EDF, the French energy company, is reported to be in talks with investors about raising up to £4bn for the Hinkley Point C project that has been delayed in Somerset. This is Britain’s first nuclear reactor in a decade. The French-owned utilities company has sought investors to cover the soaring cost of building the nuclear plant. It is believed to have reached nearly £50bn, due to supply chain problems and the difficulty in locating skilled engineers.
EDF has reportedly been in discussions with sovereign wealth funds, large infrastructure funds and other funds in order to raise extra funds through a financial instrument designed specifically for the purpose of giving investors a stake on Hinkley but protecting them from the risk that it is not completed.
EDF says Hinkley Point C will begin producing electricity in 2030 – 12 years after the construction started and five years behind schedule. Costs have also risen, from £18bn at the time of contract signing in 2016 up to £47.9bn today. Cost overruns and delays may be due in part to extra safety measures taken to satisfy UK authorities and the difficulty of securing engineers with skills after Brexit.
After pay negotiations broke down, a team of Hinkley-based specialist engineers, represented by Prospect trade union, voted for a 24-hour strike starting on Thursday. The union claimed that the engineers hadn’t received a salary increase for the past four years.
The pressure has intensified on the project after EDF’s partner, China General Nuclear Power Group, a state-owned company, refused to invest more money in the project past its contract term of 2023.
CGN has reduced its interest in investing into the UK following tensions between Westminster, Beijing and security concerns. It was made clear that a Chinese firm would not be allowed to lead a UK nuclear project.
EDF has asked the UK government for the money to finish the project. The project will only be able to benefit from bill-payer subsidies when it starts generating. However, the previous government rejected the suggestion. Centrica, owner of British Gas and previously linked to investment talks in relation to EDF’s planned nuclear project in Suffolk, is one of the companies that are considering investing in the troubled project. FTSE 100 firm is reportedly in talks to invest as much as £1bn at Hinkley Point C.
Centrica’s 20% stake in the five remaining UK nuclear power plants of EDF, of which four are scheduled to close in this decade, would be secured by investing in new reactors. Centrica has been reported to be interested in investing either in Hinkley or Sizewell, but not both.
EDF and Centrica have declined to comment.
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