Another week, another series of disasters for EDF and it’s Hinkley C nuclear power project, writes Oliver Tickell, with the company’s credit rating downgraded partly due to its exposure to the project, and its Chinese partner CGN ruling out a takeover of the site. How much longer can the tragicomedy continue before the curtain falls? The remarkable thing about the ongoing Hinkley C fiasco is just how long it’s going on – and how one disaster piles onto another without the project ever quite dying – so far at least. Moody’s credit rating agency has just downgraded EDF’s debt from A1 to ‘A2 outlook negative’. OK, that’s still not junk grade – after all the company has the French government standing behind it as 85% owner. But the A2 negative rating will make it all the harder and more expensive for it to raise the cash it needs – not just to build Hinkley C but to finance its forced €2.5 billion takeover of insolvent nuclear components manufacturer Areva, make good its problems, finance the impending closure and docommissioning of its own aging nuclear fleet … you get the picture. In other news, Germany’s energy minister Sigmar Gabriel has just announced plans to invest €17 billion over five years in energy efficient technologies as part of an ‘Effizienzoffensive’ campaign aiming to halve the country’s energy consumption by 2050. That’s under a quarter of the UK’s estimated cost of supporting Hinkley C. Could Gabriel possibly know something we don’t?
Ecologist 13th May 2016 read more »
One of the UK nuclear energy industry’s highest-profile lobbyists is calling on the government to pause its nuclear strategy and think again about what technologies to pursue. As concerns mount about whether a new nuclear power station will be built at Hinkley Point in Somerset, Tim Yeo, the former Conservative MP, has said he thinks the government needs to rethink its policy. Mr Yeo, the chairman of New Nuclear Watch Europe, an industry-funded pressure group, called on ministers to review which nuclear projects are most likely to be built. His comments add to growing calls for ministers to draw up a Plan B should Hinkley Point not go ahead. Other projects are currently building their own cases to submit to the regulator, including one at Moorside in Cumbria and one at Wylfa in Anglesey. But many in the industry worry that if Hinkley Point does not go ahead, it would jeopardise these future schemes. All of this doubt surrounding the project has led industry insiders to start questioning whether the UK government should have a back-up plan in case it is not built. On Friday, the Chinese state-owned nuclear group, which has a one-third interest in the scheme, denied reports that it was planning to build two reactors on the site if the current plans collapse. But Mr Yeo said the government now needed to take a more proactive role to make sure that other nuclear power plants planned after Hinkley Point receive the right backing.
FT 13th May 2016 read more »
France’s energy minister has warned of the “colossal” cost of the £18bn flagship Hinkley Point nuclear project to EDF, saying the state-owned utility may have been “carried away” with its British investment. The comments by Segolene Royal are likely to fuel already fraught negotiations over a final investment decision for the nuclear plant that is critical to the UK’s energy future. Ms Royal told the Financial Times she was worried at the impact the project would have on EDF’s already stretched balance sheet if it were to proceed. “I am wondering if we should go ahead with the project. The sums involved are colossal,” the minister said. Other members of the French government, including Emmanuel Macron, the economy minister, have stressed that the project must go ahead, saying that it has already been informally agreed with the UK government and that it is crucial to the future of France’s struggling nuclear industry. Even though Ms Royal is the only minister publicly to express doubts, she is – as President Francois Hollande’s former partner and mother of his four children – an influential force in the administration. Ms Royal has dismissed Mr Macron’s argument on the impact on the wider French nuclear sector if EDF were to back out. “I think that if Hinkley Point did not happen it would not put the French nuclear sector in danger,” she said. EDF’s share price has halved in the past year while its debt has ballooned past its market capitalisation to 37bn euro. On Friday, credit rating agency S&P followed Moody’s and downgraded EDF’s debt, saying Hinkley Point was one of a number of factors that could “hamper the group’s business risk profile”.
FT 13th May 2016 read more »
Times 14th May 2016 read more »
Politics Home 14th May 2016 read more »
Moody’s one-notch downgrade of EDF debt has pushed the utility’s 10 billion euros worth of hybrid debt uncomfortably close to non-investment grade, posing a risk to its refinancing. Late Thursday, Moody’s downgraded EDF’s senior debt to A2 from A1, leaving it in upper-medium investment grade, but EDF’s perpetual junior subordinated (hybrid) debt was cut to Baa2, just two levels above junk. Moody’s kept the outlook on EDF ratings negative and warned it could downgrade further if EDF goes ahead with its 18 billion pound (23 billion euro) nuclear reactor project in Britain.
Reuters 13th May 2016 read more »
Utility Week 13th May 2016 read more »
Standard & Poor’s on Friday downgraded EDF’s hybrid debt to non-investment grade, which will make refinancing the French utility’s 10 billion euros (£8 billion) worth of hybrids complicated. Standard & Poor’s lowered its rating on EDF’s junior subordinated hybrid securities by two notches from BBB to BB+, the first level of non-investment grade. Late on Thursday, Moody’s also downgraded EDF’s perpetual junior subordinated (hybrid) debt one notch to Baa2, but left it two levels above junk status.
