9 May 2012

The Times (UK): French election may leave nuclear no longer an option

The Times (UK) French election may leave nuclear no longer an option Tim Webb Energy Editor Last updated at 12:01AM, May 8 2012 Nuclear energy policy in Britain is on the verge of meltdown as experts predict that the new French government will order EDF to divert billions of euros intended for new UK reactors back into the French domestic power market.

After The Times revealed yesterday the soaring cost of building Britain’s four planned new reactors, industry analysts said last night that they believed the forthcoming administration of the anti-nuclear Socialist François Hollande could force EDF to scrap its UK nuclear plans.

With Mr Hollande planning to slash French reliance on nuclear power by 25 per cent by 2025, it is argued that EDF could be forced to switch billions of euros to fund investment in French renewables and energy efficiency schemes.

If EDF’s subsidiary EDF Energy withdrew from the British nuclear industry, it would mirror moves by the German groups E.ON and RWE, which said in March that they had scrapped their nuclear new-build plans across the Channel.

Antony Froggatt, of the Chatham House international policy think-tank, said: “We could see a similar outcome with EDF to what we saw with RWE and E.ON. If the new French government scales back nuclear, like the Germans did, that could mean EDF is in a weaker position to invest in new nuclear in the UK.”

The Germans quit the British programme after Berlin decided to accelerate the phasing out of nuclear power at home in the wake of the reactor meltdown in Japan last year.

The extra safety and administrative costs to the industry in the aftermath of Fukushima, as well as the general rise in commodities and construction costs, have already been putting the financing of EDF Energy’s British plans under pressure. The Times reported yesterday that the cost of the first two reactors set for Hinkley Point in Somerset had risen from £10 billion to £14 billion.

That escalating cost is, it is understood, exerting pressure on the British Gas group Centrica over whether it proceeds with its co-investment in nuclear as EDF Energy’s junior partner.

At the very least, British energy executives expect the election of Mr Hollande to delay EDF Energy’s plans. His administration is likely to review EDF’s strategy and possibly replace its leading executives, who, effectively, are political appointees.

His poll success sent shares in the EDF parent Électricité de France tumbling by 3.2 per cent.

Mycle Schneider, a Paris-based nuclear energy consultant and former adviser to the French government, said that EDF’s investment plans in Britain were at risk even before Mr Hollande’s electoral victory.

“Considering EDF’s huge debts, it’s quite likely that reviewing the investment programme planned for the UK, which EDF had drawn up under previous governments, is top of the agenda,” Mr Schneider said. “If EDF has to divert investment from nuclear at home into things like energy efficiency and renewables, it leaves even less money available for the UK.”

A spokesman at the Department of Energy and Climate Change said: “Government remains committed to its efforts to ensure that the conditions for new nuclear are right for costeffective investment without public subsidy in the UK.”