What are the legal obstacles that still lie in the way for Hinkley?

The contracts have finally been signed to start work on Hinkley Point C, but there are still many conditions to fulfil before the landmark nuclear plant starts generating, says Angus Walker.

The contracts have finally been signed by EDF, its Chinese partner China General Nuclear (CGN) and the British government for the construction of Hinkley Point C, the landmark nuclear power station in Somerset. It has been a long time coming, but there are still planning and legal hurdles to overcome before any building work starts.

 The equivalent of planning permission – development consent – was granted for Hinkley Point C on 19 March 2013. This is the same regime for major infrastructure projects that was used for the Thames Tideway Tunnel and will be used again for a new runway at Gatwick or Heathrow. Development consent for the 60km-long power line needed to connect Hinkley to the electricity grid was granted separately at the start of this year.

According to the conditions attached to the permission for the plant, EDF has 18 months in which it can exercise its powers to acquire all the land it needs, and also to start building. In fact, it has been busy with various preparatory works, so has officially started construction already.

Those are only two of a whopping 239 requirements, some of which must be satisfied before construction can start and most of the rest before the power station can be switched on. These could hold things up to some extent, but EDF has included a bespoke local authority sign-off regime to expedite matters. The Hinkley connection project has a more modest 46 requirements, so there is less of a chance of hold-ups there.

 

Challenges

The project has survived several judicial review challenges: one to the Nuclear Power National Policy Statement; one to access to the land for surveying; one to nuclear waste disposal; and one to not notifying Ireland about potential trans-boundary effects. All of these were unsuccessful, although the last one got to the Court of Appeal.

There remains one challenge, however, which is by the Austrian government before the European Court of Justice. This is on the grounds that the government’s “contracts for difference” regime of offering a fixed price for electricity constitutes illegal state aid. The challenge was made in July 2015 and nothing further has happened. Even if successful, it would probably require the UK to change its methods rather than affecting a particular project such as Hinkley. It will be interesting to see whether prohibitions on state aid survive the Brexit negotiations.

 Although not strictly a legal issue, there might be delays for other reasons. There have been significant delays already, first while EDF decided whether to make a “final investment decision”, and then, unexpectedly, when new prime minister Theresa May had a further rethink after EDF gave the green light. Government approval came with a few provisos about changes in ownership, something the new government is keen to widen to critical infrastructure generally.

 The environmental statement submitted with the original development consent application in 2011 assumes that both reactors will be operational by 2020. Given the delays in getting to the point of signing contracts, it is not surprising that the current estimate is 2025, and it would not be unusual if it were delayed further. Few large infrastructure projects are completed on time. For example, Crossrail was originally intended to be operational in 2013, and the current date for it to be fully open is 2019. Reactors of the same design as Hinkley planned for Finland and France have been delayed, but two in China are expected to open next year.

Adding 3.2GW to the UK’s electricity supply will be welcome whenever it happens, but the delays mean Hinkley will not address a short-term energy crunch over the next few winters. There has been only one application for a power station of any type, including windfarms, of more than 50MW this year, and so the provision of more generation is getting very urgent.

In the longer term, decarbonisation means a much greater demand for electricity for transport and heating, and although Hinkley will help to take up that strain, a significant amount of new generation is still needed. Four other nuclear power stations are on the cards, EDF’s Sizewell in Suffolk and Bradwell in Essex, Nugen’s Moorside in Cumbria, and Horizon’s Wylfa on Anglesey, but more projects of other types are also required. The government definitely needs to do more on this front, and downgrading energy from its own department into business and industrial strategy is not a good sign.

Other than minor potential hiccups with discharging conditions, it is full steam – make that pressurised water – ahead for Hinkley Point C.

 

 

Hinkley Point C key facts

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There will be two 1.6MW reactors.

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The strike price will be £92.50/MWh for 35 years. This could drop to £89.50 if EDF builds Sizewell C.

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Hinkley is predicted to cost £18 billion, up from the original estimate of £14 billion.

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CGN will have to meet the cost of any delays or overruns, and if the project comes in below budget it will share any savings with the taxpayer.

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57 per cent of Hinkley Point C investment will be made with UK firms.

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Around 25,000 jobs are expected to be created during construction of the power plant as well as 900 permanent jobs during its 60-year operation.

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The jobs include 5,600 in construction plus thousands of supply chain jobs – worth £100 million a year to the local economy during the peak construction phase.

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£128 million will be made available for community projects over 40 years once the plant is operational.

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Hinkley Point C will be the first new nuclear power station built since Sizewell B in Suffolk, commissioned in 1995.

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Hinkley will meet 7 per cent of the UK’s electricity demand.

Author: Angus Walker, partner and head of the Planning and Infrastructure department, Bircham Dyson Bell,
Channel: Operations & Assets , Policy & Regulation
Tags: EDF Energy , Wind , Nuclear , Finance and Investment , Government and NGOs

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