EDF Still Counting on Hinkley Point C

Brushing aside the outcome of the June 23 UK referendum – when the slenderest of majorities voted on leaving the European Union – French EDF said July 4 the statutory consultation period with the workforce on building the planned 3.2-GW plant in partnership with Chinese CGN was over.

EDF is aiming to take a final investment decision in September, following an expected €4bn injection, mostly funded by the state, in the summer. But the project has its critics at home and in the UK, despite the unwavering support of both governments. The power price was guaranteed at a multiple of UK wholesale prices at the time of the agreement and the ratio has since worsened; while gas-fired technology would be quicker and cheaper to build.

The company has had its credit rating cut and seen its finance chief Thomas Piquemal leave, because of the risks associated with HPC, and be quickly hired for a top job by Deutsche Bank. The technology to be used at HPC has not been tested and the project's start date will only be confirmed when the final investment decision is taken, perhaps this September.

Yet the company said: "EDF reconfirms its confidence in the HPC project which has now reached the stage for the Board’s final investment decision."

During the meeting EDF offered to provide information about the consequences on the HPC project of the British vote to withdraw from the EU: "EDF relies on existing sensitivity studies which had already been communicated to the employee representatives and considers that the vote does not change the fundamental features of the project nor the willingness of those involved to go ahead with it," it said.

The vote was not legally binding and UK's departure from the EU will require parliamentary approval. Pro-exit Andrea Leadsom, the UK junior energy minister who is now among those seeking to be chosen to succeed the pro-remain prime minister David Cameron, told a parliamentary committee in May: “We want to see it [the FID] as soon as possible, but we recognise it is a commercial decision."

Employee representatives from France's trade unions, CGT, FO and CFE-CGC supported a resolution saying they were not in a position to give their opinion about the project. The representatives from CFDT abstained from voting.

Moody's downgraded EDF on May 12 with a negative outlook on all ratings. It said: "The negative outlook reflects (1) the execution risk associated with certain elements of EDF's action plan, notably the disposal of commodity-exposed activities; (2) that the action plan does not address the fundamental challenge faced by EDF, that is power prices at a level which currently does not allow the group to cover the required investments and earn a return on those; and (3) the incremental risks associated with the HPC nuclear power station project in the UK, should it go ahead.

William Powell