Leading French auditing body, the Cour des Comptes, has described EDF’s Hinkley Point C nuclear power plant project as potentially risky for the energy giant’s finances.
The report looked into the financial impact of the Hinkely project over the 2009-2014 period and questioned whether or not pursuing it to the end is the right move, given the various hiccups and general “complexity” in funding it.
Given the period on which the report focused, it did not take into account the latest investment from Chinese state backed energy company CGN that was agreed last year (though the final investment contract has not been signed). It did, however, analyse the 2013 deal made with the British government that set out “the key terms of a proposed investment contract.”
EDF’s growing debt burden was cited as a major factor prohibiting the Hinkley project from having a clean path ahead. Currently, EDF’s debt of €37 billion outweighs its estimated market value of €18.5 billion. Fitting Hinkley’s estimated £18 billion cost into this financial profile will be difficult, say the auditing body.
The report said: “even though the [Hinkley investment] deal has not been finalised, the complexity of the deal and especially the way it could impact the responsibility of EDF suffce to raise serious questions”
It also spoke directly of EDF’s “negative free cash flow” and problems with not just the ability to fund Hinkley itself, but of the burden that doing so would place on the need to maintain France’s existed (and growing) portfolio of nuclear plants. “Massive investment” they said, would be “needed in the French nuclear park” as time goes on.
This report from the Cour des Comptes acts as more of a confirmation of worries that have already been being expressed regarding the now somewhat ill-fated plans to build a nuclear reactor in Somerset, rather than as breaking news.
The report also cited issues with the EPR reactor design at Hinkley’s core as hindering straightforward progress particularly with regard to timing. So far, various plants in various stages of planning and construction using the EPR design have been plagued with problems, including one in Flamanville in France that was described as having “serious anomalies” by the French nuclear regulating body.
The report said: “The delays in the plans in Olkiluoto [in Finland], Flamanville and Taishan [in China] obviously raise questions about ability of the Hinkley Point project to be completed on time.”
Last week, EDF’s financial chief, Thomas Piquémal, left the company following disagreements with executive Jean-Bernard Lévy over the timing of the final investment decision. Lévy wanted to press ahead and secure final contracts for Chinese investment within the next month, while Piquémal argued that it was in EDF’s interest to delay it for another three years, while the company clears up its financial situation.
The EU anti-trust committee recently completed an investigation into the legitimacy of the Chinese investment and found it to be clean and above board.
They said: “the Commission’s investigation found that competition in the wholesale supply of electricity in the UK will not be hindered by the transaction given the moderate market share of EDF, the very limited market shares of CGN in this market and the presence of other competitors.”