EDF Says War and Shortages Set to Delay Hinkley Point C in U.K.

(Bloomberg) --

Electricite de France SA says its flagship Hinkley Point C U.K. nuclear plant risks being late and over-budget as Russia's invasion of Ukraine and supply chain disruption weigh on progress at the site.

The risk of delays have increased since the company's update in January last year because of the combination of the pandemic, the U.K.'s exit from the European Union, lower civil productivity, the Ukrainian conflict and supply chain disruption, EDF said in presentation on Wednesday.

That applies “for HPC and for the suppliers of HPC,” EDF Chief Financial Officer Xavier Girre said on a conference call. “On top of that, the project is impacted by materials shortages and inflation.”

The two reactors, due to come online in 2026, are blazing a trail for a nuclear renaissance in Britain. EDF is in talks with the government to secure financing for a second plant of the same design at Sizewell. Delays and cost overruns could put off investors at a crucial point in negotiations.

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EDF has a 66.5% in Hinkley Point C, while China General Nuclear Power Corp owns the rest. The French company expects to complete its review of the timetable and budget for the project by end-June. Depending on the outcome, the reassessment may revive controversy over how expensive the technology is and whether further holdups are inevitable.

The biggest hurdle for new projects is financing. Nuclear plants cost about 20 billion pounds ($25 billion) and compete for investor capital with renewables, which provide returns much quicker.

In January last year, EDF raised its estimate of the cost of Hinkley Point by 500 million pounds to a range of 22 billion to 23 billion pounds, citing the pandemic. It also pushed back the date when the first reactor will produce power by six months to June 2026. It previously lifted the Hinkley Point budget in 2017 and 2019 from an initial estimate of 18 billion pounds when the contract was signed with the U.K. in 2016.

The company added 4,000 workers to the project last week for the next phase of construction.