The resignation of French energy company EDF’s finance director on the grounds that he could not sanction its current plans to progress with the Hinkley Point C project has once again raised doubts over the project’s future.
Thomas Piquemal, finance director of project leader EDF, quit his job last week, reportedly because he feared the £24bn project could jeopardise EDF’s financial position.
EDF’s final investment decision on the project has already been delayed several times: it was rumoured to be due in October 2015, and later expected at an EDF board meeting in January.
The prospect of any further delays is unwelcome news for a number of companies, including the BYLOR joint venture of Laing O’Rourke and Bouygues, which has been working on the main £2bn civil engineering contract, while a Balfour Beatty and NG Bailey JV has been appointed preferred bidder on a £460m electrical package.
Costain is also designing and building a £200m water cooling system, while Laing O’Rourke has also been hired for construction of workers’ campus accommodation. Mace, Turner & Townsend and Faithful & Gould have all been appointed as preferred bidders on roles at the project.
Read related articles
How much will Hinkley Point C cost? EC Harris looks at the numbers
Final terms signed on Hinkley C contracts in wake of EDF deal
Greenpeace report launched in wake of £2bn guarantee for Hinkley Point C
But industry commentators have told Construction Manager that the continued delays – and even the possibility of cancellation – are unlikely to have a major impact on the industry’s output prospects for 2016-2018.
Noble Francis, economics director at the Construction Products Association, told CM: “The CPA has already cautiously estimated Hinkley to start in 2018, late in our current 2016-2019 forecast horizon, and its effect will likely double construction activity growth in the energy sector.
“Still, even if EDF decides to delay the project once again, we believe the energy sector will see double-digit growth, driven by decommissioning projects, National Grid power connections and the Round 3 offshore wind programme.”
Michael Dall, lead economist at construction data expert Barbour ABI, also believes that the construction companies involved have only ever pencilled in the Hinkley work.
He told CM: “There is no doubt that the scale of the investment means it would have a major impact on the construction industry’s future prospects – however, most have adopted a cautious approach as to whether it actually happens.
“There is no doubt that the scale of the investment means it would have a major impact on the construction industry’s future prospects – however, most have adopted a cautious approach as to whether it actually happens.”
Michael Dall, Barbour ABI
“There are other large-scale infrastructure projects, such as HS2, which seem more realistic and are the subject of more consideration. That said, the quicker a decision is made on how the UK plans to source its energy in the future, the quicker the positive impact can be felt within construction.”
The news of EDF’s internal turmoil is the latest stumbling block for the troubled project, which EDF predicted in 2007 would be providing the electricity for Christmas dinner in 2017.
The departure of Piquemal is also the second recent high-profile resignation. Last month Chris Bakken, project director for Hinkley and leader on its design, licensing, procurement, construction and commissioning, announced he was leaving to take up a role at US energy company Entergy.
The company’s board is now expected to finalise in April how it will fund the project after postponing the decision a number of times.
Hinkley Point C was due to be one of eight new reactors heralding what former prime minister Gordon Brown in 2008 called a “nuclear renaissance” for Britain.
EDF, which is 85 % owned by the French government, bought British Energy in a £12.4bn deal in 2008, which gave it eight nuclear sites.
EDF announced a partnership with Chinese utility company CGN in October 2015 that would see EDF financing 66.5% of the project and the Chinese company 33.5 %.
However, the French government has since expressed doubt about the project and the state of EDF’s finances – its share price has been falling, linked to falling global oil prices.
The French company recently admitted it would have to sell a range of assets to raise cash and is also grappling huge cost overruns on the Flammanville nuclear project in France – currently being built with a similar reactor design to the Hinkley proposal – and a need to spend tens of billions of euros upgrading its domestic reactors.
Last month, the Financial Times revealed that the EDF board was split between those who wanted to press ahead with the project and hope to find other investors along the way, and those who wanted to delay until those investors – and possibly even a new reactor design – could be found.
