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The UK government on 15 September approved Electricite de France’s (EDF’s) GBP18bn ($24bn) project to build two Areva-designed European Pressurised Water Reactors (EPRs) at the Hinkley Point C site. However, the government has set new conditions on EDF and its Chinese partner, China General Nuclear Power Corporation (CGN), which is set to invest in Hinkley through its new company, General Nuclear International. The UK confirmed previously that EDF would initially have a 66.5% stake in the project, with CGN taking 33.5%.

“Ministers will impose a new legal framework for future foreign investment in Britain's critical infrastructure, which will include nuclear energy and apply after Hinkley", a government statement said. The agreement in principle with EDF means that the government "will be able to prevent the sale of EDF's controlling stake prior to the completion of construction, without the prior notification and agreement of ministers". The statement said. "Existing legal powers, and the new legal framework, will mean that the government is able to intervene in the sale of EDF's stake once Hinkley is operational." After Hinkley, the British government "will take a special share in all future nuclear new build projects", the statement said. "This will ensure that significant stakes cannot be sold without the government's knowledge or consent."

The UK's Office for Nuclear Regulation (ONR) will be directed to require notice from developers or operators of nuclear sites of any change of ownership or part-ownership. "This will allow the government to advise or direct the ONR to take action to protect national security as a result of a change in ownership," the statement said.

The decision came after Prime Minister Theresa May unexpectedly decided at the end of July to review Hinkley Point, just hours after EDF had finally approved the project. May had voiced concerns about the scale of potential subsidy for the plants and whether Chinese involvement was a security risk. 

“Britain needs to upgrade its supplies of energy, and we have always been clear that nuclear is an important part of ensuring our future low-carbon energy security,” Secretary of State for Business, Energy and Industrial Strategy Greg Clark said in the statement. “Having thoroughly reviewed the proposal for Hinkley Point C, we will introduce a series of measures to enhance security,” and have therefore decided to proceed, he said.

The UK government earlier agreed a contract for difference (CfD) which guarantees that EDF can sell power generated by the plant at GBP92.50 a megawatt-hour, more than double current market prices, for up to 35 years. This agreement still stands and is unaffected by the new conditions. Despite the guarantee, there was concern within EDF over the financial viability of the project both from management and from French labour unions.

The initial cost of the plant drew criticism from Chief Financial Officer Thomas Piquemal, who resigning in March saying the plant would strain EDF finances. The plant, which will take almost 10 years to construct, will provide a 9% annual return if built on time and on budget, according to EDF CEO Jean-Bernard Lévy. However, experience with other EPRs suggests that may be optimistic.

EDF’s labour unions wanted a delay of three years to assess feedback from the EPR reactors being built in Finland, France and China. The EPR being built at Olkiluoto in Finland is nine years behind schedule and significantly over budget.  The EPR under construction at Flamanville in France is six years behind schedule, and costs have more than tripled to €10.5bn ($11.8bn). The two EPR units being built at Taishan in China are three years behind schedule.

The Hinkley plant is also of strategic importance for China, with CGN providing a third of the finance and planning to take a minority stake in a similar nuclear reactor at Sizewell, with the end game being a majority holding in another NPP at Bradwell, which will use China’s Hualong One technology.

“We are now able to move forward and deliver much needed nuclear capacity at Hinkley Point, Sizewell and Bradwell with our strategic partners EDF,” CGN said in a statement.

CGN reportedly agreed to invest GBP6bn in Hinkley C in return for leading the Bradwell NPP project. CGN would own two-thirds of the Bradwell B project, with EDF owning the rest. It would be the first Chinese nuclear reactor to be built in a developed country and an opportunity to promote China’s technological expertise. According to Chinese media reports, CGN said it now plans to formally submit an application to build its own reactor design at Bradwell. However, it would take at least four years for ONR to assess the proposals and possibly approve them as part of its Generic Design Assessment (GDA) process. Sources close to CGN they were “confident” about winning approval but prepared for a “lengthy and meticulous process”.

The Hinkley approval was welcomed by the owners of two other nuclear power plant projects in the UK – Horizon, which plans to deploy the UK Advanced Boiling Water Reactors at Wylfa Newydd and Oldbury-on-Severn, and NuGen plans to build AP1000 reactors at Moorside in West Cumbria. Horizon, established in 2009, was acquired by Japan’s Hitachi in 2012. NuGen is a UK joint venture between Japan's Toshiba and France's Engie.

The decision was also welcomed by trade associations, including the Nuclear Industry Association and the Confederation of British Industry (CBI) as well as by the Institution of Mechanical Engineers and GMB, the union for energy and construction workers.

Contracts relating to the construction of Hinkley are already being awarded.  General Electric Company has received approval from the UK government for its $1.9bn contract to supply two conventional power islands.

The Steam Power Systems, part of GE Power, will supply the Arabelle steam turbine, generators, and other critical equipment for the Hinkley project. The company has been working with EDF Energy for the past six months to carry out pre-contract activities including planning, procurement planning, pre-engineering safety classification studies, and civil works interfaces. GE last year acquired France’s Alstom which makes the Arabelle turbine.

Harris Pye UK has been awarded a contract by GE Steam Power Systems for engineering design work on two tank sets, including all required services, for the Hinkley turbine halls. Manufacturing contracts will follow. First Bus and Crosville Motor Services have won a 10-year contract to provide bus services for workers involved in building the power plant.

Date: Tuesday, 20 September 2016
Original article: neimagazine.com/news/newshinkley-approved-china-welcomes-decision-5010145