Anti-nuclear campaigners declared the resignation was yet another sign the project is in trouble. John Sauven, executive director at Greenpeace, said: “Coming just days after the EDF board failed to agree a final go-ahead for Hinkley, this move is yet another symptom of the disquiet this project is causing within the company itself. The whole enterprise makes so little economic sense that EDF’s own staff and many board members are concerned it will seriously damage the company.” (1)

According to the French newspaper, Le Figaro, EDF was expected to make a final investment decision on the proposed reactors at its Board meeting on 27th January 2016, (2) although the Stop Hinkley Campaign pointed out it was the ninth time that EDF has said a final investment decision is imminent and then nothing happened. (3) The campaign group argued that EDF is in such a precarious state that it is really not sensible to commit to building two new European Pressurised water Reactors (EPRs) when there are still no EPRs operating anywhere in the world and there is considerable unease amongst employee shareholders about the financing of Hinkley Point C – some fear it could sink the company altogether. (4) The Financial Times revealed at the end of December that the EPRs being built at Taishan have been delayed by at least another year. (5) Dr Dave Toke said the debate is now not about whether Hinkley Point C will go-ahead, but whether EDF itself can survive. (6)

EDF is in dire financial straits and is reported to be seeking more help from the French Government. It has seen its debts reach €37 billion (£28 billion) and its share price has fallen from €29 in April 2014 to €11.87 now. It is being forced to take over Areva, the company that developed the EPR technology. Peter Atherton, an analyst at Jefferies, the US investment bank, said: “Financing such a massive project [as Hinkley] will place a significant strain on EDF’s finances.” (7)

The Company had already announced that it is considering selling assets worth more than €6bn (£4.5bn) including a stake in its eight British nuclear plants, of which Hinkley Point B is one, to fund Hinkley Point C. But it could only sell a 29% share if it wants to retain a controlling 51% stake, so this would only raise around €2.6bn. (8)

The company also needs €55bn to upgrade its ageing nuclear plants in France. EDF has also agreed to buy between 51 and 75% of the struggling French reactor builder Areva NP which is valued at €2.7bn. So it will have to find at least €1.4bn for that.

Another possibility is that EDF will sell 50% of its holding in the French power transmission business RTE. It cannot sell more than half because 50% is allocated to its decommissioning fund, which is segregated. There is of course a risk in selling half because if it turns out to be worth less than EDF has claimed it is worth for the decommissioning fund, EDF would have to top up the decommissioning fund by the shortfall. EDF has already launched the sale of its Polish coal-fired heating and power plants but that will raise less than €0.5bn. (9)

Another problem for EDF which caused its share price to drop to an all-time low is that estimates on the cost of a proposed French nuclear waste dump have increased. The French waste agency Andra estimates that the cost of its deep geological disposal project could be as high as €30bn rather than the €20bn estimated by EDF. (10)

On top of all this the French nuclear regulator ASN now says it won’t decide until the end of this year what to do about weak spots in steel of the pressure vessel at Flanaville. In October, ASN said it would rule “soon” on EDF and nuclear group Areva’s plans for dealing with the weak spots. Pushing back the decision could lead to further delays at the reactor, which is already years behind schedule. If ASN were to decide that Areva needs to replace the reactor vessel or lid because of the weak spots, the Flamanville project could face significant further delays and cost overruns. (11)

According to The Ecologist the China General Nuclear Power Corp (GGN) – EDF’s partner at Hinkley C – is understandably risk-averse over EPRs and is reportedly demanding an indemnity from EDF against losses at Hinkley C – so that while EDF would only own 66.5% of the project, it would be liable for 100% of any cost overruns. Meanwhile two legal challenges against the UK government’s enormous state aid package for Hinkley C are looming at the European Court: one brought by Austria, now joined by Luxembourg; and one by Germany’s Greenpeace Energy cooperative together with other green energy suppliers in Germany and Austria. (12)

