At the end of July, EDF Energy confirmed the preferred bidders to work on the proposed Hinkley Point C nuclear plant in North Somerset as it works towards a final investment decision for the £24.5bn project.
Contracts worth billions of pounds have been allocated that will help create a supply chain ready to build the first new UK nuclear power station in more than 20 years.
EDF Energy said it was now estimated that more than 60 per cent of the construction cost will be placed with UK businesses, against an initial estimate of 57 per cent.
Among the winning bidders is a joint venture between Balfour Beatty and NG Bailey – known as Balfour Beatty Bailey – which has been appointed as preferred bidder for the £460m electrical package; a move which could create up to 1,000 jobs.
“This project enables Balfour Beatty to deploy its extensive experience and knowledge of the nuclear sector as the UK takes its next significant step forward in low-carbon energy,” said Leo Quinn, Balfour Beatty’s chief executive.
“The new nuclear programme demands a scale of resources and expertise that only the most capable and trusted partners can deliver. Equally significant, the project requires us to draw on the local community and its people in building what will be a highly specialist workforce.”
The preferred bidders with a combined contract values of more than £1.3bn include:
- Balfour Beatty Bailey (joint venture) comprising of Balfour Beatty (London) and NG Bailey (Ilkley, Yorkshire) for electrical cabling and equipment installation
- Cavendish Boccard Nuclear (joint venture) comprising of Cavendish Nuclear (Bristol) and Boccard (Lyon, France) for mechanical pipework and equipment installation
- ACTAN (joint venture) comprising of Doosan Babcock (Renfrew and Crawley), with Axima Concept and Tunzini Nucleaire (both of Paris, France) for heating, ventilation and air conditioning
- Laing O’Rourke (Dartford) for construction of workers’ campus accommodation
- ABB UK (Stone, Staffordshire) for power transmission
- Premier Interlink WACO UK Ltd (East Yorkshire) for construction of temporary buildings
- Weir (East Kilbride) for large pumps used to cool water
- Clyde Union (Glasgow) for main pumps used for feedwater and cooling water systems
Five local supplier alliances, representing more than a dozen Somerset and southwest businesses, have also been named among EDF Energy’s preferred bidders, with allotted contracts worth about £225m. These are:
- Somerset Larder (six Somerset food producers) for catering
- HOST (four Somerset companies) for workers’ campus accommodation management
- Somerset Passenger Solutions (two Somerset companies) for transporting workers by bus
- Somerset Infrastructure Alliance (three southwest companies) for site infrastructure services including site road maintenance, landscaping, signage and fencing
- COMA (five southwest businesses) for construction utilities including electrical networks across the site and support services
Project management contracts have been signed with the following companies, with the value of each contract to be determined for services that will be provided over the duration of construction:
- KBR (Greenford and Leatherhead) for project management of site operations and equipment contract management
- Jacobs (Reading) for project management of building and civil work
- Gleeds (London and Gloucester) for contract management services
- Faithful+Gould (Bristol) for contract management services
- Turner and Townsend (Leeds) for project controls and project management
- Mace (London) for contract management services
EDF Energy chief executive Vincent de Rivaz, said: “Hinkley Point C will be at the forefront of the revitalisation of the UK’s industrial and skills base, and we have worked hard to build a robust supply chain to support new nuclear in the UK.
“The project will boost industrial stamina in the UK and kick-start the new nuclear programme. Experience gained at Hinkley Point will help firms be successful in nuclear projects around the world.”
Hinkley Point C, which will be located on the North Somerset coast, will be the first nuclear power station to be built in the UK for 20 years. The two new nuclear reactors that form the proposed Hinkley Point C will provide reliable, low carbon electricity to meet seven per cent of UK demand.
For companies to become directly involved, collaboration and joint ventures were required due to the scale of the contracts on offer. However, collaboration throws up numerous questions; can local businesses, including competitors, put aside their differences and demonstrate that they can work together to rival larger national bids? Can an effective management team be put together to make decisions on behalf of all of the underlying businesses? How can an untried collaboration of smaller entities demonstrate that it can provide a reliable service when it has not yet traded in that format? These are questions that Milsted Langdon can help to resolve at an early stage.
We can assist with modelling the impact of new contracts, including financial projections and cash flow forecasts. Our award-winning Business Innovation team is unique in its ability to help clients extract and present financial data in a user-friendly manner and uncover new insights into their business.
Our corporate finance team have established links with the region’s banks and asset-based lenders, and our specialist tax team regularly advise on business structures, joint ventures, and tax planning. Whatever the nature of your business, we would be delighted to help you address challenges ahead. Please contact Rob Chedzoy on 01823 445566 or firstname.lastname@example.org.