Government risks more than energy security with Hinkley deliberation

The fresh delay to Hinkley Point C undermines prospects for the Northern Powerhouse, says Simon Stuttaford.

For some time now, the nuclear new build industry has been patiently waiting for a Final Investment Decision (FID) from EDF in relation to Hinkley Point C. This decision is expected to open up huge opportunities for the UK nuclear new build industry, spear-headed by three important projects – EDF`s project at Hinkley Point C, NuGen`s project at Moorside and Horizon`s project at Wylfa.  

But in a surprise announcement a couple of weeks ago, the UK Government said it was postponing the decision until Autumn, just hours after the board of EDF announced FID.

No matter how last minute it might have seemed, the stall can be explained as nothing more than an understandable opportunity for the new Prime Minister to take a little time to review the decision herself. After all, it’s a significant step which will undoubtedly have a lasting impact on energy policy. But this ongoing deliberation is putting more than just energy security at risk.

The Government has bold ambitions to spread economic opportunities in the UK, and the nuclear industry is already playing a big part in this. So much of the supply chain is based in the Northern Powerhouse – for example, Sellafield has long been a source of significant employment in Cumbria on the waste management and decommissioning side, and EDF`s Heysham site provides employment in generation.

And on the new build side, NuGen`s Moorside project is now based in Cumbria, with its UK headquarters having recently relocated from London to Manchester, while Horizon`s Wylfa project at Anglesey is not far away. The nuclear new build projects we are waiting for represent a significant opportunity right across the supply chain and the economic benefits they will bring are substantial.

But in the current uncertain climate, smaller companies may well take the view that it is simply not worth waiting around for a firm Government decision – even post-FID – when there are other competing infrastructure projects to work on that appear more stable. So a delay by the UK Government has a direct impact on the supply chain. And from an industry perspective there is also a very real risk in losing the skills, expertise and resources that already exist in this area.

For investors, certainty is key and political certainty is an important element of that. As with the supply chain, there is every chance that potential investors will consider that their money is safer and better spent elsewhere, including in competing infrastructure projects. This means that significant investment in new nuclear generation and the associated spend could be diverted away from the Northern Powerhouse, where it would have led to job creation and potentially the wider economic development of the north.

Of course, the UK Government should take as much time as it needs to satisfy itself that the Hinkley Point C project is both viable and valuable before it goes any further. But its indecision has introduced an unwelcome element of uncertainty to a sector that, due to its long-term timescales, relies upon certainty. What is needed next is a clear and unequivocal show of Government confidence in the nuclear industry, committing fully to what will hopefully be the first of three significant nuclear new build projects – all of which will, in one way or another, benefit the UK in general and the Northern Powerhouse in particular. Simon Stuttaford, partner in law firm DWF’s national nuclear team