EDF Energy response to Carbon Connect report on nuclear power
Today’s Carbon Connect report on nuclear power endorses its role in the UK’s low carbon energy future and highlights the benefits of the strong cross-party consensus behind its development and construction. It also stresses the importance of building skills and expertise for large infrastructure projects, including new nuclear and reports on the progress in increasing the UK’s expertise in nuclear research and development.
The report makes a number of assumptions about financing, and equity returns for the Hinkley Point C project. These detailed assumptions are not correct and were neither provided nor validated by EDF Energy. As reported last October, target project returns are 10% and, with borrowing, equity investors may achieve closer to 15%. These investors will take the risk of delivering the project on budget and also face risks on the performance of the station when built. There are in-built mechanisms to reduce the customer price if higher returns prove achievable and to share benefits from any gains in construction costs.
Project costs for Hinkley Point C have been built up from competitive tendering wherever possible and, as the Government has made clear, the price for electricity is competitive with other forms of low carbon energy.
EDF Energy agrees with Carbon Connect that the European Commission state aid process is an important opportunity for further scrutiny of the deal. The process will show that the deal is fair and balanced for consumers and investors.