Also, after corrosion was observed on pressuriser valves at the EPR at Olkiluto (Finland), the Group carried out equipment checks and also detected traces of corrosion on the Flamanville EPR’s valves. The material used for certain components of the pilots control valves has been changed accordingly. Several corrosion stress tests were conducted to select the best material. The components are currently in production and will be installed on site during the first half of 2022. The ASN has been regularly informed of the technical choices, and made no objection to this strategy. The ASN and the IRSN are also continuing their examination of the operation and reliability of the pressuriser valves. EDF is due to respond to the IRSN’s most recent questions so that it can finalise examination of the valve design by the end of the first half of 2022.
As the work advances, new technical matters emerge that could increase the completion cost and the risk of deferred timelines. In view of the progress made on operations and preparations for start-up, on 2 January 2022 EDF has adjusted the schedule for the Flamanville 3 project. The fuel loading date has been deferred from late 2022 to the second quarter of 2023, and the estimated completion cost revised from €12.4 billion to €12.7 billion (in 2015 euros, excluding interim interest).
Before loading the fuel into the reactor vessel and carrying out the overall start-up tests, several operations remain to be carried out, mainly:
As announced in January 2022, inspections of fuel assemblies of the Taishan 1 reactor following the technical issue encountered during its second operating cycle showed mechanical wear on certain assembly components. This kind of wear has already been observed in several reactors of the French nuclear fleet. For the future commissioning of Flamanville 3, a solution will be examined with the ASN.
Following the final investment decision (FID) made by EDF’s Board of Directors on 28 July 2016, EDF and China General Nuclear Power Corporation (CGN) signed contracts with the UK government for the construction and operation of two EPR reactors at the Hinkley Point site in Somerset (the “Hinkley Point C” or “HPC” project). EDF’s share in HPC is 66.5% and CGN’s share is 33.5%.
Construction work continued on the HPC project in 2021, and many milestones including the following have been reached (work on Unit 2 follows around 11 months after the work on Unit 1):
Progress in 2021 on the HPC project was affected by the Covid-19 pandemic beyond the first quarter, and also by a lower-than-expected engineering performance and tensions on the worldwide building materials markets. The offshore phase of maritime work was also slowed down by delays with planning permission; a court case is currently ongoing. In this context, the risks of schedule and cost adjustments rose again in 2021. Action plans are under way to reduce the risk of delays, and steps are being taken to improve the engineering performance. Respect of the current schedule and completion costs will depend on the success of these measures.
A detailed review of the HPC project’s schedule and cost was performed in 2020, particularly to estimate the impact of the pandemic so far. As a result the following information was announced on 27 January 2021:
A full review of the benchmark costs and schedule will be carried out in 2022.
On 29 September 2016, alongside the HPC contracts, EDF and CGN signed agreements for the Sizewell C project, concerning the development, construction and operation of two EPR reactors at Sizewell in Suffolk with total capacity of 3.2GW, to supply electricity to 6 million British households for approximately 60 years. The project objective is to replicate HPC as far as possible.
Development of this project is headed by EDF, which owns an 80% share at 31 December 2021 while CGN owns the other 20%. By the final investment decision date at the latest, EDF expects to become a minority shareholder with a maximum stake of 20% and correspondingly limited rights, at which point it will deconsolidate the project in the Group’s financial statements. Consequently, the project aims to achieve the right conditions for non-Group investors and lenders to invest in the project, particularly the definition of an appropriate regulatory and funding framework, which is necessary to obtain a quality credit rating that will attract private sector funding at a competitive cost for consumers, and mobilise the necessary capital.
Once the final investment decision is made, EDF plans to supply design, equipment and essential nuclear components (particularly steam generators, instrumentation and control equipment, and fuel) and the associated services.
In June 2020, the UK’s Planning Inspectorate accepted the application for a Development Consent Order (DCO) for construction of Sizewell C. Examination of the DCO took place between April and October 2021. As part of the UK planning process, a Deed of Obligation (programme of mitigation measures) and an Environment Trust (promising additional environmental protection) were set up. The Planning Inspectorate is currently studying the final draft of the DCO and all the related documents (technical assessments, mitigation measures, etc.) before making a recommendation to the UK’s Secretary of State. The Secretary of State’s decision on the DCO application is expected to be made by the end of May 2022, and will be open to appeal for a six-week period. Applications for environmental permits and a nuclear site licence were submitted in May and June 2020 and are currently under examination. The requirements for attribution of a nuclear site licence should be fulfilled during 2022.
On 26 October 2021, the UK government presented the Nuclear Energy (Financing) Bill setting out a proposed funding framework for future nuclear projects, the Regulated Asset Base (RAB) model. The bill completed all the stages in the House of Commons on 10 January 2022 and was then sent to the House of Lords for a second reading. The RAB model aims to enable investors to share the risks of project construction and operation of the project with consumers. A Government Support Package (GSP) will also be defined to protect investors and lenders against certain risks. The Sizewell C project aims to be eligible for a RAB licence. The terms of the RAB model and the GSP for Sizewell C are currently in discussion.
On 27 October 2021, in its budget and spending review for 2021, the UK government announced that the budget for 2022-2025 included up to £1.7 billion of direct government funding to enable a large-scale nuclear project to reach a final investment decision, and that the government was in active negotiations with EDF over the Sizewell C project. On 27 January 2022 the UK government announced that it was granting £100 million of public funding in return for an option to purchase land at the Sizewell C site or EDF’s shares in the Sizewell C company.
EDF’s ability to participate along with other investors in a final investment decision and contribute to funding for the construction phase depends on the fulfilment of conditions which are not guaranteed at this date.
(1) The costs previously announced in the press release of 25 September 2019 were £21.5-22.5 billion (costs net of operational action plans, in 2015 sterling, excluding interim interest and foreign exchange effects versus the reference exchange rate for the project of £1 = €1.23). Costs are calculated by discounting estimated costs in current sterling using the British Construction Output Price Index for All New Work.
