The project to build a new nuclear power station on the Somerset coast took another troubling blow yesterday, with British Gas owner Centrica pulling out.
The uncertainty surrounding the future of nuclear power in Britain led to Centrica withdrawing from the Hinkley C project, with it citing the increasing anticipated project costs in new nuclear and the construction timetable extending by a number of years.
The decision has sparked renewed speculation that the majority developer, French-owned energy giant EDF may now link with Chinese state-owned nuclear company CGNPC. The twin reactor plant which EDF proposes at Hinkley Point would be the first new nuclear power station for a generation, and it is vital to the Government’s energy strategy.
EDF said yesterday the project is “shovel ready” and that momentum remains strong, but delays led the company to announce last year that is extending the life of the existing Hinkley B plant, by seven years.
The Government has yet to announce the “strike price”, the guaranteed minimum price that companies will receive for generating nuclear power. Nuclear development costs are high and the decision is vital to attracting fresh investment. An announcement had been expected last December. Yesterday the Department for Energy and Climate Change said discussions were continuing.
The project has reactor design approval and EDF has won a nuclear site licence. A decision on planning permission is expected in March.
Analysts warn that if nuclear build falls through, electricity prices will go through the roof. Gary Hornby, energy marketing analyst with Inenco, said: “It is not the nail in the coffin, but it doesn’t help. Nuclear is going to have to be a big part of power generation or electricity prices are going to go up. If we can’t build nuclear facilities we are going to have to burn more gas and gas is the most expensive way to generate electricity.”
Centrica chief executive Sam Laidlaw said: “We believe that nuclear generation has a valuable role to play in a balanced UK energy mix.”
EDF Energy said it respects Centrica’s strategic decision, was prepared for it and values the expertise Centrica has brought to the project.
A spokesman for anti-nuclear group Stop Hinkley said: “This has to be one of the worst weeks for EDF since they began their Hinkley C project. Cumbria has rejected hosting an underground dump for their nuclear waste, the true public cost of storing our existing waste – £67.5 billion – has just come to light, and now Centrica has pulled out.”