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Further Hinkley Point C delays feared

One of the four major contractors lining up for the £1.2 billion main civils package at Hinkley Point C has revealed it is not expecting a decision to be made on a preferred bidder until 2013.

Vinci chief executive and chairman John Stanion told Construction News he does not expect EDF Energy to make a final decision until finalised details on proposed “contracts for difference” are published.

The contracts are part of plans to reform the energy sector set out in a draft government bill this week.

They are a mechanism by which a long-term price for power is agreed with generators to give them stability for investment and are not due to be available to energy companies until 2014.

The final rates are set to be revealed next year; however, EDF Energy and Centrica have insisted they will make a final investment decision on Hinkley Point C by the end of 2012.

Mr Stanion said: “I think EDF is totally committed to Hinkley Point subject to them having a clear investment case, but I don’t think it is in a position to make a decision at least until [the contracts are] legally brought into force, so some time next year will be the earliest they will commit.

“Construction is unlikely to start until 2014, I would have thought. They won’t commit to the main civils package until they commit to the investment.

“It’s what we anticipated with the size of the team, it’s manageable and most of the work has been done, so waiting isn’t a particular problem.”

Speaking after the draft Energy Bill was laid before Parliament, energy secretary Ed Davey revealed that talks had begun between Department of Energy and Climate Change officials and EDF Energy/Centrica over their proposed investment in Hinkley Point C.

The government will now look to ensure the developers can make their investment decision by offering “investment instruments”, which could include agreeing an indicative price before they are formalised next year.

A Nuclear Industry Association spokeswoman said that EDF Energy and Centrica were likely to insist on an agreed rate before making their investment decision.

Mr Davey said that the government “wants to make sure there is no investment hiatus”.

Mr Stanion said Vinci would not start recruiting and training people unless there was “a clear direction of travel on nuclear”, admitting there would also be a “huge training requirement”.

He added: “I think nuclear is definitely going more slowly than anyone had hoped or anticipated and we had the setback with the decision on Horizon [to pull out of nuclear], but it wasn’t made in the context of the UK market.

“The key thing from a construction point of view is that these [reactors] can be delivered in a way that makes the investment case stack up, so we have to work very efficiently.”

Nuclear industry sources said they now do not expect Hinkley Point C’s £100 million earthworks package, to be completed by Bam Nuttall and Kier, to get under way until at least 2013.

But if construction is delayed until 2014, with a seven-year construction timetable this would mean the nuclear plant would not be operational until around three years later than had first been expected.

It was also revealed this week that EDF has held talks with the nuclear regulator about extending the lifetime of existing nuclear power stations.

But an industry source said: “Old plants have a habit of falling off the grid regularly so that is a stop-gap solution at best.

“The industry needs the momentum that has dissipated in the last year to be reinvigorated.”

PwC energy director Ronan O’Regan said the fact that the bill did not suggest any policy u-turns would give investors hope by offering a consistency of policy.

Civil Engineering Contractors Association director of external affairs Alasdair Reisner said the bill was only “one part of a longer process” and there remained challenges to the delivery of new generation capacity.

 

Readers' comments (1)

  • So yet again due to the inability of government to do the right thing we are going backwards. Do they want us to regress to the stone age ? . Can no one just do the right thing and build both nuclear and coal with carbon capture facility. Or do we wait Canute like for the lights to go out and the " city" to fail when the computers fail.

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