EDF warns Hinkley Point project may cost as much as £21 billion

The Hinkley Point project may cost as much as £21 billion, EDF Energy warned on Friday – almost three billion higher than what the French state-owned utility company had forecast in October.

EDF and China General Nuclear Power Corporation (CGN) signed a strategic investment agreement last October for a joint investment in the construction of two reactors at Hinkley Point C.

Artist’s impression of Hinkley Point C
Artist’s impression of Hinkley Point C – Copyright EDF Energy

EDF’s share in Hinkley Point C will be 66.5% and CGN’s will be 33.5%. Without reducing this initial stake below 50%, EDF plans on attracting additional investors to the project.
In October EDF said that the twin-reactor plan would begin generating in 2025 and cost £18bn.

However, the company said on Thursday that the partners are ready to provide a further £2.7bn “if necessary” in “extreme scenarios”.

The projected rate of return (IRR) on Hinkley Point is estimated at around 9 percent, based on it sticking within the £18bn cost estimate. EDF said every six months of delay cuts the IRR by about 20 basis points.

“We will do everything we can to make sure there is no delay,” chief Executive Jean-Bernard Levy told shareholders.

EDF also said that the schedule for Hinkley “anticipates a 115 month construction period after the final investment decision until commissioning of the first reactor”.

French energy minister warns of the “colossal” cost of the Hinkley Point project

Ségolène Royal, the French Minister of Ecology, Sustainable Development and Energy, said that EDF may have been “carried away” with its investment in the Hinkley Project.

According to The Financial Times, Ms Royal said she was concerned about the project’s impact on the EDF’s already stretched balance sheet if it proceeds. “I am wondering if we should go ahead with the project. The sums involved are colossal,” the minister told the FT.