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Sizewell C to benefit from cost reductions

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EDF Energy Chief Executive Simone Rossi delivered a speech at Cannington Court today (17th January) outlining the possible benefits of third nuclear power plant at Sizewell, Suffolk.

Mr Rossi, who's been with EDF for 12 years and Chief Executive for less than three months, claims that the construction of a new nuclear power station in Suffolk could be significantly cheaper, up to 20%, than the Hinkley C project for which construction is underway.

Sizewell C is being developed by EDF Energy and its partner China General Nuclear. The new station would be located to the north of Sizewell B, an existing and operational plant. It would consist of two reactors, UK EPR’s, expected to be capable of generating enough electricity to supply around 5 million homes.

"We understand the message from the Government on cost reduction and the need to be competitive for the next nuclear projects,"
said Mr Rossi. He continued: "It is our job to meet the challenge and I think we can. The cost to consumers is made up of construction and  financing. There is potential to significantly reduce both for Sizewell C. Let me take construction costs first. The key to reducing the construction cost is replication. Doing something again with the same design makes it easier and cheaper.

Let me give you an example. Hinkley Point C has eight emergency generators. They had to be designed and certified to meet the standards required for nuclear safety. That means the first two will cost £38m, but the next six will be half the price - £19m each. At Sizewell, none of that development or certification work needs to be done again. All its emergency generators will be at the lower price. Repeating that experience countless times for a power station at Sizewell that is largely identical to Hinkley Point C makes a capital cost reduction of 20% possible."

With regards to financing, Rossi stated that reducing the cost of capital can make a significant difference to the price for consumers. He said: "At Hinkley Point C the shareholders bear all the risk of building the power station. The National Audit Office says that other models of financing should be considered for the future. It believes this could significantly reduce overall cost of the project to consumers.

"With Government, we should explore alternative financing models that can create the conditions where institutional investors like pension funds can participate when they were not able to before. Sizewell C will be a proven technology, representing the 7th and 8th EPR Units, and the first 4 units will soon be operational in China, France and Finland.

I am not saying financing will be easy – with the right framework in place, it will be possible. Taken together, all of these cost reductions give Sizewell C a unique opportunity to be significantly cheaper than Hinkley Point C and competitive with equivalent alternatives."

Mr Rossi also explained that Sizewell C will benefit with the current grid connection infrastructure in place at the site. The current site was built with a grid connection capable of handling a bigger power station – and it is relatively close to where demand is. According to Mr Rossi, this could lead to substantial savings in grid connection costs.

Simon Gray CEO of the East of England Energy Group (EEEGR) commented on the speech today from Mr Rossi: "The speech includes some calculations showing how Sizewell C will enjoy considerable economies of scale when compared to Hinkley Point C resulting in savings of approximately £4 to £5bn or some 20% cheaper. This is great news for the East of England and great news for the skilled workers in our region that will benefit from more than two generations of a high quality jobs in the sector. When coupled with the knock on impact on the supply chain this will result in even more jobs in our East of England."

Hinkley C

In his speech Mr Rossi also commented on the on-going progress of the new Hinkley C site being constructed in Somerset. Construction is estimated to cost £20bn and will take 10 years to complete. EDF is pumping £12bn into the project whilst state owned China General Nuclear Corporation puts up the remainder. It will consist of two reactors and is expected to produce power for up to 6 million homes.

There are currently nearly 3,000 people on the site and it is expected that there will soon be over 5,000 involved with its construction. Mr Rossi said that there more than four million cubic metres of earth have been moved so far and installation of huge sea water cooling pipes is underway. Soon the boring machines will arrive for the 11km of tunnels which will be dug under the Bristol Channel.

Mr Rossi comments: "I said at the start that my top priority is to honour the trust that Britain has invested in EDF to deliver Hinkley Point C. We will deliver Hinkley Point C. But the job doesn’t stop there. You can see for yourself the hard work done at HPC which provides the bonus of building a cheaper power station at Sizewell and to give the east of England some of the economic benefits delivered here in Somerset. What we will achieve together at Hinkley Point C will also enable us to deliver a competitive Sizewell C for the benefit of Britain and the East of England."

"What also matters is our impact on the local economy. Here in Somerset, all the activity on site is making a real difference to the economy and people. Four thousand businesses in the South West are registered to work on Hinkley Point C and by 2020, there will be £200m of spending each year in the local economy."

EDF Energy in the East of England

In the East of England, EDF Energy operates Sizewell B power station which employs 575 staff and 250 contracting partners. It is the UK’s only Pressurised Water Reactor and has a 1198MW capacity, enough to provide power for up to 2.5 million homes.

The company also provides gas and electricity to 270,000 customers in this region with over half of those opting for one of the company’s Blue+ products which are backed by low-carbon generation.

EDF Energy also powers up some of the largest companies in the UK, including sites for Tesco Stores Limited, Ministry of Defence, Morrisons and Cambridge University Hospitals NHS Foundation Trust in the East of England.

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