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Hinkley Point: Over to you, supply chain

The UK nuclear supply chain has been told to prepare in earnest for a mammoth wave of work, following the approval of state aid arrangements for Hinkley Point C.

The European Commission last week approved a package of measures that will allow the UK government to subsidise the electricity produced at the Somerset nuclear plant, and guarantee some of the debt raised to finance its construction.
Hinkley developer EDF and the engineering industry said the decision was a major boost for plans to build the first new nuclear plant in the UK this century.

The £16bn construction project could herald a new era of nuclear work. EDF has plans to develop Sizewell C in Suffolk, while NuGen’s Moorside plant in Cumbria and Horizon’s Newydd station on the Isle of Anglesey are also in the pipeline.

Mark Stewart, partner at built environment consultancy EC Harris, told NCE it was now down to the supply chain to ensure it was ready. Hinkley Point C would be the first new nuclear plant to be built in Britain since 1995.

“This decision will bring confidence to a supply chain that has lost a lot of confidence,” he said. “Companies have been working away in oil and gas, waiting for the nuclear industry to come to life. Now they can finally start investing.

“Supply chain capacity is one of the big remaining barriers to fulfilling the UK’s new nuclear plans. Suppliers need the right professional and craft individuals in place.”

A Bouygues/Laing O’Rourke joint venture has been named preferred bidder for the £2bn main civils package at Hinkley Point C, while Costain is preferred bidder for the £250M marine pipeline work.

A Kier/Bam Nuttall JV secured the earthworks deal, which includes excavation of the massive basement in which the nuclear island will sit. 

EDF has previously estimated that more than half of the project’s construction cost could be spent in the UK, and that the project could create 25,000 jobs. 

The European Commission today said contracts for difference and a state guarantee on debt to fund the construction project for Hinkley Point C fell within EU state aid rules.

This followed changes to the original funding arrangements, including moves to increase the amount by which bill and tax payers would benefit from any savings from the construction project.

Commission vice president Joaquín Almunia said: “After the Commission’s intervention, the UK measures in favour of Hinkley Point nuclear power station have been significantly modified, limiting any distortions of competition in the Single Market.

“These modifications will also achieve significant savings for UK taxpayers. On this basis and after a thorough investigation, the Commission can now conclude that the support is compatible with EU state aid rules.

EDF chairman and chief executive Henri Proglio described the approval as a “major milestone” for Hinkley Point C.

“Now EDF and partners have to finalise the agreements needed to reach a final investment decision. Building EPR reactors in the UK will provide huge benefits for both countries in terms of job opportunities, economic growth and skills,” he said.

The energy giant is expected to take a final investment decision on Hinkley Point by the end of this year and, if it goes ahead, to complete the plant by 2023. The final cost over time, including all repayments on debt, is expected to be almost £25bn.

Energy and climate change secretary Ed Davey added that the announcement was “an important step” on the way to building the Somerset plant.

“While there is much work still to do before a final contract can be signed, today’s announcement is a boost to our efforts to ensure Britain has secure, affordable low carbon electricity in the 2020s,” he said.

UK engineers welcomed the EC’s decision. Alasdair Reisner, chief executive of the Civil Engineering Contractors Association, said: “CECA has long argued that the UK’s energy needs will only be met by a mixed portfolio of generation, of which new nuclear power stations will be a vital component.

“We now hope that all involved will work together to move forward with this project, and that work can start without further delay.”

Not everyone was happy, however.

The Austrian government this week wrote to Brussels opposing the decision. Austria’s ministry for science, research and economics said using government subsidies to promote nuclear power would set a bad precedent for the environment.

And solar firms expressed “disappointment”.

James Watson, chief executive of the European Photovoltaic Industry Association, said: “This decision, which is at odds with the objective of enhanced competition in the energy sector, will undoubtedly generate further distortion in the energy sector and hamper the internal energy market.”

 

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