Oral evidence: UK new nuclear: status update, HC 922Wednesday 23 March 2016
Oral evidence, 23 March 2016.
Witnesses
Zhu Minhong, General Manager of International Nuclear Business Development Department, General Director of UK Nuclear Projects, China General Nuclear (CGN), Vincent de Rivaz, Chief Executive Officer, EDF Energy, Humphrey Cadoux-Hudson, Managing Director, Nuclear New Build, EDF Energy, Tom Samson, Chief Executive Officer, NuGeneration, and Alan Raymant, Chief Operating Officer, Horizon Nuclear Power, gave evidence.
Chair
Again, can I thank our second panel this morning for coming before the Energy and Climate Change Select Committee? It is appreciated. For the record, can I ask those on the panel to state their names and organisations for the record, and I will start on my left?
Alan Raymant
My name is Alan Raymant. I am Chief Operating Officer, Horizon Nuclear Power.
Tom Samson
Good morning, panel. My name is Tom Samson. I am the Chief Executive Officer of NuGeneration, a company current owned by Toshiba Corporation and ENGIE.
Vincent de Rivaz
Good morning. I am Vincent de Rivaz, Chief Executive of EDF Energy.
Humphrey Cadoux-Hudson
Humphrey Cadoux-Hudson, Managing Director for New Build for EDF Energy.
Zhu Minhong
I am Zhu Minhong. You can call me Minhong. I am General Manager of International Business Department of CGN. I am pleased to be here today. Thank you.
Chair
Thank you very much. I understand that Vincent de Rivaz would like to give an opening couple of minutes’ statement, so I will be tight on the time, and two minutes would be appreciated. Thank you, Vincent.
Vincent de Rivaz
Thank you. Thank you for the opportunity to be here today and to update you on our project and answer your questions. I would start by saying, clearly and categorically, that Hinkley Point C will go ahead. That is good news for the UK. It has been a long road. The project has successfully passed a huge number of regulatory, political, commercial and operational milestones, and I will say briefly why it will go ahead. It will go ahead because we have the expertise, the supply chain ready and the team ready, including our longstanding partners, CGN, to build HPC on time and on budget. It will go ahead and it will deliver 60% of the project’s cost for the UK suppliers. We are confident in this project. We are confident in the EPR technology and evolution to achieve higher standards of safety, of the well-established and reliable PWR technology. EPR is a modern design, which has already been approved by the UK safety regulator. It will go ahead because we have the strong support of the UK Government and of the French Government. It will go ahead because we are confident regarding the financing of this project. Chair, we are confident and proud to be able to deliver this project because it meets the UK need for reliable, affordable, low carbon electricity. It is a fair deal that is at the heart of this project: fair for the customers and fair for the investors. The customers will not bear any risks during the construction of this project. We will bear those risks. Because we are confident in our ability to deliver, we are ready to take those risks. At the end, you will probably see that we are here with the team, with the same passion, the same vision, the same stamina, and behind us there are hundreds and thousands of people ready to go ahead for this vital project. Thank you very much.
Chair
Thank you. Thank you, indeed. I am sure the panel will have plenty of questions following that statement, but for fairness I will ask the other two companies present as well, Mr Samson and Mr Raymant, to tell us what their interest is in UK new nuclear. Mr Samson first.
Tom Samson
Thank you. We believe that NuGen is an essential part of the UK’s nuclear new build industry. We think that industry is larger than just Hinkley Point C. We understand the need to bring on 18 gigawatts of new capacity in the mid-2020s, and NuGen wants to play its part in delivering that new, clean, green, baseload power on time in the mid-2020s. We believe that is consistent with the Government objectives for climate change. We believe that it is necessary to replace the existing ageing fleet of nuclear assets and to overcome the impacts of the shutdown of the coal assets by 2025, and we think it is essential for security of supply to have a domestic source of baseload power here in the UK that we can depend upon for the following 60 years. We are prepared and are working within the defined UK policy framework with the CfD and the IUK regime, and we are confident that we can continue to develop our programme and attract debt and equity to fund our regime over the coming years. We have a deliverable technology, a fleet of AP1000s currently being built around the world today in China and the US. In fact, NuGen will be the 17th, 18th and 19th AP1000s being delivered. We have a single-consortium approach to deliver the project in Cumbria, and we believe we have the right technology and the right team, in the right location, to bring this online.
Chair
Thank you. Mr Raymant.
Alan Raymant
Thank you, Mr Chairman. Horizon is the developer and future operator of Wylfa Newydd in Anglesey and at Oldbury, with the potential of others to follow. We are bringing forward the advanced boiling water reactor technology, which is proven both through construction and operation. We are making steady progress through developing all aspects of the project, focusing initially on the Wylfa Newydd project, to deliver commercial operation in the first half of the 2020s. Like Tom, we see nuclear as an essential part of the future energy mix going forward in order to deliver affordable, secure and low carbon electricity, and we are pleased to be able to give evidence to you this morning.
Chair
Thank you. Can I also ask Mr Zhu Minhong? Aside from your interest in Hinkley Point C, perhaps you could also tell us briefly about other CGN interests in the UK.
Zhu Minhong
Thank you for your question. I am happy to give you some information related to CGN. CGN is an energy company in China, and we have many—four—sectors of business. They are nuclear, renewable, finance and the mines. I have worked for the nuclear sector for about 30 years. Regarding our business in the UK, I like to say, as you know, we have been in partnership with our colleague, EDF, for 30 years, and we are working together today jointly to build two EPR units in China. First, it is natural to extend our partnership to the UK. That is why we are here, of course. Our partnership will cover HPC, Sizewell C, and Bradwell, and at Bradwell we plan to deploy so-called HPR1000 Chinese technology, provided we can go through GDA assessment. That is our plan. Thank you.
Chair
Thank you very much. Mr de Rivaz, you started with a quite flamboyant, perhaps, opening statement there. You said you were confident in the project itself, and then you said you were confident in EPR, and my heart sank somewhat and then I thought about Flamanville in France, which was due to be opened in 2020. Was EDF also confident in that at this stage of its development?
Vincent de Rivaz
EDF is confident in EPR. It is a technology that has been developed in order to meet the highest standard of technology and the highest standard of safety. It is an evolution compared to the PWR technology but it is the same family fundamentally. In terms of it being the technology for our times, meeting the highest standard of safety, absolutely. In terms of our ability to deliver Hinkley Point C on time and on budget, absolutely. Maybe I will let Humphrey to explain how we have, in our project, organised ourselves to learn all the lessons we have learnt from previous projects, Flamanville in France, as well as the Taishan project in China.
