Contract for Hinkley Point C extended by three years
Dec. 9, 2022
Electricité de France (EDF), China General Nuclear (CGN) and the UK government have agreed to a three-year extension of the contract for difference (CfD) for the Hinkley Point C (HPC) nuclear power plant under construction in Somerset, England. While the date on which the CfD can be terminated for non-completion (Longstop Date) has been postponed to November 2036, the timetable for commissioning Hinkley Point C remains unchanged, according to EDF.
In October 2013, a contract for difference with a strike price of GBP 92.50 (USD 114.39) per MWh had been agreed for the HPC project. A contract for difference is an offsetting transaction between the purchase and sale price (or vice versa) of an asset. Specifically, consumers pay the difference if the market price for electricity generation falls below a certain base or strike price. If the market price is above that, electricity companies pick up the difference. At the time, the contract for difference for EDF had a term of 35 years with November 1, 2033 as the longstop date, which is the date after which the contract for difference can be terminated for non-realization.
The Low Carbon Contracts Company (LCCC) - the government's contractor - announced on Nov. 29, 2022, that the Longstop Date had been extended from Nov. 1, 2033, to Nov. 1, 2036.
"The extension of the Longstop Date will not affect the delivery date of the project," LCCC told the New Civil Engineer website, because "the terms of the contract provide an incentive to complete commissioning as soon as possible."
China involved in Hinkley Point C, on exit for Sizewell C
Under an October 2015 agreement, CGN took a 33.5% stake in the project to build Hinkley Point C, which includes two EPR units. In May 2022, following a review, EDF announced that power generation for Unit 1 of Hinkley Point C was now expected to start in June 2027 and that the cost of completing both units was now estimated at GBP 25-26 billion (USD 30.91 bn to 32.12bn).
On November 29, 2022, the UK government announced that it was taking a 50% stake in the Sizewell C nuclear power plant. It would also provide funds for CGN to exit this new build project. CGN's share has been 20% until now. With this move, the UK wants to reduce China's participation in British infrastructure projects.
Sources:
WNN, December 2, 2022; and Department for Business, Energy & Industrial Strategy, "Hinkley Point C: contractual documents," November 29, 2022.
Translated with DeepL