures to satisfy UK authorities, and trouble securing skilled engineers after Brexit.
A team of specialist engineers at the Hinkley site, represented by the trade union Prospect, voted to strike for 24 hours from Thursday after pay talks broke down. The union said the engineers had not had a pay increase in the last four years.
The financial pressure on the project has deepened after EDF’s partner, China General Nuclear Power Group (CGN), a state-run company, declined to plough more funding into the project beyond its contracted term in 2023.
CGN has scaled back its interest in investing in the UK after tensions between Westminster and Beijing over security concerns made it clear that a Chinese company would not be given permission to lead a nuclear project in the UK.
In response, EDF has called on the UK government to stump up the cash to help finish the project, which will only benefit from bill payer subsidies once it begins generating, but the suggestion was rebuffed by the previous government.
One of the companies considering an investment in the troubled project is Centrica, the owner of British Gas, which has previously been linked to investment talks relating to EDF’s planned nuclear project at Sizewell C in Suffolk. The FTSE 100 company is reportedly in early talks to invest up to £1bn in Hinkley Point C, according to the Daily Telegraph.
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Investing in new nuclear reactors would help to secure future electricity supplies for Centrica, which holds a 20% share in all five of EDF’s remaining UK nuclear power stations, four of which are due to close this decade.
Centrica is understood to be interested in investing in either Hinkley or Sizewell – but not both.
EDF and Centrica declined to comment.
Source: theguardian.com