Chair
Can we move to that maybe later as the morning moves on? Can I ask you just a secondary follow-up point? You said this will be fair to customers. We heard earlier that it would only be economically fair to customers if oil was around $230 a barrel. When you say, “Fair to customers”, on what criteria do you mean fair to customers? Do you mean economically fair to customers?
Vincent de Rivaz
The question you are asking is absolutely at the heart of why we are meeting today. Is the Contract for Difference that we have negotiated in 2013 with the UK Government, and this is now in its final form, ready to go ahead? A fair deal. I tend to say that when I see on the other side of the channel that it is too risky for the investors, and when I come back here on this side of the channel that it is too generous for investors. That sends me a strong signal that it is a fair and balanced deal. Consumers will pay nothing, absolutely nothing, until the electricity is produced in 2025. The real question is: how have we determined this price, and by which process? Secondly, is this price going to be competitive with the lifetime costs of other generation from 2025 until 2060?
Chair
Is your answer that it is economically fair to consumers in the UK?
Vincent de Rivaz
Yes. It is. Maybe I—
Chair
Do you agree it needs $230 a barrel of oil for equivalence?
Vincent de Rivaz
No. I have listened to what Peter said, and fundamentally I agree with much of what he has said, but you cannot take one isolated element of the whole energy equation. What is true is he said that prices of electricity are very low today and they can be much higher tomorrow, as they have been very high in the past. In 2008, for instance, it was £80 per megawatt in Britain. What is true is that we have to compare the price between 2025 and 2060 to what will be the prices of alternative low carbon energies, in a world where, clearly, the push for decarbonising will be even stronger than it is today, in a world where, very probably, the carbon price worldwide will be higher. At the heart of this price there is a long process that has been scrutinised and challenged here in Britain and then in Brussels, and both processes have concluded it is a balanced deal because it reflects the costs to build this plant, the costs to operate it for 60 years, and it reflects the fair return for the investors, a return which is commensurate with the risks they are going to take during the construction, and they have to take all the risks of the construction and commensurate with the need to attract investors in a world where the UK Government has decided a long time ago that the taxpayers will not pay for the construction cost and will not invest directly in the project.
Chair
Thank you very much.
Vincent de Rivaz
That is the fair deal we have achieved: fair for the customers, fair for the investors.
Chair
You have indicated there are nerves on both sides of the English Channel. I will bring in James Heappey on this.
James Heappey
Mr de Rivaz, I am going to invite you to give some very short answers. It is my understanding you have spent £2 billion on the groundworks and project-specific research on Hinkley. Is that correct?
Vincent de Rivaz
It is a very good question. Thank you for making this point.
James Heappey
Roughly, I believe.
Vincent de Rivaz
This project has never stopped. This project has never stopped.
James Heappey
You have spent about £2 billion.
Vincent de Rivaz
We have already invested for this project £2.4 billion.
James Heappey
You continue to spend, I think, about £55 million per month on the site.
Vincent de Rivaz
Correct, which means that we have never stopped this project.
James Heappey
Given that is the case, why do you not tell us when you are going to take a final investment decision?
Vincent de Rivaz
I have said categorically that this project will go ahead.
James Heappey
No, I know that. We have heard that for quite a few months now. When will you take a final investment?
Vincent de Rivaz
I am pleased to confirm it, and I am pleased to confirm that a final investment decision will be taken very soon. The French—
James Heappey
By when? By when, please? By when?
Vincent de Rivaz
The French Minister of Economy and Finance, Mr Macron, said yesterday it will be by early May.
James Heappey
It will be by early May. The first week of May?
Vincent de Rivaz
He said it. I can confirm that for me it is a confirmation of what I have said that it will be very soon.
James Heappey
You have confirmed to the Committee this morning that you will take a final investment decision by early May. If, by 15 May, no final investment decision is taken, would you agree with us that the UK Government and UK public should be very concerned about your commitment to the project?
Vincent de Rivaz
Nobody should doubt our commitment to the project in which we have invested £2.4 billion.
James Heappey
It would be helpful if you committed that that is what you are saying to the Committee this morning.
Vincent de Rivaz
Yes. I understand, and I am very pleased that people are so eager to see this final decision happening, which is a good sign of the appetite for the project. I have the same appetite for a decision very soon. I cannot give you today, this morning, the precise date.
James Heappey
You can tell us by when.
Vincent de Rivaz
I will not give you a precise date. I have just told you that the French Minister of Economy has given this horizon, early May, and it confirms that the decision will be taken very, very soon.
James Heappey
Thank you for that. That is very reassuring, and I suspect that Twitter has just lit up, but I want to understand what remaining barriers there are in front of you. Are you now on the home straight towards taking the final investment decision by early May, or are there other things that you need to work out before then?
Vincent de Rivaz
Thank you for the question, because I think it is very important that I explain the context in which this decision will be taken. As the chairman of the group said it, he is working as the chairman of the EDF Group, with his main shareholder, the French Government, to secure the financial situation of the group as a whole for the next decade. What is the challenge that we are facing as a group? Huge investments: investment in existing nuclear plant in France, in networks, in energy services, and all sorts of activities that we have in France and in other countries. Hinkley Point C is 15% of this amount of investment. 15%, so it is a large chunk of investment that the company has to deliver. At the same time, it is a point that also Peter said very well. The power prices in the wholesale market have dropped dramatically in six months since October, 35%, so there is an issue coming from that. It is more strain on the finance of the group. We are discussing actively with our shareholder, the French Government—EDF is doing so—to find a solution to this financial equation. What is the good news? I can confirm to you these discussions are now in the final stage, which has allowed the French Minister of Economy to say what he said, and we are going to find a solution, which is not going to be one solution only. It is a combination of solutions that any company facing these challenges must deliver, with the support of its shareholders.
James Heappey
This morning you have told us that you will take a final investment decision by early May. Yesterday we heard Monsieur Macron in the French Parliament confirm that this is very firmly in the French Government’s interests, but from your reply to my question about the remaining barriers you did suggest that there is still some decision-taking to be done, and while your commitment and the French Government’s commitment remains clear, you accept that your answer then does not quite tally with you being convinced that you can take a final investment decision in the next six to eight weeks.
Vincent de Rivaz
No, no. You have heard what I said, which is that we are working on the solutions. They are well defined. It is a complex issue. As Peter said earlier, we talk about £15 billion to £17 billion a year for EDF in this investment, so it is a big, big number. The power price and the revenues are going down, so how do we fix this problem? It is now very clear that everybody is working in the final stage to make it happen, as the French Minister said it yesterday, and he said it in a context where also he said what our chairman said, that this project, Hinkley Point C, is absolutely critical and it has the full support of the French Government, as it has the full support of the British Government. Everything is aligning at the moment very positively. That is why I said in my opening statement categorically it will go ahead, and a decision is very soon.