FID Postponed Then, just as EDF was about to make its final investment decision (FID), the item was taken off the agenda for the 27th January Board meeting, because of last-minute concerns expressed by some of the company’s most important backers about how Hinkley would be financed. The CFECGC managers’ union, which has a seat on EDF’s board, posed a set of last-minute questions to the company about the financial risks. It voiced concern that “significant” financial issues related to Hinkley could “put EDF in danger” in the long term. A CFE-CGC document highlighted the construction problems at both Flamanville and Olkiluoto in Finland, which is 10 years behind schedule and €5bn over budget. (13)

Les Echos said the French firm was struggling to find the cash for its 66.5% stake in Hinkley and was now “putting pressure on the [French] state, which owns 84.5% of EDF, to come up with fresh funds”. It said a final investment decision would now be made at the earliest at EDF’s annual results on 16 February. (14)

CFE-CGC submitted a list of 15 questions it said have yet to be answered. (15) The list includes an expression of serious concern about the plant’s viability and what it might cost the company. The document reveals that the Infrastructure UK arm of the government has attached a BB+ credit rating to the project – below investment grade – reflecting worries in Whitehall that it might not be completed. The Union also asked what happens if the project is not built before 2025, as planned, and expressed concern that “significant” financial issues related to Hinkley could put the long term survival of the company in jeopardy. It asked: “What is the rationale for starting construction on two EPRs, at the same site, in such a short period of time?” Given that the other projects appeared to be taking 10-15 years to build, it asked how EDF can estimate a construction time of nine years? Much of the concern in France about the project focuses on how EDF plans to pay for the reactor while continuing to pay its dividend.

Sources close to the board suggest the concerns go beyond the unions meaning the firm may not have sufficient support to make a decision. The news comes amidst warnings from France’s technical regulator that there could be further problems with EDF’s Flamanville plant. Speaking to the French press, ASN chief Pierre-Frank Chevet warned the body was concerned by “anomalies” with the project which had not been spotted by EDF. The authority is conducting further tests on the crisis stricken plant which could cause further delays – with a decision expected later this year. (16)

According to The Times the EDF Board remains deeply split over whether to proceed with Hinkley, with nearly half its members expected to vote against. Mycle Schneider, a Paris-based nuclear energy expert, said that the situation was very serious, adding: “The indications are that the unions, who have six board seats, would have voted against it and at least one more member. Maybe more.” Although the executive team of EDF, including Jean-Bernard Lévy, the chairman, is strongly backing the project with government approval, they are facing stiff opposition from other powerful industry figures. Upheaval within the French nuclear industry is complicating efforts to finalise the Hinkley project. (17)

The six union members on EDF’s 18-seat board would vote against the French utility’s plans for two nuclear reactors in the UK, but other board members do not want to postpone the project, according to Reuters. The unions want EDF to put off the £18bn ($26 billion) project until it has strengthened its balance sheet and started up at least one of the four EPRs it has under construction elsewhere. A united front of EDF’s unions opposing a major investment decision would be unprecedented, but the lack of support from other board members removes a major element of uncertainty for the plan. EDF’s dominant CGT union, which has three board members, called on the firm to postpone the project, saying EDF should prioritise upgrading its ageing nuclear fleet in France, start up the long-delayed EPR it is building in Flamanville, and design a new-model EPR reactor. The more radical FO union, which has one board seat, also said on Monday it was “urgent to wait” and said that going ahead with Hinkley Point could put EDF’s very survival at risk.

Since EDF board member Philippe Varin is also chairman of Areva, he cannot vote on the UK project, which means that nine votes could block it. Besides the six union members, EDF also has six independent board members – including its chief executive Jean-Bernard Levy, Varin and the chairmen of listed French firms Vallourec and Lafarge – while six other members are appointed by the state. Three of these people are government officials. Two sources familiar with the situation told Reuters that none of the other independent or state-appointed board members would side with the unions. (18)  References …..http://www.no2nuclearpower.org.uk/nuclearnews/NuClearNewsNo82.pdf