In case you missed it, EDF considered yesterday an opportune time to bury some bad news.
It evidently wasn’t wrong, judging by scenes in Westminster yesterday evening, but the French energy giant still had a slightly difficult morning to contend with.
Yesterday morning EDF confirmed that not only was its flagship UK nuclear project, Hinkley Point C, now more likely to be 15 months late, but it could cost as much as £2.9 billion more than previously thought. It represents the latest episode in a continuing drama that the UK just can’t seem to get enough of.
No, not that one. But more on that later.
Hinkley Point C season three kicked off like any other TV drama does. More of the same dialogue, but a bit more severe and starker in tone so as to shock a weary audience. Project delays and cost overruns in that corner of Somerset are now as common an occurrence in the power market as energy retailer collapses, only at least on this front the customers don’t stand to be adversely affected.
The timing of the announcement is doubly poetic considering that, just last week, the UK’s renewables scene was dealt a double dose of good news. Friday saw the eagerly awaited results for the third round of Contracts for Difference auctions and, boy, did they not disappoint. 5.5GW of offshore wind power clearing at prices as low as £39.65/MWh – plus index-linked inflation, of course – means that before Hinkley even comes on stream, there’ll be offshore wind farms generating at almost one-third of its price.
Also last week, Aurora Energy Research collaborated with would-be renewables investor Wyelands Bank and renewables developer Anesco on a report which ultimately concluded that, as early as next year, utility-scale solar-plus-storage farms will be capable of delivering internal rates of return of around 7.6%. Furthermore, when spoken to by Current± about the report, Wyelands Bank described its IRR forecasts as “pretty conservative, actually”.
That conservative figure just so happens to be the new IRR that EDF is forecasting for Hinkley Point C, meaning that the company would have been just as better off if it had ploughed £20 billion+ into solar-plus-storage projects from next year, and those could’ve actually been generating by the year’s end.
It’s the kind of plot twist a struggling TV drama usually reserves for mid-way through its third season, determined to recapture a flagging audience for its end-of-season run. But here’s EDF delivering that news straight off the bat. You wonder what could possibly happen next.
Yesterday’s development was enough to make you wonder why the UK seems so committed to an unquestionably politically-motivated project that promises to be months overdue amidst changing goalposts, and could cost businesses billions of pounds more than was initially promis- ah. Hold on.
Read more: Current News