The timing of EDF’s “clarifications” is a shock. It is very early in the life of this £18.1bn (now £19.6bn, possibly rising to £20.3bn) project to be recasting the numbers. The tricky stages of construction, like pouring the right mix of concrete, lie ahead. The additional costs relate to mundane matters, such as “a better understanding” of UK regulators’ requirements and “the volume and sequencing of work on site”. These are planning areas in which EDF would surely have made allowances for uncertainties. That all that slack, and more, has been used up is puzzling. Sceptics within EDF who argued that Hinkley is too big and too financially risky will feel vindicated already. EDF’s projected rate of return on the project was never high at 9%; now it is down to 8.5% and will fall to 8.2% if the delays materialise. Still, it’s a French problem, right? Didn’t the UK government insulate us by making EDF and its Chinese co-financier shoulder the construction risks? Wasn’t that the trade-off for the UK guaranteeing to buy all Hinkley’s electricity for 35 years at twice the current wholesale price? Well, yes, that’s how the contract is structured, and EDF’s UK boss was full of reassurance on Monday that UK taxpayers remain protected. But no contract of this size is ever so straightforward, as the National Audit Office pointed out in its blistering report last week.
Guardian 3rd July 2017 read more »
[Machine Translation] The CGT Union sees in these changes of cost and timing a proof of the runaway which characterizes this operation. “The decision was originally taken without any consultation, without listening to the trade unions who wanted to postpone the project,” said Sébastien Menesplier, secretary general of the National Federation of Mining and Energy (FNME-CGT). What we were asking for was to wait for the EPR in Flamanville to come into operation to give feedback, and thus adjust the sight in financial and technical terms. “An eagerness also emphasized by Nicolas Goldberg de Colombus Consulting: “Ideally, EDF would build an EPR in France and wait for it to be completed before building another one elsewhere.” The Flamanville EPR, supposed to be a showcase of French technology in this field, should have cost 3.3 billion euros and be delivered in 2012. It will only be operational in 2019 and the bill will reach 10.5 billion. Last week, the Nuclear Safety Authority (ASN) validated the aptitude for the reactor vessel, but requested replacement of the lid by 2024, which will add another 100 million euros to the bill.
Liberation 4th July 2017 read more »
Jonathan Bartley co-leader of the Green party: With every day that passes, the proposed new Hinkley Point power station looks less flagship and more shipwreck. But we don’t have to go down with this one. Yesterday’s announcement that the cost of building the new nuclear plant has risen again, this time by a staggering £1.5bn, came just ten days after the National Audit Office confirmed what campaigners have been saying for years – that the deal is overpriced and risky. With the cost of renewable energy now falling faster than anyone anticipated, it’s hard to imagine a more expensive way of producing power, or indeed a common sense reason for continuing with such a folly. It doesn’t have to be like this. Over the past month, Theresa May’s administration has crumbled. Propped up by the Democratic Unionist Party, unable to implement its manifesto promises and derided in Europe, the disastrous election has left this government on its knees. But this moment of weakness creates an opportunity – we have the real chance to stop Hinkley in its tracks and think again. The New Economics Foundation has suggested we could provide more than six times our annual electricity needs through a Blue New Deal, getting renewable offshore energy through wind and wave while rejuvenating our coastal communities with 160,000 new jobs. Green MEP Molly Scott Cato has shown how the South West alone could meet all its energy needs through renewables, creating more than 100,000 new jobs. This puts the 900 full-time posts expected to be available at Hinkley, if construction is ever completed, into sharp perspective.
