After EDF revealed on Sunday that the final decision on investment in the Hinkley Point nuclear project was to be delayed until September, several senior executives at the company have been called before MPs to explain their position.
The announcement of the delay came less than a month after French economy minister Emmanuel Macron said that the final investment decision on the £18 billion project would come in early May.
Speaking to the French Economic Affairs Committee, Macron described the Hinkley Point project as “the principal nuclear project in the developed world” and said: “Can we legitimately choose not to take part in [it]? For my part, I don’t think so.”
Aside from technical problems that have been raised with the design of the plant and the reactor type at its core, EDF currently faces a huge financial burden and an obstacle in the way of completion of the Hinkley plant. The company is currently working with a net debt of around €37 billion, and Hinkley is not the only expense on their financial horizon. EDF are also going to have to pay out for maintenance and repairs of their existing nuclear fleet in France.
However, despite issues with initial affordability, Macron has insisted that the UK government’s guarantee of a price of £92.50 per megawatt hour of electricity, “allows us to guarantee the profitability of the project at around 9% a year for 60 years.”
A deal was agreed last year with Chinese state-owned Nuclear company CGN, who will be buying 33.5% stake of the project for a third of the total cost. However, EDF are still struggling to find capital to fund the remaining 66.5%.
It was expected, following Macron’s statements, that a final investment decision would be reached at an upcoming EDF board meeting on the 11th of May. However, this estimate has since been pushed back, following statements from EDF executives and Macron himself, who said that it is now more likely that the decision will “be confirmed next September”.
Following a recent board meeting, EDF made a statement saying that they intend to start a €4 billion state-backed capital raising program in order to better prepare themselves for this project and others in the future, combatting “adverse market conditions” that the energy sector is currently facing.
This “significant recapitalisation” program will be necessary in order to facilitate EDF’s “strategic investment programme including Hinkley Point C”, the company said.
Macron confirmed that a final decision on Hinkley’s investment would have to wait until this recapitalisation program has been completed.
Following the announcement of this further delay, EDF bosses have been called before the Energy and Climate Change Committee to explain.
The committee’s chair, Angus McNeil, said: “When EDF appeared before us in March, company bosses were insisting that a decision would be made in May. At that hearing we said that we would call them back in if that timetable slipped again and that’s what we are doing now.
“If Hinkley does not go ahead it could have huge implications for our future energy security and efforts to cut climate-changing emissions. We will therefore be watching progress on this closely. If we have to see EDF back here in September as well, we will.”