James Heappey
Do you accept that, given your commitment today to take a final investment decision by early May and Monsieur Macron’s statement to the French Parliament yesterday, were you to now miss that deadline—and I accept that that is the first time that EDF have actually said when you will take a decision by, and previously it has been the UK press that has imposed a deadline on you—of early May, which you have said this morning, that would cause us all to question the credibility of the project?
Vincent de Rivaz
First of all, I have not given you a precise date.
James Heappey
You said by when you would take the decision.
Vincent de Rivaz
I have said the French Minister of the Economy has said it, and he has a very important role in the decisions that are taking place. I take every confidence from what he said that the decision will be taken very soon.
James Heappey
Mr de Rivaz, I am not sure that we can let this move on. We thought that you had said by early May, and now you are rowing back from that a little. You are here this morning—
Vincent de Rivaz
I am not rowing back. I am just saying the French Government has said it very clearly, so I take it as very positive.
James Heappey
Give yourself some wriggle room, but I want you to be clear with us by when you will have taken a final investment decision. We know you are committed to it. We have seen the press releases over the course of the last six months, telling us again and again and again your commitment to the project. By when will you have taken a final investment decision?
Chair
I distinctly heard “early May”. Early May would be before 15 May, as Mr Heappey said earlier. Early May is before 15 May. Will it be done by then?
Vincent de Rivaz
You can understand that I do not want to give precise date.
Chair
That is fine.
James Heappey
By when?
Chair
I mean if it is a—
Vincent de Rivaz
You refer to a very important declaration that I can only take as a very positive one.
James Heappey
Then you have not actually advanced what we know about your commitment to Hinkley this morning. All you have done is come here and told us what we know already, which is you are committed to it.
Vincent de Rivaz
That is absolutely fine. You are convinced that we are committed. We cannot be more committed and more confident than we are.
Chair
I have taken some advance from it because, if Mr de Rivaz is correct and he said early May, early May will be before 15 May. The precise date is immaterial, but before 15 May will be the time this Committee will look for the final investment decision for Hinkley Point.
Vincent de Rivaz
I am very happy to come back to confirm that when it is taken.
Mr Carmichael
We have all heard commitments, Mr Chairman, in this House, to do things by spring, which tend to happen when the leaves are falling off the trees. We will take early May as being in May. I am just interested to explore with you some of the reasons behind your apparent great confidence here and just look for a second at the relationship between yourselves and the French Government, who are 85% owner. There has been some speculation that in order for the project to go ahead, they would be looking in the future at taking the dividends in shares rather than cash, such is the nature of the financing of the project here. Is that correct?
Vincent de Rivaz
I do not want to enter into details of the discussions taking place.
Mr Carmichael
I am not looking for details. I am just looking for—
Vincent de Rivaz
No, no. It is one of the points that the French Minister has said yesterday, with your colleagues in Paris at the French Parliament, as one of the avenues that are contemplated. There is a whole suite of solutions we are now working on, and at the end there would be a good solution, good for the shareholder, the French Government—which has to defend French taxpayers—and good for the company, which has the ambition to make massive investments despite the difficult market conditions that we are all facing. The good news is that this work is going on happily, and we will deliver the good news of EDF being involved to take very soon the much-expected decision on Hinkley Point C.
Mr Carmichael
Your colleague, Jean-Bernard Lévy—
Vincent de Rivaz
My chairman.
Mr Carmichael
—spoke to your employees, saying that the project would only go ahead if it had more support from the French Government. Is that correct?
Vincent de Rivaz
It is exactly the same point, yes.
Mr Carmichael
The suite thing is that it is not to be taking shares instead of cash dividends. What else is it?
Vincent de Rivaz
What has been said publicly is that there is a combination of solutions. One is from the shareholder something that increases the capital of EDF in another form. That is a technical detail, which will be discussed, and a solution will be found. The second avenue that is contemplated as a normal decision for a normal company facing choices, investing in a priority project, is to divest in the non-strategic assets. That is a natural thing to do. The third thing is obviously to continue, as any company should do, to reduce its costs, to increase its operational performance, and those are the types of avenues that we are working on with, I have to say, 100% confidence that the solution will be found shortly, as the French Minister said it.
Chair
I am sorry, Mr Carmichael, can I interrupt, please, for a moment? I need to interrupt because at 11.00 am, in approximately a minute or so, we will be observing a minute’s silence for the victims of the attacks in Brussels yesterday, and I hope that all in the room will join us to mark this moment of respect. I expect the bells to ring, and if they do not ring—because they are often muted during a Committee—I will just call us to order and we will begin a minute at the point we left off. Mr Carmichael.
Mr Carmichael
To an extent, to some of what you are saying, in addition to the question of taking equity instead of cash, you would divest yourself of other assets, so you would look at making other cuts within your business. Is this not in danger of becoming something of a cuckoo in the nest for you?
Vincent de Rivaz
No. EDF is 70 years old. It is a great company. It is a world leader. It is the most successful power company in Europe. All the power companies, energy companies and electricity companies in Europe are suffering because the market conditions are dire.
Chair
Order, order. The Committee observed a minute’s silence. On resuming-
Vincent de Rivaz
I repeat what I was just saying: this company is a great company facing huge challenges, absolutely determined to face them, and taking action, as any normal company should do, to make choices, priorities, disposing of non-strategic assets, hedging costs, and having the support of its main shareholder.
Mr Carmichael
I completely understand that, and I think, as Chief Executive, it is absolutely proper that your first priority should be the protection of your company. As a Committee of the House of Commons, though, obviously we have wider interests to scrutinise and protect. What I am interested to know is the point at which the different options that you have outlined to the Committee this morning will be confirmed and put into the public domain.
Vincent de Rivaz
Yes.
Mr Carmichael
You will do that?
Vincent de Rivaz
Of course. The decision will be based on the evidence that EDF has found the solutions to sustain the investment, and I think it should be good news to see this company behaving in such a responsible way before the final investment decision before kicking off the massive additional investment in Hinkley Point C to be sure that we will deliver, and it is going to be the case.
Mr Carmichael
It must be controversial internally. You lost your chief finance officer recently, Thomas Piquemal. That was over the Hinkley Point decision, was it not?
Vincent de Rivaz
I will not comment on the decision of any individual in this company. As I have said, it is 70 years old.
Mr Carmichael
Let me put it this—
Vincent de Rivaz
What is important is that the chairman has made a very clear choice that we should all be pleased with to categorically support this project, to make sure that it will go ahead. The finance director of the group is a supporter of this project. We move on, and we move on with this very clear choice of the chairman and the French Government that Hinkley Point C will go ahead.
