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Cost of EDF's new UK nuclear project rises to $40 billion

FILE PHOTO: Signage is seen for the EDF energy company on a building near the Hinkley Point C nuclear power station near Cannington in southwest England

By America Hernandez

PARIS (Reuters) - EDF's new nuclear plant in southwest England is likely to cost about 2% more than its last budget estimate as inflation propels the price tag to almost 33 billion pounds ($40 billion), EDF documents show.

Britain plans to build new nuclear plants to boost its energy security and help meet a target for net zero emissions by 2050.

EDF warned in a results presentation on Friday the cost of the Hinkley Point C project, Britain's first new nuclear plant in more than two decades, "could reach 32.7 billion pounds" based on inflation indexes as of June 30, 2022.

Its previously published cost estimate in May 2022 was 31-32 billion euros when adjusted for inflation.

The project's price tag is often presented without an inflation adjustment. When compared to the initial estimate, the latest increase represents a roughly 30% hike from the 2015 quoted price of 25-26 billion pounds.

EDF is building the plant with China's CGN, which has a 33.5% stake in the project.

Under the companies' agreement, the higher costs mean EDF can ask CGN to put more capital into Hinkley, but EDF said "the probability that CGN will not fund the project after it has reached its committed equity cap is high."

That would mean EDF would have to step in to shoulder the additional costs in place of CGN.

EDF is in the process of being nationalised by the French government, a first step in a plan to reinvest in its nuclear business and get the debt-laden company back on track.

The company last week reported a record net loss of 17.9 billion euros ($19.1 billion). French Energy Minister Agnes Pannier-Runacher told RadioFrance on Saturday the government remained fully behind the company, though she did not specifically refer to the UK project.

EDF is still targeting a start date of June 2027 for the first of the two units at the plant, but warned there was a risk of a further 15-month delay to both units if government-imposed lockdowns or the war in Ukraine disrupted supply chains.

The project is already a decade overdue, with EDF initially saying it would be powering British homes in 2017.

($1 = 0.8314 pounds)

($1 = 0.9356 euros)

(This story has been corrected to fix the paragraphs 1, 4 and 5 to reflect that EDF's previous cost estimate was published in 2022, not 2015, resulting in a lower percentage rise in costs by comparison)

(Reporting by America Hernandez, Editing by Susanna Twidale and MarkPotter)