Hinkley Point: a huge nuclear gamble for France
The British government's long-awaited green light for the Hinkley Point nuclear power station in England on Thursday is of vital importance to France and its state-backed energy industry.
French nuclear power giant EDF is piloting the £18 billion (21 billion euro, $24 billion) project with investment from China.
Here are the stakes for France:
Nuclear power key to French economy
Nuclear power is crucial to the French economy, and state-controlled French power company EDF will be relieved that the project has finally got the go-ahead.
EDF, which is nearly 37 billion euros ($41.5 billion) in debt, hopes it will lead other European countries to rethink their nuclear strategy — and green-light projects for which it can provide the technology.
“I think the British government’s decision will lead many other European countries who have not really decided how they will cover their long-term energy needs to have a rethink,” said EDF chief executive Jean-Bernard Levy.
EDF is already planning to build two more nuclear reactors at Sizewell in eastern England. The firm will also help China, the world’s biggest producer of nuclear energy, to build its own reactor at another British plant in Bradwell, southeast England.
Boost for new technology
Crucially, the go-ahead is also a vote of confidence for the third-generation EPR reactors developed by EDF that will be used at Hinkley Point.
Another plant in France featuring the new technology, Flamanville on the Normandy coast, will be the world’s largest nuclear reactor when it goes into operation in late 2018.
But this project, as well as another in Finland, has been plagued by delays and cost overruns which have discouraged other investors from opting for EPR reactors.
Francois Pouzeratte, an energy specialist at Eurogroup Consulting, said the go-ahead Thursday “will allow know-how to be retained (because) without Hinkley Point there would have been a hole in the French capacity to build power plants.”
Project carries huge risk
The enormous cost has led French unions and even a former EDF board member to warn that it could bankrupt the heavily indebted company.
Paul Marty of Moody’s said the “scale and complexity” were likely to add significant business and financial risks to EDF’s balance sheet.
He warned it will “have to shoulder the financial implications of a very long construction phase during which the investment will not generate any cash flow.”
EDF had to take a 66.5 percent share in the project when it was unable to find other partners to join it and China’s CGN in the financing.
Gerard Magnin quit the EDF board this year because he could no longer support the strategy of the company and the French government to push nuclear energy at the expense of other options.
“As a board member backed by the shareholding government I no longer wish to support a strategy with which I disagree,” Magnin said in the letter.
France needs EDF to succeed. The French state has already poured in billions to keep its competitor Areva afloat and thousands of French workers on the payroll.