Internal turmoil at EDF has been growing over the Hinkley Point project, heightened after a document leaked to the Financial Times showed that several senior engineers are calling for further delays to the plant’s construction.
Two Year Delay
The document – allegedly passed between various top executives at the company and penned (though unsigned) by senior engineers – claims that “the realistic service date [for the plant is] 2027” rather than the official date set by EDF and the government of 2025.
Reasons for the claimed delay are largely focused around “continuing design modifications” that are required given problems with the European Pressurised Reactor design, as well as “the ‘very low’ competency of French supplier Areva in making some of the large components”, the Financial Times reports.
EDF themselves were quick to respond to the leaked white papers, dismissing them and the related reporting as “unfounded rumours and fanciful stories”.
“EDF refutes these rumours”
They said, rather unequivocally: “EDF refutes these rumours and confirms that the date of the first reactor is fixed at the end of 2025 and that no delay is anticipated.
“EDF regards this anonymous press campaign as seriously harmful to our interest, as well as the interests of the industry and to jobs in France and Europe.”
The engineers are not the first to express worries about the credibility of the official completion date in 2025. The EPR model is at the core of another of EDF’s nuclear projects, Flamanville 3 in France, which is currently running almost six years behind schedule and has so far cost €7.2 billion more than it was supposed to.
The funding of the Hinkley project has also been a contentious topic; EDF’s share prices have gone down by more than 50% over the last year and with the company’s high debt levels, questions have been raised about their ability to afford the estimated £18 billion cost of the project.
Risky Bet
EDF’s currently run at a deficit with net debt reaching around €37 billion every year; over a third more than its current market capitalisation worth €21 billion.
RBC Capital Markets analyst Martin Young said: “In isolation, the Hinkley project may not be a terrible idea. But if you have not got the money and you have problems at home you should not bet a whole company on a project of this magnitude”.
A deal with Chinese energy company CGN to pay for a third of the total cost in return for a 33.5% has been agreed but is still yet to be officially finalised (though this is more of a formality), and EDF are having difficulty funding the remaining 66.5%.
EDF’s chief financial officer Thomas Piquemal resigned earlier this month and, while the energy giant officially declined to offer reasons for his departure, it is claimed by sources within the company that he left following disagreements with CEO Jean-Bernard Lévy over the finalisation of the Chinese investment deal. The story goes that Piquemal believed that to push the final investment deal through too soon would jeopardise the company’s finances and instead proposed a three year wait.
However it is looking increasingly unlikely that this delay will be pursued, particularly as EDF recently gained renewed full support from the French government, who own 85% of the company.
French economy minister Emmanuel Macron said “we renew our full support for the Hinkley Point project.”
A spokesperson for David Cameron made a similar statement and a spokesperson for CGN did the same.
The UK government has already provided backing in the form of a guaranteed price for the electricity it should eventually produce. They have guaranteed a price of £92.50 per megawatt hour – more than twice the current average price for wholesale electricity of £44 per MWh. This guarantee works both ways – if EDF manage to produce electricity at less than £92.50/MWh, then they will receive the difference nonetheless; if it costs more, then they will have to refund the difference. In both cases, the money both comes from and goes to energy consumers, not from tax payments.
