The award of a £1.2bn civil engineering contract for a new nuclear power station at Hinkley Point in Somerset has been put on ice by EDF Energy, triggering more uncertainty over the nuclear renaissance.
Two consortiums led by Balfour Beatty and Laing O’Rourke were hoping to have heard about the huge deal in recent days but now expect no decision until 2013 at the earliest. The move is a blow to employment prospects in the area and comes weeks after £100m worth of site preparation was postponed.
The soonest a new reactor will be built in Somerset could now be 2021, around four years later than originally hoped. EDF declined to comment on the latest setback, with a spokesman for the 83% state-owned French power company saying: “I am afraid it is not our practice to comment on open tenders.”
The group insisted that its wider plans remained intact and it aimed to start work on the £100m contract, which was awarded last year to construction partner Kier Bam, “as soon as practicable, and all necessary steps are being taken to ensure that work can start in good time”.
EDF says it still plans to go ahead with new reactors in Britain but industry experts say uncertainty over the government’s planned support mechanism through “contracts for difference” and the election of President François Hollande, who is sceptical about nuclear power, have encouraged EDF to slam on the brakes.
John Stanion, chief executive and chairman of construction firm Vinci, a partner to Balfour Beatty, told the industry newspaper Construction News that the £1.2bn contract was unlikely to be awarded until next year. “I think EDF is totally committed to Hinkley Point subject to them having a clear investment case, but I don’t think it is in a position to make a decision until [the contracts are] legally brought into force, so some time next year will be the earliest they will commit.”
The use of contracts for difference to ensure investment in low-carbon technology through guaranteeing a certain power price was confirmed in the energy bill published by the government last week.
But energy companies have made clear they will need to see the exact scale of the financial support before they can commit themselves to new plants, especially nuclear ones. Other power companies such as E.ON, RWE and SSE have already dropped plans for new reactors in Britain.
There has already been speculation that EDF’s original price of building new stations has risen from £4bn to £7bn. The French company will not confirm that.
EDF said it was making “good progress” on site preparation at Hinkley Point after winning approval from West Somerset council in February. Meanwhile, investment in wind and other renewable energy is also stuttering. Spending during the first quarter of the year dropped to its lowest since 2009, according to Ernst & Young’s latest quarterly global renewable energy Country Attractiveness Indices report.
Britain dropped from fifth to sixth place in the global rankings due to new uncertainties surrounding government policies.
guardian.co.uk © Guardian News & Media Limited 2010