Mr Carmichael
The departure of your CFO saw a loss of 6.5% in your share price overnight. This 70 year-old company has a share price standing at €10, down from €22, at the moment. If you do not meet that early May deadline for a final investment decision, it will be dreadful for EDF, will it not?
Vincent de Rivaz
Hinkley Point C will go head, categorically, very soon. I have already answered the question of the deadline. We are in these days where an historical decision will be taken, and everybody is working in the same direction: the UK Government, the French Government, my parent company, and the team are here to make it possible.
Mr Carmichael
It is all confidence, is it not? You cannot not be confident in your situation.
Vincent de Rivaz
It is a great project. It is a good project. Yes, I am passionate about it, the team is passionate about it, and we are eager to start it.
Chair
We understand that. Thank you.
Tom Blenkinsop
Thank you, Chair. Good morning, gentlemen. I want to ask a few questions of Mr Raymant and Mr Samson. Do you think the delays experienced in the Hinkley Point C project are unusual, and what lessons have you learnt from the EDF experience?
Tom Samson
I am happy to answer first. We are optimistic that EDF will achieve FID soon, and we wish them well. We were keen for that to happen. We do not believe that that necessarily is currently a barrier to us progressing. We have made tremendous progress over the recent years towards our own FID, which is scheduled for the end of 2018. We will continue on that path, and we are optimistic as well that that is a realistic path for us. As I mentioned in my opening remarks, we have some differences in our approach. We have a fleet of AP1000s being built in China and the US, which have also, as was mentioned earlier this morning, suffered some challenges. Those challenges have been overcome. We hope to load fuel in the first reactor in the coming 12 months. That gives us the input and the knowledge to benefit from those lessons learnt when it comes to delivering the project at Moorside. We are delivering a single EPC consortium solution to build the project and we are looking to attract debt. There are a number of distinct differences in how we are approaching it, still within the CfD and IUK regime in the UK, but we remain confident and our shareholders remain committed to our progress towards FID.
Tom Blenkinsop
Mr Raymant.
Alan Raymant
Very similar. Clearly, we wish EDF all the success with Hinkley Point, but we are not dependent on that project. We, likewise, have made huge progress over the past few years in developing particularly the Wylfa Newydd project, and our focus is very much on getting to FID as soon as we can on that project to be able to bring the plant into operation in the first half of the 2020s. We have the opportunity to learn from a number of opportunities, from previous experience. First of all, we are bringing, as I mentioned earlier, tried-and-trusted technology from Japan. It has been constructed to time and cost in Japan and it has been in operation, so we are using a tried-and-tested technology that is currently going through the generic design assessment process on schedule. Also, we are seeking to benefit, particularly from the experience and the lessons learned from the Hinkley Point project, in terms of the process that it has gone through and some of the outcomes to make sure we have a project at Wylfa Newydd that attracts the widest pool of investors possible. We are owned by Hitachi. Hitachi has made a huge investment in the project already, but it will be looking for additional external finance to support the project, and we have to make sure, through discussions with Government, that we can attract the widest pool of investors to support that.
Tom Blenkinsop
Mr Raymant, could you tell us about what stage you are at in the development process for Wylfa and Oldbury, for example?
Alan Raymant
Our target is to get to financial investment decision in early 2019. To do that, we have to conclude the generic design assessment process. We have to secure the development consent order and the various licences and permits to achieve that, and, in addition, finalise an agreement with Government on the Contract for Difference and put the financing in place. There are a huge range of activities we have to conclude during that time. At the moment, as I mentioned, generic design assessment is on schedule. That is due to complete at the end of 2017, as we said when we started that process, and we will be looking to have the key permits in place by mid-2018 to enable us to move into the financing phase.
Tom Blenkinsop
Mr Samson, could you tell us likewise about Moorside?
Tom Samson
Yes. We are targeting an FID towards then, the 2018. That is really driven by a critical path in the DCO planning progress. We have completed our DCO stage 1. We are about to start DCO stage 2 in May, so our DCO progress is on target. We are in the midst of our GDA process with Westinghouse, our technology provider, and expect to have secured our DAC and SoDA from the GDA from the ONR in Q1 2017. We are already preparing in Q1 2017 to develop our nuclear site licence submission to the regulator. In the meantime, we are building our organisation. We have moved to Manchester over a year ago. We are now 130 people in Manchester. We are continuing to grow and we are preparing ourselves, by the middle of next year, to have those key development milestones in place, and by that stage as well to have validated our financing strategy. I mentioned the introduction of debt, and we are engaged with a number of entities to try to attract debt to our programme, and that needs to be validated by mid-2017.
Tom Blenkinsop
Thanks, Chair.
Matthew Pennycook
Thank you, Chair. I am going to take us back to the economics of Hinkley Point C, I am afraid. Can you tell us how much the project is going to cost? EDF’s figure is £18 billion, and the EU state aid investigation said £24.5 billion, I believe. We know that £2.5 billion of that has already been committed. How do you reconcile the difference between those very large figures, and is it still your position that the cost is £18 billion?
Vincent de Rivaz
First of all, I would like to also say that I wish my two colleagues well for their respective projects, and thank you for your good wishes. Yes, the construction cost is £18 billion. The number that you also referred to was mentioned by the European Union in 2014 in a certain assumption regarding the way the project would be financed. We have moved the way we are going to finance this project from project financing to corporate financing. This number is no longer relevant. The contribution costs of Hinkley Point C are, and remain, and will remain, £18 billion.
Matthew Pennycook
Thank you very much. My second question is around the support the French Government are going to be delivering. I have to say that I share the frustrations of other Committee members that—while you are categorically certain that this project is going ahead—you cannot tell us about the suite of solutions that you are negotiating with the French Government or anything beyond the timeline. I will not labour that point; I don’t think we are going to—in the short time that we have—make much progress on that. Can you give this Committee a guarantee from EDF that the support the French Government look likely to offer will not be passed on to the UK taxpayer in the form of infrastructure guarantees, shifting liabilities, or direct investment? A short answer, if you can.
Vincent de Rivaz
Okay. Thank you for the question. Sorry for the frustration, but you can understand that these discussions between the chairman and the CFO of EDF and the French shareholder are technically complex and I cannot enter into the details. The key point is that they are discussing with the common will to achieve an agreement, shortly allowing Hinkley Point C to go ahead. The solutions that they have mentioned are clearly between the French Government and EDF, in the case of capital, for instance, possibilities regarding the dividends that the French debt would like to accept to be paid in shares, rather than cash, for example. Point number two, disposal of non-strategic assets. Point number three, efforts to continue to be the cost-efficient counterpart in the whole group. None of these solutions have any impact on the British taxpayers in any shape or form. All those solutions are there to secure the finance of the EDF Group, the shareholder of EDF Energy, allowing us to go ahead with Hinkley Point C. It is all positive.
