Giving evidence yesterday on the challenge of building new nuclear, he was keen to scotch suggestions that government would need to take on any of the risks of construction overruns similar to those seen in Finland or France. De Rivaz said the question arose because people did not know the details of the Contract for Difference that would give EDF revenue certainty around the project.
MPs asked whether the company would want to access the Treasury’s UK Guarantee Scheme, launched in June to provide a financing backstop for new infrastructure projects. Humphrey Cadoux-Hudson, EDF Energy’s managing director for nuclear new-build, said that could be an important element of financing. He added that was not to take construction risk but to “provide adequate credit headroom above debt financing”.
Rupert Steele, director of regulation at Scottish Power, which aims to build a later plant at Moorside in Cumbria in a joint venture with GDF-Suez, was less sure about the strength of the CfD. He said “these are large projects working with relatively new designs” and it was “either necessary to allow for that in the strike price or have an adjustment mechanism. It is too early to tell what is the best value for consumers.”
De Rivaz also said he had “no concerns” over political risk in the UK and the progress of the bill. He asked “do you believe that as a company we would have invested as much money as we have if the government was not serious?” and said he expected a second reading of the energy bill before Christmas 2012.
On the key question of the strike price he said suggestions it would be £140 per MWh were “absolute rubbish,” and he had “emphatically denied it”. He ducked questions over whether the price would be as low as £100/MWh – the aim for offshore wind generation – saying only that it would “reveal nuclear’s competitiveness compared to other low-carbon technologies”.
De Rivaz denied suggestions from Martin Gardiner MP that there could be a perverse incentive to estimate higher capital costs for the project, which would allow EDF to argue for a higher strike price. That would not be robust over the long term, De Rivaz said.