Q&A briefing: what you need to know about Hinkley Point C

Eric Adams, nuclear business development director at WSP Parsons Brinckerhoff, looks at the continuing delays and question marks around the £24bn project.

Eric Adams

French energy company EDF and its Chinese co-investors are due to greenlight Hinkley Point C soon, possibly during the state visit of Chinese president Xi Jingping on 20-23 October. But when might it be operational?

This type of major project has defined stages of development and each stage has its own dependencies. HPC is still in the stage of investment commitment and until this is concluded with a positive Financial Investment Decision, the project will not be able to enter into the more defined and predictable detail design and construction phase.

But if HPC can arrive at a positive FID by the end of this year and all indications are that this could be achieved, then starting the next phase would allow more certainty of achieving exported power by the early 2020s.

Construction price inflation is affecting many projects. What impact will this have had on Hinkley Point C?

During the investment commitment phase, a great deal of analysis will have taken place to arrive at more certainty on construction costs which will be a significant part of the elements to be considered in arriving at a conclusive FID. 

One would expect HPC to be able to incorporate lessons learnt from the current construction of similar projects in both Finland and France. That said, each country has its own issues with regard to construction culture, techniques and efficiencies so it will be interesting to see how HPC incorporates best practice from other countries. A clear understanding of scope plays an important part in allowing detailed accurate estimations of cost and since HPC is in effect the third of its kind to be constructed, one would expect that this would contribute to there being less chance of any scope mismatches.

What difficulties for the supply chain and contractors have all the delays created? 

The supply chain and Tier 1 contractors will need to make considerable investment to be able to compete on the required level of quality and delivery commitment. The delays experienced create uncertainty and reduce interest to the point where some capable suppliers may miss out on opportunities. The sooner there is visibility of requirements the sooner suppliers can make their decisions on investment commitments.

For those who already have contracts and have had to slow down or postpone activities, this creates additional difficulties in having to transfer where possible redundant resources, resulting in additional costs and possibly losing certain types of resource.

Will HPC incorporate lessons learned on projects in Finland and France?

There’s a general view that the strike price negotiated with the government – £92.50 per megawatt hour of electricity – is a generous deal. What’s your view?

Looking at the current utility power export price and trying to equate to a power export price in, say, 10 years’ time is hard, but that is what the strike price is trying to predict. Who would have been able to predict 10 years ago, when oil prices were far greater than they are now, a strike price for today and to take into account all the variables? 

But it is quite clear that investors will find it extremely difficult to make a commitment if the returns are not clear or carry a large risk factor. The amount of investment is simply too great for private enterprise alone to commit and government has to play its part in this.

The over-budget and delayed reactors in Finland and France use the same reactor design as Hinkley Point C. Should we be worried, or have lessons been learned? 

Clearly one would expect that lessons have been learnt from the two projects and will be incorporated into HPC. There are many reasons for the various issues on the power plants currently being constructed in Finland and France and the key here is to be very clear what the root causes are and to deal with the real cause and ensure that is not repeated on the next power plant. 

The Generic Design Assessment (GDA) process adopted in the UK is quite unique and has served to at least flush out design and operation issues that probably would not have been found until much later in the programme and would certainly have created considerable additional costs and delay. It is much more cost effective to spend additional time up front in preparation than it is to make changes during a construction programme and particularly on such a complex project. UK is in a much better prepared position on HPC at this stage than previous projects.

As we are using French and Chinese finance and management for the project, how can the UK industry best capitalise on the nuclear build programme? 

The UK has not built a nuclear power plant since Sizewell in the 1990s, which has resulted in a general loss of its broad nuclear base even though there are specialist nuclear companies performing very well, but generally we have lost our strength. 

Since the 1990s other countries and international companies have continued to design and build nuclear facilities and have clearly developed over the last 20 years. If we are to build our nuclear strength up again, UK industry needs to look to partnerships with international companies that have developed and through such partnerships bring the expertise back to the UK. 

In the 1980s UK industry was exporting nuclear related equipment and in efforts to expand manufacturing undertook various “technology transfers” to Far East locations. We have to be realistic and understand that now we are in a period of “technology return” and if we can embrace and take advantage of this we could regain our nuclear strength.