New Statesman 4th July 2017 read more »
[Machine Translation] Following a “full review” of the project carried out over several months, EDF announced on Monday (July 3rd) an upward revision (+ € 1.845bn) of the cost of the two EPR reactors that the group is constructing at Hinkley Point, in the south-west of England, confirming information from the World (dated 25-26 June). This will raise the cost to 22.4 billion, an increase of 8% compared to the original estimate, said the general manager of EDF Energy, a British subsidiary of the French group. Vincent de Rivaz did not specify, but the additional cost of this first slip will be shared pro rata between EDF, which finances 66.5% of the project, and its partner China General Nuclear Power Corporation (CGN), which finances one third , Indicates the direction of the French electrician. This situation worries the Minister of Economy. Bruno Le Maire immediately asked EDF’s CEO, Jean-Bernard Lévy, to submit a “rigorous action plan” to him by the end of July to ensure control of the site. This plan should make it possible to “reinforce the timetable” and “to reduce as far as possible the financial impact of this reassessment and to ensure a rigorous control of the risks of the project”. It also wants the “precise causes of this re-evaluation” as well as “the risk factors and the content of the review of the project” to be “analyzed” by the group’s board of directors. According to EDF, this change can be explained by the changes being made to the design of the EPR (control, ventilation, etc.) required by the British nuclear safety authority and the revision of the “volume and sequencing of work on site” , Which began in March. It also implicates it in the “gradual introduction of supplier contracts”, which are reviewed, since the final investment decision was not taken until September 2016, almost one year behind schedule initial. Added to this extra cost is the first postponement of the start date of the reactors, although Mr de Rivaz stresses that the teams must “remain mobilized” to fulfill the initial objective of commissioning by the end of 2025. In fact, EDF refers to a “risk” of 15-month slippage for the first EPR and nine months for the second. This would entail a cost of € 861 million, in addition to € 1.845 billion. These extra delays are inevitable, according to several experts, as the UK EPRs are different from others, notably Flamanville, and British industry has not built a reactor for twenty years. EDF recognizes that the expected rate of return of the project will fall from 9.2% to 8.5% and even to 8.2%, which remains very comfortable. On the other hand, Mr de Rivaz says that this slippage will have “no consequence” on the contract signed in 2013 between the British government and the company operating the plant. It guarantees EDF and CGN a remuneration of 92.50 pounds (105 euros) per megawatt hour (MWh) for thirty-five years. The executive ensures that these fifteen months are “far below” the delay beyond which London is entitled to reduce this guaranteed price.
Le Monde 3rd July 2017 read more »
[Machine Translation] Economy Minister Bruno Le Maire on Monday asked the CEO of EDF to present a “rigorous action plan” by the end of July to ensure control of the extra costs and schedule of the construction site of the two EPR reactors Of Hinkley Point in England. The State will ensure that this action plan, to be presented to EDF’s board of directors, will “strengthen the project’s timetable” and “minimize the financial impact of this re-evaluation and To ensure a rigorous control of the risks of the project, “the minister said in a statement.
Romandie 3rd July 2017 read more »
Le Figaro 3rd July 2017 read more »
Challenges 3rd July 2017 read more »
[Machine Translation] Hinkley Point, the bill of the British EPR is already slipping. The construction site of the British EPR has just begun that it already displays a very significant additional cost. The setbacks continue for EDF on its Pharaonic project of two new nuclear reactors at the site of Hinkley Point, in the southwest of Great Britain. The electrician announced a first financial slip of 1.84 billion euros (1.5 billion pounds in 2015), 8% more than the original estimate. The rate of return (IRR) is now estimated at 8.5% instead of 9%. In plain language, the group had to cope with the demands for greater modifications than expected of the British security office, which forced it to review its plans, while at the same time, in Paris, engineers work To a simplification of the EPR. Vincent de Rivaz mentioned, for example, new requirements concerning “the ventilation systems of the many buildings in the reactor building”. An internal source also refers to the poor relations between the French and British teams of EDF. These announcements could further complicate the task of Jean-Bernard Lévy, president of EDF, who had just obtained the endorsement of the board of directors a year ago to launch the project. However, these risks of cost slippage were anticipated. They had been discussed at the beginning of 2016 by Yannick Escatha, the CEA’s former boss, who was particularly concerned about the many specificities requested by the English party. His note was never made public and even the EDF Right to a summary of a few pages. He also feared that the authorities would seek to renegotiate the very advantageous contract for the purchase of electricity from the EPR, at a fixed price over 35 years, which the UK Court of Auditors had already highlighted the consequences on the consumers.
La Croix 3rd July 2017 read more »
[Machine Translation] Several analysts are concerned about the financial consequences of the new upward revision of the cost of the nuclear project in the UK. The title of the French group loses more than 3% in session. The “Macron” effect was only short-lived. After a few weeks of lull, EDF is once again heckled on Tuesday at the Paris Stock Exchange, led by the upward revision of the cost of the Hinkley Point nuclear project in the United Kingdom. For HSBC and MorningStar, EDF still has questions about its balance sheet, despite the capital increase of 4 billion euros carried out in March. Besides, the electricity group has to face the simultaneous aging of its nuclear reactors in the Hexagon, of which it must ensure the lengthening of the lifetime. According to analysts, the problems linked to the “gigantic” project of Hinkley Point, supported by the President of the Republic, highlight the “misalignment” of interests between the state and minority shareholders. Paris holds 78.9% of EDF’s capital. The Minister of Economy has asked the CEO of EDF to present a “rigorous action plan” by the end of the month to ensure control over costs and schedule. This plan of action should enable the State to “reinforce the project timetable” and “to reduce as far as possible the financial impact of this reassessment and to ensure a rigorous control of the risks of the project” “The minister said in a statement. Bruno Le Maire noted, however, that the impact of the cost overrun on the rate of return of the project remains limited and that EDF maintains its forecasts of results for the next two years. Not sure if that’s enough to reassure the markets.
Les Echos 4th July 2017 read more »