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Energy sector car crash must be averted now

Another week, another series of stories that can’t help but raise doubts over the outlook for the construction of energy projects in the UK.

This country is lacking energy – literally and metaphorically – and the whole industry should be worried about the consequences.

EDF has added another £3bn contingency onto its costs at Hinkley Point C, taking them to more than £20bn, and effectively extended the project’s overall programme, pushing the likely completion date back to 2026.

Of course, that’s assuming the scheme gets the final investment decision from EDF in September and that there are no problems building or applying the proposed nuclear technology – two big ifs.

Confidence dented

Experience from EDF and Areva’s much-delayed and over-budget plants at Flamanville in France and Olikuluoto 3 in Finland, coupled with the resignation of EDF’s finance director over the financial and construction risks of the project, have not improved confidence.

The government continues to express its wholehearted support, but Hinkley is increasingly looking like a beast that should be put out of its misery.

“It’s not only companies that already have contracts; the whole industry is affected by a question mark this large”

At the same time, Swansea’s Tidal Lagoon has been going on a PR offensive, taking to the airwaves to promote the project and its potential to be an international trailblazer, and commissioning a survey showing that the majority of Conservative MPs are in favour.

The question is: which ones? Unless they include Messrs Cameron and Osborne, it’s probably academic, at least for now.

As support for major solar and wind schemes has waned and carbon capture projects have fallen by the wayside, the only beacon of light is small nuclear reactor technology, which, as Construction News reports this week, has prompted enthusiasm from an interesting list of names, including EDF.

Painful question marks

The increasing uncertainty over the future of energy is a problem. For contractors already signed up to schemes, the delays and setbacks to some of these projects are a costly sore – there are more than £1.3bn of Hinkley contracts and £525m of Swansea Bay deals already agreed.

But it’s not only companies that already have contracts; the whole industry is affected by a question mark this large over such significant parts of the pipeline. The industry has enough to deal with on skills planning without these huge doubts over energy projects.

There’s no getting away from the fact that the UK needs new projects to generate power and contractors need to be able to plan to deliver them. This slow motion car crash needs to be averted – and quickly.



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