French-based energy company Électricité de France (EDF) has been given the go-ahead by the U.K. government to build a new nuclear plant, Hinkley Point C. S&P’s Director of Utilities, Pierre Georges, discusses why EDF’s credit rating has consequently been downgraded from ‘A’ to ‘A-’. Following the recent announcement that energy giant EDF will begin a new £18 billion nuclear project – Hinkley Point C, in Somerset – we see increased execution and contingency risks for the company. This highly complex and expensive project will hamper EDF’s already large number of investments at a time when the company is generating a weak cash flow. At the same time, the announcement comes at a time when EDF continues to face high execution risks relating to another nuclear build in Normandy, France. The company is also suffering from an increasing reliance on revenue derived from unregulated activities (following a partial liberalisation of the French energy market) which make energy prices less predictable. Because of these risks, we are lowering our ratings on EDF to ‘A-’ from ‘A’.
Energy Voice 7th Oct 2016 read more »