Southwest businesses involved in the development of Hinkley Point C are now facing uncertainty because the project to build the nuclear reactor has been delayed due to its Chinese investors demanding that the French government protect them if it goes bust.
The £16 billion Hinkley Point C scheme’s operational start date of 2023 may well be delayed also, and local businesses with an interest in contracts at the site are concerned that financial payback is likely to be pushed back by many months.
State-backed China General Nuclear Power Corp and China National Nuclear Corp, which in October 2013 provisionally agreed to take a stake of about 40 per cent in the project, are understood to have concerns about Hinkley Point’s European pressurised reactor design from loss-making state-backed French group Areva.
It has been reported by the national press that the Chinese companies are refusing to invest unless the French government promises to bail out Areva, if necessary, and cover their share of any cost overruns. Projects to build the same Areva-designed reactors at Flamanville in France and Olkiluoto in Finland have been delayed by around five years and are more than three times over budget.
Furthermore, it has emerged that plans to erect more than 140 pylons connecting Hinkley Point to Avonmouth could be delayed by three years. National Grid wants to install overhead electricity lines from the new proposed nuclear power station by October 2019, if approved. However, at the start of a six-month inquiry the date has been pushed back to October 2022. The Planning Inspectorate is due to make a recommendation on the plans to the Secretary of State this summer. The National Grid plans, submitted in May 2014, will see 30 miles of overhead wires carried on pylons and a five mile section under the Mendips to connect the power station to the National Grid’s 400,000 volt substation at Avonmouth.
The contracts and expertise required at Hinkley are wide-ranging and include construction, metal fabrication, facilities management, catering, temporary office fit-out, bus services and accommodation booking amongst many others. EDF gave its commitment at an early stage to encourage and facilitate the involvement of local businesses in the supply chain and, where practical, to stimulate inward investment into the wider Southwest area.
Our expert corporate finance, tax and Business Innovation team are well placed to assist businesses which are either actively involved, or considering becoming involved, in tenders for Hinkley Point C projects. If you would like to discuss what we can do to help, please contact Rob Chedzoy, on email@example.com or on 01823 445566 to arrange a meeting with one of our experts.