Matthew Pennycook
So, no. Thank you very much. Just moving us on to the UK loan, can you confirm whether or not you intend to make use of the £2 billion UK loan that has been confirmed, and do you expect to go beyond that and use any more, or to approach the UK Government for any more, of the up to £10 billion that has been discussed?
Humphrey Cadoux-Hudson
The agreement we have is to put in place a loan of a further £2 billion, to be repaid relatively early by 2020. We will assess, based on the financing available to us after FID, whether we need to go through a process to extend the loan to a further amount, but we are setting up FID on the basis that we will not have to.
Matthew Pennycook
My final question, Chair. I think we have established that in your financial position you have problems with cash flow and profitability. The support the French Government are, therefore, going to offer: we are going to add a categorical “no” that that will not impact on the UK taxpayer. My last question is about decommissioning, which could potentially impact on the UK taxpayer. How confident are you that the £2 to £3 in the strike price will be enough to cover decommissioning, given that the Cour des Comptes have raised concerns that EDF’s decommissioning programme is underfunded?
Humphrey Cadoux-Hudson
I do not think they have had a comment on Hinkley Point decommissioning. The decommissioning fund that we are setting up is a bit like a pension scheme. We are going to set money aside through every year of operation to go and build the fund up to pay for decommissioning and treatment of waste, but we take full responsibility for it. The number you quote is an estimate inside total estimated costs, but it is the risk of the project to pay for the decommissioning. As we go through time, regularly there will be reviews of the estimated cost of decommissioning, and we will need to put aside the amount of money necessary to enable that decommissioning to actually happen. It is a scheme in which the project remains all through its life fully responsible and will have to adjust according to updated views of forecast costs.
Matthew Pennycook
On that basis and as things stand, you are confident that there will be no future liability for the UK taxpayer from the decommissioning of Hinkley Point C?
Humphrey Cadoux-Hudson
Yes.
Vincent de Rivaz
I have to say that it is the first time that such a nuclear project is going to be launched with the funding of the decommissioning already included in the financial model and a specific contract has been negotiated and approved by the European Union for the funding decommissioning plan. It is the first time. It is very positive. It is an example of us and the UK Government behaving in a responsible way and not transferring the problem for the next generations.
Chair
We heard last weekend at the Department of Energy and Climate Change that decommissioning is very expensive. 44% of DECC’s budget is spent on wind scale in Cumbria, still paying for past energy.
Vincent de Rivaz
We are in the new world pricing. What has been badly done in the past will not happen again.
Tom Blenkinsop
Thank you, Chair. Mr Samson, we have heard from EDF. Are you likely to run at the same constraints that EDF is currently facing regarding the Moorside project?
Tom Samson
As I mentioned to you earlier, our plan is to develop a financing strategy that we can build on in the coming 12 to 15 months. It gives us confidence we can reach FID in advance of FID. We have a different view on the timing of building that confidence on the financing, yet to be proven. We are engaged in discussions with a number of players. The reality is developing nuclear projects is difficult, it is challenging, but it is essential.
Tom Blenkinsop
Will you seek additional partners?
Tom Samson
Absolutely. The current shareholders we have are committed to take us through to FID. We need to attract debt and we need to make the deal attractive for equity investors. We will need additional equity investors to come in at FID to commit to the funding required, along with debt and equity, to achieve the commercial operation.
Tom Blenkinsop
How is the financial health of Toshiba?
Tom Samson
Toshiba’s commitment to nuclear remains, Toshiba’s commitment to Westinghouse remains, and Toshiba’s investment in NuGen is still a top priority. We are working very closely with Toshiba, and the recent challenges they have faced have not changed their commitment to nuclear in either Westinghouse or the UK as a result of those challenges. They are on the course to recovery and we are confident they will make good progress in that recovery.
Tom Blenkinsop
Is this the same situation for Wylfa and Oldbury? Alan Raymant:: Absolutely. As I mentioned earlier, Hitachi is our shareholder and is funding our project through to financial investment decision. Clearly, we are pushing the project forward as fast as we can, but also we have to get it right. We have to make sure the project is developed in the right way and also we can then secure the investment support we will need. As I mentioned earlier, we have been very clear that we will need to bring in additional investors, external finance to support the project, and we are working on that at the moment.
Tom Blenkinsop
How is Hitachi’s financial situation? Alan Raymant:: Hitachi’s financial situation is fine, and it is continuing to fully support the plans that the development had.
Tom Blenkinsop
You do not see it running into any constraints, as EDF have?
Alan Raymant
Clearly, we have to go through the same process that EDF has been through in terms of getting all the consents and permits, and that is a complex process. We then have to negotiate a very complex deal with Government in the same way that EDF has. As I mentioned, we would expect that process, having gone through that once, to be smoother. We have learned from that experience, and ultimately we have to create the right project structure and investment case to attract the external finance that is required, not just for our project but for the whole new nuclear programme, and we have to think of it in terms of a programme as well as individual projects.
Chair
Thank you very much.
James Heappey
Mr de Rivaz, our earlier exchange has surprised commentators a little because your unwillingness to commit to early May stands at odds with what Monsieur Macron said in the French Parliament yesterday. I think I know why, and I just want to question you a bit on that. The leaked letter from your boss in France the other week said very clearly that they need to obtain commitments from the state to help secure our financial position. Without that commitment, you cannot proceed with the project. Is that right?
Vincent de Rivaz
Yes, and this coming month we—
James Heappey
What Mr Macron said yesterday in the French Parliament is that the French Government will take a decision on that recapitalisation in early May. The reason you cannot commit to a date this morning is that if the French Government do not agree to that recapitalisation, no matter what your commitment is in your statement front-up, actually you will not be able to build us a power station because the French Government will not have given you the cash to do so.
Vincent de Rivaz
May I repeat, if I may, what I have said categorically? This project will go ahead. It is difficult to imagine stronger support than that which the French Government has given for this project. Recently, early March, the French President, François Hollande, and the British President, David Cameron, in the Franco-British summit, expressed very clearly there is strong support for the project. Secondly, the French Minister of Economy and Finance was in charge of precisely the discussions with EDF on this subject. As I said, every day in the last 10 days, he has supported, and he has said yesterday at the French Parliament that—
James Heappey
This is exactly what I hoped you would say. I put it to you that the reason that you cannot commit to a decision is because you are in the French Government’s hands, but you have just replied categorically that it will happen.
Vincent de Rivaz
Yes.
