Now you C it – Hinkley Point update

Author: Caroline Lockyer, Glenigan Sector Expert – Utilities & Infrastructure

The decision by the Government to delay a final decision on Hinkley Point C has been described as chaotic, clever, coincidental with Brexit and the EU referendum results and finally `bonkers’ by the GMB Union.

So, is this a coincidence? Is it clever? Labour certainly think it’s chaotic!

However, following recent political changes, the Department of Energy and Climate Change has been closed and now forms part of another newly set up Government body known as the Department of Business, Energy and Industrial Strategy.

So, from a wider stance, how serious is this, are the Government taking their eye off the ball or is this a larger group to concentrate on the climate issues that are affected by this?

Environmental groups have criticised this decision saying action on climate change will be downgraded and is the Hinkley Point C delay because of this? Exactly how far down the agenda is climate change, it was never a contender for the top spot, but has constantly made the top 10, but how will this now effect progress in all walks of the industry, from investment to construction?

Craig Bennett, the CEO of Friends of the Earth said 'this is shocking news'. Less than a month into the job and it appears that the new prime minister has already downgraded action to tackle climate change, one of the biggest threats we face.

However, since the results of the EU referendum, HS2 appears safe, a third runway also appears to remain a possibility with just the decision of 'where' remaining up in the air.

Previously the Department for Energy and Climate Change would represent the UK at international climate talks, have responsibility for meeting carbon targets and levying subsidies for green energy all now fall under the new department’s umbrella which is led by Greg Clark.

There’s been too many years of procrastination regarding Hinkley Point C and it’s time the gauntlet was thrown down, the pen picked up and contracts signed.

Hinkley Point C will provide 7% of the UK’s electricity by producing 3,2000,000KW which is enough to charge 640 million iPhone’s at the same time!

So, what’s the hold up? Once EDF had approved funding at their board meeting yesterday, contracts were scheduled to be signed with the Government today, promoting the commencement of the UK’s largest building project and the UK’s first nuclear power station for 20 years. The government then said it was 'only right' to review the project and would make a decision by the Autumn 2016. Many companies have had to put on hold their commitments to the project which just doesn’t include construction and civil engineering companies, there are catering companies who will supply food to the workers employed on the site, cleaners, security and other companies related to the large amount of contractor’s employees who are having accommodation provided for them throughout the duration of the project.

With Chinese officials now making their way home, what is the signal being sent out by the UK Government in the wake of the referendum result? How open for business are we? Britain has committed to pay a price more than twice the current market levels for the power generated by the plant for a long period of 35 years.

With gas prices artificially low and the oil price collapse, this would have been the perfect time to seal the deal. Other power stations are gradually reaching the end of their life cycle as well.

However, taking the momentum down a gear does give the Government time to reflect, it is a new Government with changes in their energy department structure, and there doesn’t appear to be anything negative come from this, just some time out. Although David Cameron and George Osborne were highly in favour of the project, and it’s probable that if they were still in Government, contracts would have been signed today in a historic nuclear deal.

However, the Government are being urged to make their decision sooner rather than later, this Hinkley hiatus cannot continue, with approximately 5,600 workers expected to be on the site at peak construction, this is having quite an impact. The Government are aware that safe renewable power is a major requirement, it’s also a major investment!

Solar energy has been hit quite hard with the change in feed in tariffs, there has been a decline in new planning applications for solar farms over the last 18 months and with energy from waste plants being controversial, therefore taking a lot longer to come to the forefront of construction, this nuclear power plant needs to be pushed forward.

So, Autumn 2016 it is then! Until the next time…