France’s Court of Audit, the national public auditor, has cast doubt on the future of the Sizewell C and Bradwell B nuclear energy projects in the UK in a critical report of EDF’s projects in the sector. In its report issued last Thursday, the auditor said the French firm’s Hinkley Point C project “weighs heavily” on its balance sheet, adding that the company, which is 83.6 per cent owned by the French state, is exposed to 63.5 per cent of the project’s risks. EDF ended 2019 with net debts of €41bn (£37bn), €7.7bn (£7bn) worse than a year earlier. The auditor warned that the eventual profitability of the Hinkley project, which has been revised downwards repeatedly since it was signed off, could fall further still. It also noted that while the Hinkley Point C project benefits from a favourable guaranteed price for the electricity it will eventually produce, this benefit will not extend to subsequent projects due to criticism in the UK from both the National Audit Office and the Public Accounts Committee. The auditor’s report observed that while the Sizewell scheme will aim to replicate the Hinkley project to cut construction costs by 20 per cent, the price of the electricity produced will only be competitive if the cost of financing the project can be considerably reduced, such as through adoption of the regulated asset base approach. The report also noted that EDF’s desire to reduce its exposure to Hinkley Point C will only become possible if the project’s risks fall to a level that is acceptable to private investors. But it added that any further erosion of profitability would make it “difficult if not impossible” to bring in private investors.
Construction News 13th July 2020 read more »