James Heappey
That means that you are 100% confident that the French Government will give you the cash by early May. It is extraordinary that if you are that confident of that and you are that confident of the timeline, you are unwilling to say that the very next day you will make a final investment decision, and, therefore, you can do it by early May. It does not make sense to us and it does not make sense to anybody who is commentating on this session from afar. Why the disconnection?
Vincent de Rivaz
No, there is no disconnection. I have just told you that I do not want to give a specific date.
James Heappey
We are not asking for that. We are asking you to set a backstop. We are asking you to tell us the latest possible date by which you will have taken a final investment decision. Not the date. The latest possible date by which you will have taken one. I know it is dependent on the French Government.
Vincent de Rivaz
You have said earlier that, listening to the French Minister, you think these latest dates should be mid-May. I think it is a very assumption you are making.
James Heappey
Once the French Government has taken its decision, which you are confident will be as you need it to be, and you are confident it will be in early May, it is very reasonable for us to assume that in that same timeline you will take a final investment decision?
Vincent de Rivaz
It is.
James Heappey
Why is it reasonable for us to assume it, but not reasonable for you to just say it?
Vincent de Rivaz
I am very pleased to give you the privilege to make this assumption, and to draw—
James Heappey
We are here to take evidence from you.
Vincent de Rivaz
—the right conclusion, as you have done.
Chair
Basically, the future of Hinkley Point C in the United Kingdom is in the hands of the French Government as we speak?
Vincent de Rivaz
The future of Hinkley Point C, the future of nuclear, is the result of joint efforts, which have been there for years and years.
Chair
The French Government is absolutely pivotal here.
Vincent de Rivaz
Absolutely, as the British Government is, and I think it is no surprise that for such a massive project, the shareholder of EDF, which is the French Government, is as supportive as it is. It makes a lot of sense that after all these years, where the French Government and the British Government have been supporting us developing this project, bringing it to the stage it is today, going through all the hurdles, and our colleagues have said that there are many hurdles, just to—
Chair
I understand that. Hinkley is in the hands of France. It is in the hands of France.
Vincent de Rivaz
No, no. No, no, no, no. Hinkley is in the hands—
James Heappey
It is not in your hands.
Vincent de Rivaz
Hinkley is in good hands, first of all. The hands of a great team, which—
Chair
I am not sure that was meant to bring a laugh, but it certainly did bring a laugh.
Vincent de Rivaz
It is in good hands, in the hands of a great team, which has achieved a lot, which has been through many hurdles—2012—to get the GDA that we have since 2012, to get the nuclear site licence that we have since 2012, to get the planning consent that we have since March 2013, to get the CfD that we have since the end of 2013—
Chair
Yes, I think we have established that. Time is pressing, I am sorry—
Vincent de Rivaz
—to have the support of the European Union that we have had in 2014—
Chair
Yes, we understand this.
Vincent de Rivaz
—to have the partnership of the Chinese, French, and partners that we have got in October 2015.
Chair
I am sorry, Mr de Rivaz, I have to cut you off.
Vincent de Rivaz
No, but it means that it is a very long and good process.
Chair
That is fine. We understand this. We are pushing for a date and you cannot give us a date. You have background information, which we know. Mr Pennycook, you want to take it further.
Matthew Pennycook
I will take the pressure off for a few minutes.
Vincent de Rivaz
Thank you.
Matthew Pennycook
Mr Zhu, could I put it to you? You are looking at a European company, EDF, whose balance sheet is stretched, whose CFO has resigned over concerns. How firm is the Chinese end of this deal, given the problems that you are viewing from where you are?
Zhu Minhong
I understand you are asking me for a commitment from the Chinese party. I am happy to answer your question. We keep our full commitment to UK projects. As I told you, we have been in partnership with our colleague, EDF, for 30 years, and the story in our mind is we are partnered with EDF. We think we can commit not only investment but also we think we can bring our expertise and experience that we have of 20 years’ nuclear development and operation to this country, to this HPC project. That is on one hand. On the other hand, we hope through our participation in the HPC project we can learn how to direct nuclear power sites in the UK because the context is totally different. We hope that we can learn from our colleague, EDF. To be clear, our commitment remains. We will be helping EDF to make this project a success. Thank you.
Matthew Pennycook
No legal documents have been signed and no agreements finalised. Perhaps we can get the question we have been asking from the point of view of China General Nuclear. When do you expect an agreement to be finalised, to be signed off? If an agreement was not signed off by mid-May, would you be concerned, as an investor in the project?
Zhu Minhong
It is a super question, and I am happy to share with you some evidence in terms of progress we have made. It is huge progress. Last year in October, SIA has been signed between two chairmen of two groups, CGN and EDF. It marks a very important milestone. That means what? It means we have agreed the package deal in terms of heads of terms, and then we spend our time transferring heads of terms into a long form. Today what I can say is our discussion is practically completed.
Matthew Pennycook
When do you expect that final form agreement to be signed off?
Zhu Minhong
As Mr Vincent de Rivaz responded to your questions, and from CGN’s side, we are confident to say this project will go ahead.
Matthew Pennycook
If this power station were fuelled on confidence and passion, it would be up and running, but it is not.
Vincent de Rivaz
I concur totally with what Mr Zhu Minhong just said. We have made huge progress since October to finalise, I think, 2,500 pages of contracts related to three sites, Hinkley, Sizewell and Bradwell, and to two technologies. It is practically completed and when it will be signed, at the same time and—
Chair
Nobody disputes that at all, but the Committee have been trying with various degrees of success to get the date in May. We think now it is the first half of May, at least. What I want to do is take you on now to the experience of building EPRs in other countries. We have talked about a lot of the economics but of course a lot depends on the technology. If the finances have problems, if the dates have problems, if the form-signing has problems and if the final investment decision has problems, it would appear too that the EPR itself has problems. The one in Finland is nine years behind schedule and €5.2 billion over budget. The project in Flamanville in France is six years late and €7.2 billion over budget. Is Hinkley C going to go the same way, over time and over budget? We already know that the filling-in of the paper is taking time. How is the building or the construction going to be? Will that be over time and over budget?
Humphrey Cadoux-Hudson
I would not describe what we have been doing as filling in the paper. We have spent the last years, through the Generic Design Assessment process, doing an enormous amount of work on the design to ensure that we have that design stable and ready, which I have to say has not been the case for the Olkiluoto and Flamanville start. Part of this is to go and look in huge detail at all the lessons we can learn out of the experience of the other projects, and on top of that we have engaged the supply chain to be part of the preparations for the project. We have had an enormous amount of engagement from Areva, Alstom, with Laing O’Rourke and the other big supply chain companies. I would say that none of the other projects have been anything like as well-prepared as we are today.
