The Times, Published at 12:01AM, February 1 2016
The beleaguered French company is facing stiff opposition to the project, writes Robin Pagnamenta
The board of EDF remains deeply split over whether to proceed with the nuclear plant at Hinkley Point in Somerset, with nearly half its members expected to vote against the giant project, according to French nuclear experts. The French state-owned energy group, which is grappling with debts of €37 billion and plunging wholesale electricity prices, delayed a key board meeting last Wednesday under growing pressure from French energy unions to abandon the project because of the huge costs and financial risks involved.
Mycle Schneider, a Paris-based nuclear energy expert, said that the situation was very serious, adding: “The indications are that the unions, who have six board seats, would have voted against it and at least one more member. Maybe more.”
Although the executive team of EDF, including Jean-Bernard Lévy, the chairman, is strongly backing the project with government approval, they are facing stiff opposition from other powerful industry figures.
On Friday the French government reiterated its support for the plans, in an effort to dispel growing doubts over the future of the joint French-Chinese project. Emmanuel Macron, the economy minister, said that the state was very clearly committed to building the power station, which will generate 7 per cent of UK electricity once built by the late 2020s.
A spokesman for EDF said that a final decision on Hinkley Point would be made soon, adding that the company remained deeply committed. He declined to comment further. The French government wants the plant to proceed to demonstrate that its embattled nuclear industry still has a bright future.
Peter Atherton, utilities analyst for Jefferies, the US investment bank, said: “The French have been very keen for the UK to buy their nuclear technology. They have invested decades in developing it and are very keen to export it around the world.”
However, upheaval within the French nuclear industry is complicating efforts to finalise the Hinkley project, which EDF intends to build with two state-controlled Chinese nuclear companies, according to a deal agreed in October last year during a visit to the UK by President Xi. The two companies also plan to build two more EPR reactors at Sizewell in Suffolk.
EDF’s French parent, which is 84.5 per cent owned by the French government, is the world’s biggest generator of nuclear electricity, operating 58 reactors in the country that produce 77 per cent of the nation’s power. But these ageing stations are absorbing EDF’s limited resources while the group is also being forced to bail out Areva, developer of the EPR French nuclear reactor technology earmarked for use in Britain.
Areva, which is 87 per cent owned by the French state, has collapsed after huge delays and cost overruns linked to an earlier project to build an EPR at Olkiluoto in Finland.
“EDF cannot generate sufficient cashflow to finance the investments necessary to keep the lights on in France,” Vincent Ayral, a Société Générale analyst, said. “There have been limited signs of recognition by the government that the current situation is unsustainable nor of support for EDF’s cashflow and balance sheet. If anything, the company has been asked to get its wallet out and come to the rescue of Areva.”
France has struggled to find new export markets for its EPR reactor since the Fukushima disaster in 2011, which triggered a sharp drop in demand for nuclear power. Britain and China are among the few countries still interested in buying French nuclear technology.
Mr Atherton said: “Financing such a massive project will place a significant strain on EDF’s finances. That is why they have brought in Chinese investors.” However, he said that the project could still prove highly profitable to EDF in the long term because of the attractive subsidies offered by the UK, including a guaranteed “strike price” for Hinkley’s electricity of £92.50 a megawatt hour, nearly three times the present wholesale cost of power.
Lots of talk but very little action
When Tony Blair threw his weight behind plans to build a new generation of nuclear power stations in 2006, there was talk that the first one would be producing electricity by Christmas 2017 (Robin Pagnamenta writes).
Instead, a decade on, a shovel has yet to hit the earth on the first site proposed by EDF at Hinkley Point.
Britain’s nuclear dreams have fallen victim to the fallout after the Fukushima disaster, as well as to political problems and union agitation within the troubled French nuclear industry.
Britain’s clapped out nuclear facilities, which were built mainly in the 1970s and 1980s, are approaching the end of their working lives and becoming increasingly unreliable. They must be replaced by something — and soon.
However, building new reactors is an enormously expensive and time-consuming engineering challenge, and after flogging off its stake in British Energy, the UK’s nuclear generator, to EDF, the government has had to dangle hefty subsidies to persuade it to press ahead with its Chinese partners.
Don’t hold your breath, however. Even if Hinkley Point gets built on time, which is unlikely, it won’t be generating electricity before the late 2020s.
Two Japanese-backed developers, Horizon and NuGen, are waiting in the wings but they are trailing further behind with their plans to build stations at Wylfa on Anglesey, Oldbury in Gloucestershire and Moorside in Cumbria.