Reuters 13th May2016 read more »
Greenpeace has called a rating agency’s decision to downgrade EDF debt a “massive red flat warning” to the UK Government over the Hinkley Point nuclear plant. Moody’s has downgraded EDF debt because of Hinkley Point, pushing some of the French energy company’s riskiest debt close to junk, meaning that traders are advised not to invest in it. It said the negative outlook reflects the fact that the Hinkley plan does not address the fact that power prices at current levels do not cover the required investments enough to make money off them. EDF had not accounted for the incremental risks associated with Hinkley Point C, Moody’s said. Standard and Poor’s warned in October that it may also have to lower EDF’s rating if it presses ahead with the plant. “If investing in Hinkley is not a rational commercial decision for private investors then any French government financing would be illegal state aid,” John Sauven, Greenpeace executive director, said.
Independent 13th May 2016 read more »
There is a real chance the (Hinkley) deal as currently envisioned will not go ahead. It certainly faces fierce opposition from a number of EDF shareholders. Both the Labour Party and environmental lobby groups are pointing to the hole this would leave in government energy plans and demanding a plan B – something which, according to former energy secretary Lord Howell of Guildford, is being drawn up by EDF’s partner on the project, Chinese state operator China General Nuclear Power Corporation (CGN). Whether there is any credence to Howell’s comments is not known. Publicly, there have been denials from CGN and the Department for Energy, while The Guardian notes that the Hualong designs China wants to use in the UK are currently unlicensed, which would complicate a takeover of the project in the short term. If nothing else, the comments show how real the prospect for Hinkley Point falling through has become – and the challenge that this would pose.
The Week 13th May 2016 read more »
A Russian nuclear group is hoping that the potential meltdown of French plans to build new European pressurised reactors at Hinkley Point could offer an opportunity to break into the British nuclear market. Deeper concerns about the future of the Somerset scheme were raised by the French energy minister, Ségolène Royal, who warned of the “colossal” cost, which EDF admitted could be £18bn or even £21bn. Recent talks have been held between state-owned Russian nuclear group Rosatom and the UK’s Nuclear Decommissioning Authority (NDA) despite the chilly political relations between London and Moscow over Ukraine, Moscow sources claimed. These discussions centred on whether Russia could help Britain with removal of uranium from old reactors – but Rosatom is understood to have a wider agenda of trying to resuscitate earlier plans to build its own reactors in Britain.
Guardian 13th May 2016 read more »
Allan Jeffery: Some dreams come true; others turn into nightmares. Hinkley Point C nuclear power station has been a dream to many politicians. Is it about to come true? Margaret Thatcher was one of the first to dream of building Hinkley C. It was to be the second of 10 nuclear power stations she would build, to rescue the country from the menace of those socialist, coal-dependent generators, providing most of the UK’s electricity and too often holding the country to blackout ransom. But her dream turned sour as her privatisation of the nation’s nuclear electricity production bankrupted British Nuclear Energy. The government had to bail out the privatised company. Even worse, the world’s largest nuclear accident at Chernobyl occurred, and the radioactive pollution spread over many countries in Europe. Mrs Thatcher gave up on her nuclear dream. Nuclear was too risky and dangerous and too expensive. The nuclear dreams of many people will turn to disaster, whatever EDF decides on the final investment decision.If the decision is yes, France could lose its national electricity generator and the French taxpayers will rue the day they tried to follow the nuclear dream.If EDF says no, the UK’s energy policy is in tatters leaving the hopes and dreams of politicians, councillors, aspiring businesses and some British trade unions regretting the day they put all their eggs into one nuclear basket, following the Hinkley C dream. My dreams are coming true. All around the world I see rapidly growing investment into a decentralised, renewable, truly sustainable future for our children.This is article has been abbreviated. The full version can be read at http://stophinkley.org/StopPress.htm
Plymouth Herald 13th May 2016 read more »
In March, the UN Economic Council, Economic Commission for Europe, Environmental Impact Assessment in a Transboundary Context Implementation Committee ruled regarding the proposed new Hinkley Point Nuclear Power Station in the UK “that the characteristics of the activity and its location warrant the conclusion that a significant adverse transboundary impact cannot be excluded in case of a major accident, accident beyond the design-base or disaster. The Committee also finds that, as a consequence of its conclusion concerning the likely significant adverse transboundary environmental impact, the United Kingdom is in non-compliance with its obligations under article 2, paragraph 4, and article 3, paragraph 1 of the Convention.” (ECE/MP.EIA/IC/2016/2 See more further below).
Mining Awareness 12th May 2016 read more »
An energy giant owned by the Chinese state has denied it plans to step in with a “Plan B” at Hinkley Point should a £21 billion deal with the French collapse. China General Nuclear Power Corporation (CGN) issued the denial after former energy secretary Lord Howell told the Lords the Chinese were prepared to “bypass EDF altogether” at the Hinkley C project in Somerset.
Plymouth Herald 13th May 2016 read more »
Guardian 13th May 2016 read more »