Coalition nuclear policy dealt fresh blow as French company refuses to confirm contract

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By Bob Duncan
 
UK government plans to build a new generation of nuclear power stations have been dealt another serious blow as EDF Energy announced it has postponed plans to award a £1.2 billion civil engineering contract for development of a third reactor at Hinkley Point in Somerset.
 
The contract was due to be awarded in the next few days to one of two consortia headed by Balfour Beatty and Laing O’Rourke respectively, but no announcement is now expected until 2013 at the earliest.

Hinkley Point was identified by government as one of eight sites in the UK potentially suitable for new nuclear power stations.  The shelving of the contract is a serious setback for employment prospects in the area and comes just weeks after £100m worth of site preparation was also postponed.

It also follows claims by the Government’s own partner, Centrica that plans to guarantee a minimum financial return to nuclear generators by hiking up household bills is illegal.

The postponement of the decision over the £1.2 billion contract until next year means it may be 2021 at the earliest before a new reactor could be built on the site.  It follows reports that have put the cost of the proposed new plants in the UK at £7bn each, 40% higher than previously stated.

This latest blow to UK nuclear development plans, following several other recent setbacks, has led the Scottish National Party to call for an end to the UK Government’s plans for a new generation of nuclear power stations.

Westminster Energy Spokesperson for the SNP, Mike Weir MP said:

“The obsession of the coalition government over nuclear is quickly unravelling as energy companies beat a hasty retreat from investment in expensive and unnecessary nuclear power stations.

“Even EDF – the last company standing up for the technology after the withdrawal of the other majors – has delayed investment plans, amid reports that the costs of its proposed new station has almost doubled.

“There is now absolutely no way that nuclear energy will contribute to meeting forthcoming energy needs. The UK government must abandon this expensive white elephant now and follow the example of the SNP Scottish Government by investing in clean green renewable energy.”

The use of “Contracts For Difference” (CFDs) to ensure investment in low-carbon technology through guaranteeing a minimum power price was confirmed in the energy bill published by the government last week.

As reported only yesterday in Newsnet Scotland, this practice has been described as “illegal” by the UK government’s own commercial partner, Centrica.  This has led to widespread doubt over whether any of the new power stations will ever be constructed as the consortium of Centrica with EDF is the last one left in the running to build and operate the new nuclear plants.

The two energy companies have made it clear that they will need to see the exact scale of the financial support promised by the CFDs before they can commit themselves to building new plants, especially nuclear ones.

The earliest a new Hinckley C reactor will be built could now be 2021, around four years later than originally planned. EDF declined to comment on the latest setback, with a spokesman for the 83% state-owned French power company saying: “I am afraid it is not our practice to comment on open tenders.”

EDF says it still plans to go ahead with new reactors in Britain but industry experts say uncertainty over the government’s planned financial support mechanism and the election of President François Hollande, who is sceptical about nuclear power, have encouraged EDF Energy to slam on the brakes, and there is much speculation in the industry that they may now pull out altogether.

Several power companies including E.ON, RWE and SSE have already dropped plans to build and run new reactors in Britain, leaving the nuclear programme of UK ministers in serious doubt.