EDF needs to double its estimated completion time for the Hinkley Point project, according to Centrica, which says Britain’s first major nuclear power plant in a generation is more likely to take 10 years to build than the four or five-year timeframe that the French energy giant has previously stated.
At Centrica’s Annual General Meeting, chairman Roger Carr noted that the cost of the project had escalated considerably in recent times, and this had led the company to withdraw from the development altogether in February, leaving EDF as the only member of the big six involved.
After giving up its 20% stake in the £14 billion project, Centrica also handed back £500 million to shareholders, and refocused its attention on investing gas in North America, but the decision was not taken lightly, according to Mr Carr, who said the cost of the project ultimately proved too great.
“Nuclear is not a cheap option,” he said, adding that the price of the development had “rocketed” since the British Gas owner first entered the fray.
Centrica chief executive Sam Laidlaw added that the increasing cost was only one off-putting factor, coupled with the schedule lengthening considerably.
“So, instead of taking four to five years to build, EDF were telling us that it was going to take nine to ten years to build. That is a long time to be writing out a cheque for this project,” the Telegraph reported him as saying.
He added: “EDF’s agenda is different to ours. They are 85% owned by the French government, they are using French technology and they see nuclear as a core part of their strategy going forward. Our strategy is to have customers at our core and provide the lowest cost low-carbon energy for our customers.”
EDF is currently locked in negotiations with the UK government over the extent of its investment in the project and the benefits that the energy giant may reap, with the coalition keen to strike a deal before EDF withdraws and the nation’s energy security is plunged into doubt.
The French government is known to favour a renewables-based approach that is at odds with the nuclear project at Hinkley Point, and EDF wants a guaranteed price for the electricity it will generate for the next 40 years.
However, this would be subsidised by levies on people’s energy bills, which has led two other members of the Big Six – SSE and npower – urging the government not to proceed with the agreement.
A fair price
Centrica has adopted a more neutral approach since backing out of the project, with Sir Roger saying it is important for EDF and the UK government to find a “fair price” at which the UK can have nuclear power and the provider can afford it.
“That is a negotiation that we hope is successful because it is part of an energy plan this country needs as old capacity and coal capacity shuts down,” he added.
The potential energy shortage that could arise, should Hinkley Point fall through, is of major concern to industry and consumers alike, particularly as plans remain in place to phase out older power plants in the coming years.