EDF won’t make ‘massive fortune’ from Hinkley, says director

EDF won’t make a “massive fortune” out of its Hinkley Point C nuclear power plant due to returns being eroded by delays to the project and escalating costs, a director has admitted.

Giving evidence to the House of Commons energy security and net zero committee, EDF Energy’s director of strategy and regulation Paul Spence was grilled on how much constructing the first new nuclear power station in a generation would cost the consumer.

He said that the guaranteed strike price for power from the project, which was set at £92.50 per MW hour when the Contract for Difference for Hinkley was agreed in 2016, was now worth between £110 and £120 once inflation was taken into account.

However, a combination of construction cost inflation and delays, partly resulting from disruption caused by the Covid-19 pandemic, means that EDF no longer expects to see the 9% return it had initially banked on for the project.

Spence said: “EDF is not going to make a massive fortune, we’re going to make a fair return for the effort put into the project.”

While acknowledging that building the UK’s first nuclear power station in more than 20 years was always going to be a challenge, he said: “The project had proved harder than we expected and taken longer than we hoped.”

As one example, Spence added that it had taken a year longer than anticipated for the Welsh Government to approve the dumping of mud displaced from the Hinkley site.

But Spence said EDF is already seeing performance improvements of up to 30% in the construction of the second reactor unit at Hinckley, such as for fabricating the steel ring at its base.

EDF also expects to see further improvements on later units, like those at its planned project at Sizewell C in Suffolk, he said: “Because the design has been done first time, it doesn’t need to be redone.”

Spence added that EDF is looking into plans to increase the efficiency of green hydrogen production by taking steam, which is a by-product of nuclear generation, from Sizewell to heat up water.

This can lead to improvements of up to 10% in the efficiency of the process for using electrolysis to produce hydrogen from water.