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French and Chinese set to dominate Hinkley C

Construction of the Hinkley Point C nuclear power station in Somerset will rely heavily on British expertise and skills, project developer French energy giant EdF insisted this week.

EdF said that “up to” 57% of the £14bn cost of building the plant with its two nuclear reactors will go to the UK supply chain.

This is despite a heavy French influence on the choice of tier one suppliers and the announcement of the involvement of two Chinese nuclear firms in the deal to finance the project.

EdF agreed contract terms with key tier one suppliers this week after agreeing with ministers the price it will be able to charge for electricity generated.

British contractor Costain was the only newly named firm on EdF’s tier one team. It will take responsibility for the design and delivery of the water cooling systems for the plant in a deal understood to be worth £250M.

But it joins a French dominated project team heavily skewed headed up by French-led joint venture (JV) Bouygues/Laing O’Rourke.

The JV was reconfirmed as preferred bidder for the £2bn-plus main civils contract this week, having first landed the role in June 2012.

French firm Alstom has responsibility for the power turbines and French firm Areva is supplying the two 1.6GW European Pressurised Reactors (EPRs) along with the instrumentation and control system, steam supply system and reactor fuel.

Alstom confirmed this week that the Arabelle steam turbines that it is supplying would
be delivered from its Belfort site in France.

EdF Group chairman and chief executive Henri Proglio agreed that French firms would benefit from the project.

“The EPR project at Hinkley Point represents a great opportunity for the French nuclear industry in a context of renewal of competencies,” he said, adding that the project will create job opportunities on “both sides of the Channel”.

EdF also suggested that there will be a Chinese influence in the project team. China General Nuclear Corporation (CGN) and China National Nuclear Corporation (CNN) will together take a 30% to 40% equity share in the project finance package and were expected to insist on putting their own people into the project team.

“A number of suitably qualified Chinese personnel will join the project to work alongside members of the project team, subject to the usual approvals from the UK regulators,” said EdF in a statement.

CGN is currently the world’s largest developer and constructor of new nuclear power plants. It has eight units in operation and 15 under construction in China, including two EPR reactors being built in a joint venture with EdF at Taishan. CNN has nine units in operation and 12 under construction, again in China.

EdF Energy chief executive Vincent de Rivaz played down the significance of the Chinese involvement.

“There will be a much more significant role for British construction companies than Chinese,” he said. “The Chinese are very happy to come on board as investors because of the quality of the project. They will have a minor role as shareholders, but we will keep overall control as constructors.”

EdF said that work with potential suppliers as well as national and local supply chain events meant that up to 57% of the project’s value “could” be spent in the UK “building skills and expertise, which will help the country win a greater share of nuclear programmes nationally and globally”.

Energy secretary Ed Davey said that the level of UK involvement had been a “very important part” of negotiations, adding that it linked to the government’s industrial strategy for the sector that aims to ensure a “rebirth” of the British nuclear industry.

Preliminary works for the project are already well advanced, with a design approved by UK regulators, a nuclear site licence in place and planning permission granted for construction.

EdF said projected construction costs had been established through a competitive tendering process and have been independently scrutinised.

It said that, subject to a final investment decision, which will be made by July 2014, it expects to complete commissioning of the first unit in 2023.

EdF’s contract will run for 35 years from the date of commissioning and it has calculated the rate of return on its investment to be around 10%.

Chinese and British agree to share nuclear skills

Announcement of Chinese involvement in construction of a new nuclear power station at Hinkley Point came days after the UK and Chinese governments signed a new Memorandum of Understanding to work together on nuclear new build.

The memorandum sets a strategic framework for working together on investment, technology, construction and expertise. It highlights the importance for both countries of working together on the UK’s new nuclear build programme and China’s own domestic programme, and stresses the opportunities for UK and Chinese companies.

Specifically, the memorandum states that the UK government “actively supports and welcomes Chinese enterprises, with their expertise and technologies, into the UK civil nuclear energy market.

The government has also committed to providing guidance to any Chinese enterprise seeking to secure and maintain local and national public support for civil nuclear energy projects in the UK, and to facilitate appropriate engagement with local and national supply chain companies, skills agencies and relevant academic institutions.

In return the Chinese government “recognises” the strength of UK expertise in all areas of the civil nuclear energy sector and actively supports and welcomes UK enterprises into China’s civil nuclear energy market on a competitive basis.

 

 

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