George Osborne’s gamble on a nuclear future for British energy looked increasingly risky last night as the company set to build the first new reactor for a generation postponed its “final investment decision”. EDF had been expected to announce the go-ahead for the £18 billion Hinkley Point project today but the French state-owned company pulled back amid growing financial problems. It is reported to be seeking extra support from the French government amid a collapse in energy prices and the value of its shares. Hinkley Point C, in Somerset, was to be the beginning of a new nuclear era in Britain with EDF building the plant and China providing financial support. EDF has seen its debts reach €37 billion (£28 billion) and share price fall from €29 in April 2014 to €11.87 this week. It is being forced to take over Areva, the company that developed the European pressurised reactor (EPR) technology, which is in question after a nine-year delay delivering a plant in Finland. Paul Dorfman, of the Energy Institute at University College London, said: “It looks like EDF is looking for an escape door.” He added that the EPR was flawed and that this could be the beginning of the end for French investment in Britain’s nuclear industry. Peter Atherton, an analyst at Jefferies, the US investment bank, said: “Financing such a massive project will place a significant strain on EDF’s finances.”
Times 27th Jan 2016 read more »
Les Echos said the French firm was struggling to find the cash for its 66.5% stake and was now “putting pressure on the [French] state, which owns 84.5% of EDF, to come up with fresh funds”. It said a final investment decision would now be made at the earliest at EDF’s annual results on 16 February. Greenpeace executive director John Sauven said: “The EDF board is clearly rattled as they delay yet again this crucial investment decision. It could well signal curtains for Hinkley. “EDF managers as well as employee representatives on the board are deeply concerned this project is too risky and too expensive.”
BBC 27th Jan 2016 read more »
Two people with knowledge of the process told the Financial Times that the item had been taken off the agenda because of last-minute concerns expressed by some of the company’s most important backers. One said: “There are apparently some serious concerns among the private investors about how this will be financed.” Another person said the main item on the agenda would now be the company’s merger with Areva, the French nuclear energy group. The CFE-CGC union, which has a seat on EDF’s board, has posed a set of last-minute questions to the company about the financial risks. It has voiced concern that “significant” financial issues related to Hinkley could “put EDF in danger” in the long term. A CFE-CGC document highlighted the construction problems at both Flamanville and another similar plant in Finland, which is 10 years behind schedule and €5bn over budget. It asked: “What is the rationale for starting construction on two EPRs [European pressurised reactors], at the same site, in such a short period of time?”
FT 26th Jan 2016 read more »
Guardian 26th Jan 2016 read more »
ITV 27th Jan 2016 read more »
Western Daily Press 27th Jan 2016 read more »
Analysts at Bank of America Merrill Lynch said: “The key change with today’s report appears to be that a new financial partner could be a precondition to EDF’s ability to go ahead with the project. “We estimate a 66.5pc stake in the project implies an equity investment of c€5.5bn in today’s prices, suggesting c€1.3bn in external equity is needed to reduce EDF’s share to just over 50pc.” EDF had originally been expected to use project financing for Hinkley, backed up by up to £16bn in UK Government guarantees via Infrastructure UK. But Mr Lévy announced in October a “radical change” to what he said was a “more efficient” option of delivering its £12bn share of the project from EDF’s own balance sheet. It has since emerged the UK had attached a sub-investment grade BB+ credit rating to the project.
Telegraph 26th Jan 2016 read more »
Just as EDF was due to make its ‘final investment decision’ on Hinkley C, writes Oliver Tickell, another delay. In spite of incredibly generous subsidies, the company is unable to finance it. Its last hope is to persuade the French state to take a 10% stake in the doomed project. The revelation comes in the French newspaper Les Echos, which has been consistently ahead of the pack with high-level leaks from EDF. According to its report, published today, the parastatal corporation has been unable to raise the full sum – some £18 billion – with which to progress the project. The revelation comes in the French newspaper Les Echos, which has been consistently ahead of the pack with high-level leaks from EDF. According to its report, published today, the parastatal corporation has been unable to raise the full sum – some £18 billion – with which to progress the project.
Ecologist 26th Jan 2016 read more »
As if anything extra was needed to demonstrate the financial lunacy of the Hinkley C project to all parties concerned, EDF, according to French press reports, now wants the French Government to pay for it! Quite why anyone would want to take responsibility for a project whose potential lossmaking wildly exceeds even the over-generous offer made by the UK treasury and electricity consumers, beggars belief. Clearly EDF now do not want to. Under increasing pressure from company shareholders, unions, rating agencies, and others EDF has concluded that it just doesn’t have the cash to fund this disaster-in-waiting. Of course the subtext, is, as I have said for several years now, this project is unfinanceable in any rational way apart from being the receipt of a government blank cheque (if one accepts that as rational way!). Now, in effect EDF expects TWO governments to pay for it (UK and France)!
Dave Toke’s Blog 26th Jan 2016 read more »
Les Echos 26th Jan 2016 read more »
The EDF board is meeting tomorrow to reach its ‘final investment decision’ on Hinkley C. It was meant to be a rubber stamp but now it’s anything but, as EDF’s share price sinks to a new low, unions and employee directors harden their opposition to the project, and projects in France, Finland and China run way over time and cost with severe technical problems and safety concerns.
Ecologist 26th Jan 2016 read more »
Plans by EDF to build a new nuclear power plant in the UK could be at risk after the firm was challenged by management unions to justify the decision ahead of a crucial board meeting this week. The meeting was intended to rubber-stamp a final investment decision on the project which has been subject to a litany of delays before construction has even started. However, reports in the French press suggest the moderate CFE-CGC union – which has seats on the management board – has challenged the scheme. In a letter to the board the union raised 15 questions about the project, suggesting it would be difficult to complete on time and that financing it could threaten EDF’s survival. When approached by the FT EDF made no comment. Sources close to the board suggest the concerns go beyond the unions meaning the firm may not have sufficient support to make a decision. The news comes amidst warnings from France’s technical regulator that there could be further problems with EDF’s Flamanville plant, which is built to the same design as that planned for the UK. Speaking to the French press, ASN chief Pierre-Frank Chevet warned the body was concerned by “anomalies” with the project which had not been spotted by EDF. The authority is conducting further tests on the crisis stricken plant which could cause further delays – with a decision expected later this year.
Greenpeace 26th Jan 2016 read more »
A trade union represented on EDF’s board has raised a set of last-minute doubts ahead of the company’s final decision on whether to build the Hinkley Point nuclear plant in Somerset. The CFE-CGC, a key manager-level union, last week drew up a list of 15 queries raising financial, legal and strategic concerns over whether EDF can afford the £18bn project. It also questioned whether EDF can deliver the project on time, given that similar projects are experiencing major delays.
Business Green 26th Jan 2016 read more »
The Energy Union Questions on Hinkley are here (in French).
CFE-CGC 19th Jan 2016 read more »
As press reports suggest that EDF may take a final investment decision on the Hinkley Point C proposals on Wednesday this week, the Stop Hinkley Campaign has released a new briefing on the huge impact the Somerset reactors would have on the UK’s radioactive waste stockpile. The proposed Hinkley Point C nuclear power station would produce radioactive wastes and spent fuel with a radioactivity inventory equal to roughly 80% of the radioactivity in all of the UK’s existing radioactive wastes put together. As the UK Government eagerly awaits a final investment decision on possibly the most expensive infrastructure project in UK history, Ministers are misleading the public on how much nuclear waste it will create.
Stop Hinkley 25th Jan 2016 read more »