Chair
You say that but on 9 March, the Times reported the Office for Nuclear Regulation had yet to give final approval for Hinkley Point C because of “increasing worries about the reactor’s steel dome”. If the planning was there, why are they concerned?
Humphrey Cadoux-Hudson
The UK regulator has looked into all of the issues. We have, as I said, passed the GDA. We keep them informed of any issues that are arising and they have clear visibility of how we are intending to solve the issues. There have been issues around the dome raised for the Flamanville reactor. We are very confident that we have—
Chair
These are issues in the UK.
Humphrey Cadoux-Hudson
We have a clear solution to ensure that the reactor pressure vessel for the UK will be built using slightly different manufacturing methods, which will eliminate the problem that has arisen on other forgings. It is a good example of how we are taking fast feedback out of all issues that are arising out of the other projects, taking them into account and ensuring that we have good, reliable solutions that will enable us to deliver on time, on budget, safely. Q115 Click here to enter text.Chair: You are still in the position where your technology and your construction are dependent on what is happening in Flamanville in France. The French nuclear regulator, ASN, warned of “very serious anomalies” and weak spots, again in the steel reactor, and it seems that the ONR here in the UK is following that very closely. You cannot have finalised what you are going to be doing at Hinkley given the ongoing “very serious anomalies”, as the French regulator put it in, in Flamanville.
Humphrey Cadoux-Hudson
The regulator has not classified them in terms of the seriousness. It is an anomaly to an engineering standard and the task for the EDF engineers now, EDF and Areva, is to study the dome that they have and demonstrate that it is safe beyond any possible doubt. They are going through that process at the moment. That is for the Flamanville reactor. Ours is not made yet. The reactor pressure vessel is not made yet. We have started the process of getting forgings. We have done that well in time, so that if there are problems on the forgings we have time to correct them, and we are using a different manufacturing method, which we are absolutely sure will lead to a different result. That is a discussion that has been had explicitly with our regulator and they are comfortable to monitor us in our progress of ensuring a safe, reliable nuclear power plant. Flamanville itself has nearly completed its civil works. It is over 60% through the erection phase and if you look at the Taishan EPR, Unit 1 has already, over Christmas, entered into the first, very important stage of commissioning the testing on the primary circuit, the reactor pressure vessel and all the associated pipework. We have a very advanced stage reached for the EPR in Taishan and again, together with our partner, CGN, we are getting the feedback out of that experience and will do over the next year as that commissioning runs through to its completion.
Chair
Where in the world is an EPR operational at the moment?
Humphrey Cadoux-Hudson
The closest we have at the moment is Taishan.
Chair
There are none at the moment operational?
Humphrey Cadoux-Hudson
No, but this is a function of the fact that we are building the latest generation of nuclear power plant. It is a third-generation plant. It is intended by design to be significantly safer than anything that has gone before. It takes into account all the lessons out of Fukushima and all the other things that you would wish.
Chair
Is there one planned to be built—
Humphrey Cadoux-Hudson
It is not surprising that there is not one operating because we are at the forefront at the next generation of plants.
Chair
Given this track record of EPR that I have laid out, is there one planned to be built after Hinkley? Are there any further plants or is Hinkley the last?
Humphrey Cadoux-Hudson
No, we are planning to build the same plant at Sizewell and also there is a possibility at the Taishan site. For sure, this is not the last. Through Hinkley Point we are going to demonstrate a plant built on time and on budget and allow that track record to create projects that will deliver cheaper, even more economical energy for subsequent projects.
Chair
Can I ask the other two nuclear developers on the panel? The delays to the Hinkley project have undoubtedly affected confidence in the building of new nuclear in the UK. Do you think your technologies could have offered a better solution to that that has been proposed by EDF? Mr Samson?
Tom Samson
We believe that our technology offers a deliverable solution for the UK. That is why we are progressing forward with the AP1000 through GDA, and to build it in Cumbria. Westinghouse, our technology provider, is the originator of the PWR and has a rich legacy and history in developing the PWR technology, both in the commercial fleet and in the nuclear navy in the US and elsewhere. Westinghouse’s ability to build the PWR over time has been demonstrated. The AP1000s are part of a fleet that is currently under construction in China and the US and, as I mentioned earlier, we are learning those lessons, building in the deliverability, the price and delivery certainty, into our programme to ensure that we can also deliver our programme on time and on budget, to be part of the UK’s nuclear new build programme.
Chair
Thank you. Mr Raymant?
Alan Raymant
Thank you. The Advanced Boiling Water Reactor that we are building, the Wylfa Newydd, will be the ninth and the tenth unit. Four other units have been built and been in operation in Japan and another four are in the advanced stage of construction. The opportunity for us is to transfer that expertise and know-how from successfully building those reactors to time and cost and to bring that to the UK, working with the UK supply chain to achieve that.
Chair
Thank you. Mr Zhu, you must feel almost a spectator looking at the tête-à-tête going across each side of the English Channel at the moment. What confidence do you have towards the nuclear build in the UK or to other nuclear build in the UK? What do you feel is the climate for welcoming nuclear technology and construction in the UK?
Zhu Minhong
Personally I have confidence in EPR technology because we are now building our two units in China. It is clear.
Vincent de Rivaz
Saying our Chinese partners are spectators is very economical to the truth. They are building two EPRs in China successfully. As Humphrey said, the first ever third-generation technology, which is meeting the highest safety standards and has been successfully through these tests, what we call the tests, is in Taishan. EPR is a technology that has the Generic Design Assessment certificate here in the UK. It is the only third-generation technology that has been through this.
Chair
China General Nuclear are building at Bradwell, I understand, as well. You are involved in construction at Bradwell and Sizewell, yes?
Zhu Minhong
Yes. As I shared with you, our partnership covers HPC, Sizewell C and Bradwell B. Bradwell, where we plan to deploy HPR1000 technology, even later we can—
Chair
If Hinkley does not happen, will that affect your confidence? If Hinkley Point C is not built, how will that affect your view of building nuclear in the United Kingdom?
Zhu Minhong
It is a simple question and I am happy to share my thoughts on this. I believe our investment will benefit the UK. Why? Because our investment means, from my understanding, thousands of jobs we can create.
Chair
If Hinkley does not happen, how do you view the UK? Hinkley might not happen. Do you have any particular feeling towards the UK in the event of Hinkley not happening?
Zhu Minhong
As I said, we have confidence to say HPC will go ahead. We can only look at the deal on the table. We do not have thinking on this kind of hypothetical scenario. Thank you.
Chair
I am sorry, time is pressing. Confidence and enthusiasm again, as Matthew Pennycook said.
