EDF board split as £18bn Hinkley Point reactor faces fresh delay
Senior figures at EDF are pushing to delay final approval for the £18bn Hinkley Point nuclear reactor for up to a year as the company seeks new investors for the project.
The long-delayed scheme to build the first in a wave of nuclear power stations in the UK has been awaiting a final investment decision from the French utility company for months.
EDF has said repeatedly that approval for the plant in Somerset, in the west of England, is “imminent”. Jean-Bernard Lévy, chief executive, said last week the decision was “very close”.
But two people involved said it could be delayed until next year.
According to one person close to the company, some directors are pushing EDF to find other investors before giving the go-ahead so that it will not have to take the full liabilities on to its balance sheet.
French rules dictate that the company must consolidate the debt for Hinkley if it owns more than 50 per cent of the scheme. Under a deal struck with CGN, the Chinese state-owned nuclear company, EDF owns 66.5 per cent of the project but it wants to offload a portion to avoid taking on the extra debt.
While Mr Lévy has said that he hopes to bring in other investors after taking the final investment decision, others on the board say it should do so as a prerequisite, a process likely to last into 2017.
One person close to the company said: “EDF is very concerned about its [A-grade] credit rating, and so is desperate to offload a share of this project.”
The British government’s plans for energy supplies are heavily reliant on the facility, which is due to provide 7 per cent of the country’s electricity. Under current plans, it will start producing power in 2025 — having originally been scheduled to open in 2017 — but analysts warn that this deadline will slip if the company delays further.
Standard & Poor’s, the rating agency, has warned it might downgrade EDF’s debt if it goes ahead. The company’s €37bn net debt load dwarfs its €18.5bn market capitalisation.
The major stumbling block for new investors is that none of the projects employing the European Pressurised Reactor design is up and running. Two under are construction in Finland and France but are years behind schedule and billions over budget.
EDF is looking at taking other measures to boost its cash position, such as a potential initial public offering of RTE, the French electricity transmission company.
Insiders say some on the EDF board even want to delay the process indefinitely and wait for the “new model” EPR — an upgraded version.
So far these people have been resisted by a majority of board members, most heavily by those from the French government, which owns 85 per cent of the company.
One person close to the deal in Paris said: “Many people on the board don’t even want it to go ahead and at the very least they want to see that there is a working EPR out there first. I honestly can’t see the final investment decision coming until next year.”
Deepa Venkateswaran, an analyst at Bernstein, said: “From EDF’s perspective, the more delay, the better. The problem is that they have previously said it would take 10 years between the final investment decision and completion of the project.”