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According to reports from the Financial Times and Reuters, the UK government has no plans to offer loan guarantees for Hinkley Point C, which is majority-owned by EDF.
Hinkley Point C was approved in July 2016 and began construction soon after. The vast power station, which will have two nuclear reactors, is expected to provide zero-carbon energy to six million UK homes and have an operating lifetime of 60 years.
The project has since been faced with years-long delays and a ballooning budget – according to a recent announcement, its final cost could reach £46bn, an increase of approximately a third, and it will not begin fission until 2029 at the earliest. Challenges include thousands of design changes demanded by regulators, inflation, disruption to supply chains and labour shortages.
Hinkley Point C is financed by French state-owned energy company EDF Energy (66.5%) and Chinese state-owned energy company CGN (33.5%).
This week, it was reported by The Financial Times that the French government was pressing the UK government to provide loan guarantees for the project to ease pressure on EDF’s finances.
Under the terms of the contract for the project, any additional construction costs fall on EDF. In 2014, the UK government offered EDF a loan guarantee of £10bn, which was withdrawn by the time the project was approved because of concerns about mounting costs and delays. Instead, the agreement set a minimum price guarantee for Hinkley C’s future power supplies.
Junior partner CGN is not expected to provide extra funding, leaving EDF the sole private guarantor for the project.
The UK government said, according to the newspaper’s report: “Hinkley Point C is not a government project and so any additional costs or schedule overruns are the responsibility of EDF and its partners and in no way will fall on [UK] taxpayers.”
More recently, Reuters reported that Prime Minister Rishi Sunak’s spokesman said he was “not aware of plans” to provide loan guarantees to relieve pressure on EDF.
“Hinkley Point C’s financing is a matter for the project’s shareholders, it’s not for government,” he said. “Of course, we’re speaking to them about how we can ensure the project continues on its current schedule.”
French officials are reported to be considering other options to help EDF. This could involve bringing another partner into the project or adjusting the terms of its deal to build the upcoming Sizewell C nuclear power station, for which construction is expected to begin this year.