Matthew Pennycook
To Mr Zhu, given how confident you are in EPR why has CGN not ordered another EPR at Taishan, as Paris has been pressing you for quite some time to do?
Zhu Minhong
It is a good question. We are progressing well the construction of two EPRs in Taishan. That is a fact. We hope that the first unit of EPR will come into production in the year 2017, next year. That will be the first unit of EPR. Alongside this progress, alongside this success, we will have plans to construct more EPR in China.
James Heappey
This morning has been a great advert for NuGen and Horizon, as we have the confidence of knowing that you are intending to build much later in the class. Was it the thirteenth and fourteenth reactors and the fourteenth and fifteenth reactors? The question for EDF, and for China General Nuclear, is how far out of the ground Hinkley can get before Taishan and Flamanville are up and running. Moreover, what can be done on Sizewell and Bradwell until construction at Hinkley is in full swing?
Humphrey Cadoux-Hudson
You have heard Minhong say that Taishan Unit 1 should be operating next year.
Zhu Minhong
Yes.
James Heappey
You are totally confident of that? With Flamanville there has been—
Humphrey Cadoux-Hudson
Sorry, you should not direct—
James Heappey
You are totally confident that Taishan will operate next year?
Zhu Minhong
Yes.
James Heappey
Why is the Taishan technology working and you are confident you can switch it on next year, whereas in Flamanville there have been delays and need for redesign?
Humphrey Cadoux-Hudson
I will just say that we have an open learning process between the projects. Taishan has been able to benefit from learning out of the experience on Flamanville. That learning has been put in practice by a very strong team at Taishan. As Minhong said, it is a partnership between CGN and EDF, so there is a very clear route for those lessons over time.
James Heappey
Taishan will overtake Flamanville, effectively. The question still stands: how far out of the ground can Hinkley get and how much work can be done on Sizewell and Bradwell?
Humphrey Cadoux-Hudson
In a year and a half you will see us moving an enormous amount of material and starting to create galleries around the bottom of the plant. That is what can be done in that period of time. It is not very far away before we can see Taishan operating.
Mr Reed
How many reactors does China intend to build at the moment? Fifty springs to mind.
Zhu Minhong
It is a very good question. The fact is China has the biggest number of units under construction. For example, for my group, CGN, we have 12 units under construction, two units per year. We have not stopped our construction for a decade. That is why I told you that I hope we can bring our expertise to this country. Construction of a nuclear power station is something really complicated and, as nuclear people, we have this concept. We need to share our experience. As Humphrey said, my units in Taishan are advanced and we are happy to share our experience for HPC. That is our life.
Mr Reed
Thank you.
Zhu Minhong
Xiè xie.
Mr Reed
Xiè xie. Turning to NuGen very briefly, what is the experience elsewhere in the world with regard to the AP1000? What have the project developments been like in terms of running to time and budget? How can those lessons be assimilated at Moorside? Have there been, at any point, any safety concerns with the AP1000?
Tom Samson
I will talk about the other projects first. The other projects in China and the US have also had schedule challenges and cost challenges. We have dissected those and done a forensic analysis to understand which were related to engineering impacts, to supply chain decisions or to construction progress and which were related to regulatory changes, government intervention or other political activities in those countries. All those experiences and lessons are being factored into our programme. What is important to recognise is that as there are eight units under construction, there is a physical progression. The delays that were experienced on the first units were then much less as the subsequent units came on line. Similarly, in Abu Dhabi—I spent four years in the UAE—with four units being constructed side by side, you could visibly see the lesson-learning transferring to the subsequent units because that knowledge builds up. We benefit from that knowledge base on the AP1000. That is built into our programme to ensure we can rely on price and delivery certainty in our structure. On safety features, the AP1000 has been through a regulatory review already in the US and in China and is going through the GDA process. There are no technology barriers preventing us from getting to the end of that process. There are a number of issues to be concluded with the regulator. Most of them are converging issues. The features on the AP1000 do have some unique safety features, being part of, as Vincent mentioned, the generation three-plus designs, with the passive safety features that provide the AP1000 with some unique safety elements particular to that design. -
Mr Reed
Alan, with Horizon, what is your experience elsewhere?
Alan Raymant
The projects in Japan have been built to time and cost. The benefit there that we are able to bring to the UK is that in Japan they have had a continual programme of nuclear power station development. They have not had the stop-start that we have experience in the UK and, therefore, they have been able to maintain that expertise and experience and bring that through into subsequent projects. That is the opportunity that we have, to transfer that expertise and know-how to the UK projects, which is what we are heavily focusing on at the moment to make sure our projects are delivered successfully to time and cost here.
Mr Reed
Any particular learning points for Wylfa and Oldbury? Clearly, you are all working in different regulatory and political environments with these projects. Any particular learning points for your projects here in the UK?
Alan Raymant
Yes, it is true to say the key challenge for us at the moment is going through the regulatory process. It is very different in Japan to the UK, the whole approach to regulatory assessment, and that is a key focus. The other key lesson that Hitachi has learned is the need to do detailed planning up front before getting too far into construction. That is a key feature of our programme here as well, to make sure we have the plans fully established before we proceed with committing to construction.
Mr Reed
This is a very unfair question. This is a question I have for the entire panel. Is the Office for Nuclear Regulation and the Office for Nuclear Development in this country sufficiently staffed and powered in order to help you all expedite your projects?
Alan Raymant
At the moment, clearly, it is something we keep an eye on because there are two projects going through GDA and obviously the Hinkley project now in the licensing phase. We will be moving into the licensing phase over the next 12 to 18 months as well. It is a key issue that we have to bear in mind because, at the end of the day, the regulatory regime is hugely important. It is a key part of maintaining and building public trust in what we are doing, so it is vital that they are staffed accordingly to be able to scrutinise and assess what we are doing closely.
Mr Reed
My view is it is a bit of a bottleneck, but I see I am not going to get any joy from the panel. Thank you, Chair.
Chair
Thank you very much indeed, Mr Reed. That brings our questioning to an end for this morning. I would be quite interested also to know—and maybe it will transpire in the future—but I am not sure I would get an answer, of what EDF would look for from the UK Government if it pulled the plug. I am sure the cost would be expensive. Can I thank you, panel, for your time this morning? We have heard of your confidence and, indeed, your super enthusiasm loud and clear. We will be awaiting EDF’s announcement in early May. Indeed it may be in the Queen’s Speech on 18 May, which will be marking the new parliamentary session. Of course if it is not there we will reserve the right to call EDF back to the panel. We will also be following the developments of NuGen and Horizon with great interest as well. Thank you all for your time. Oral evidence: UK new nuclear: status update, HC 922 35