The chairman of the Devon and Somerset Local Enterprise Partnership has said he remains confident that a £14 billion scheme to build two new nuclear reactors at Hinkley Point C will happen – despite intense wrangling between EDF and the government.
The scheme, which has been ten years in preparation, was due to take a step forward at the start of this year with EDF expected to formally announce its intention to go ahead with the development.
This has been delayed while negotiations between EDF and the Government over the rate that the power company will be paid for producing energy at Hinkley are concluded.
Under plans put forward by the Department of Energy and Climate Change, EDF will receive a contract guaranteeing a price for the electricity it generates from Hinkley which will be subsidised through levies on all UK consumer energy bills.
But the Treasury, which is heavily involved in the negotiations, is believed to have taken a tough stance over the rate of return EDF should be allowed.
EDF has said it wants a deal by the end of this month, after a December deadline was missed.
The company is understood to have asked for a rate of return of 10%, while the Treasury believes it should be nearer 8%.
EDF has said that it is scaling back on its spending on the scheme "until there is greater clarity around its negotiations with the Government".
The company warned this would have an impact on recruitment, which is understood to mean the loss of 150 jobs – about one-fifth of the project's workforce.
Hinkley Point C would be the first new nuclear build undertaken in the UK for 25 years and is seen as being a crucial project to meet the country's growing energy needs. If it goes ahead, it would have a massive impact on the local economy with 25,000 jobs created in the construction phase and supply chain opportunities creating a ripple effect of opportunity across the region.
EDF has invested around £1 billion in the scheme already, with £25 million of this being awarded in the form of contracts with Somerset businesses.
The scheme has long been a key plank of Somerset's economic planning with EDF having already invested in new energy and construction skills centres at Bridgwater College so that it can source skilled staff.
Tim Jones, chairman of the Heart of the South West Local Enterprise Partnership, said there was "an element of brinksmanship" in the negotiations but said he remained confident that a solution would be found.
"The programme that has been set up with EDF has been quite exceptional in terms of engagement with business and local supply chain opportunities and I'm confident that they are dealing with the negotiations very responsibly and are very committed to the project," he said.
"I have strong expectations that they will be successful although I recognise the difficulties for both sides with escalating development costs and the Government not being able to commit to a reasonable subsidy.
"It is a definite negotiation, and I see it as that, rather than an ultimatum."
