EDF Struggles to Secure Funding for U.K. Nuclear Project

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The U.K.'s push for new nuclear power is in doubt following the sudden departure of Électricité de France S.A. (EPA:EDF) (Paris, France) Chief Financial Officer Thomas Piquemal.

The company's Number 2 quit unexpectedly last week over concerns that the £18 billion ($26 billion) Hinkley Point C nuclear project in Somerset, England, threatens the financial stability of the company. Following the departure, EDF has since approached the French government, which owns 85% of the company, for additional financial aid before fully committing to the project. In a letter to employees, Chief Executive Officer Jean-Bernard Levy said that will it not go ahead unless it gets more help from the government.

"We are currently negotiating with the French state to obtain commitments allowing us to secure our financial position," Levy wrote. "I am sure that this project is a good project for the group and that in the near future, all the conditions will come together for it to be definitely launched. It is clear that I will not engage EDF in this project before these conditions are met."

Last October, EDF and its minority Chinese partner, China General Nuclear Power Company (CGN) (Shenzhen), confirmed a final investment decision to build the 3,300-megawatt (MW) Hinkley Point C plant. Final financial sign-off on the project was expected in January but has been put off over reported funding problems. For additional information, see October 23, 2015 article - EDF to Build Hinkley Nuclear Plant in U.K..

The Hinkley project marks the start of the U.K.'s drive to build new nuclear power plants to replace its ageing fleet, most of which will be shut before the new plant is ready. It will be the first new nuclear plant to be built in the country for more than 25 years. When completed, it will be capable of generating enough power for around 5 million homes--which is equivalent to about 7% of the U.K.'s total electricity demand.

EDF has already secured a lucrative and controversial deal with the U.K. government, which promises a guaranteed power price for a period of 35 years, when the Hinkley Point C nuclear plant is commissioned. The so-called "strike price" is three times higher than the current per megawatt hour (MWh) cost of electricity.

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