Is it just Hinkley that’s finished or the whole of EDF?

No2Nuclear Power Jan 2016 “………French utility EDF is considering selling assets worth over 6 billion euros (£4.5 billion) this year, according to French daily Les Echos – notably it is considering selling a stake in its eight British nuclear plants to fund plans to build Hinkley Point C. But it could only sell a 29% share of EDF Energy (which is supposed to be worth 9 billion euros in total). This would leave EDF with a 51% stake, because Centrica already owns 20%. The paper said a sale had been studied but the process had not been launched. The company needs 55 billion euros to upgrade its ageing nuclear plants, plans to invest 18 billion pounds in Hinkley and spend several billion euros to buy Areva’s reactor unit. (1)

Further delays at the Taishan EPR being built in China are hammering another nail in a coffin, says Dr David Toke, reader in Energy Politics at Aberdeen University. The only debate now is whether the coffin will house just the Hinkley C project or the whole of EDF. The Taishan plant’s construction began in 2009 and was supposed to be finished in 2013, but is now not expected to open until 2017. EDF will have to sell-off profitable assets to fund Hinkley C, something that is almost universally regarded as at least a rather large gamble or, increasingly, a probable disaster that will sink EDF. Given that the EPR is proving to be such a turkey in three multibillion projects (Olikuoto, Flamanville and now Taishan) what sort of business decision can it be to fund a fourth project that could break the company? (2

Disagreements over valuation and charges related to a Finnish EPR are likely to delay EDF’s acquisition of Areva’s nuclear reactor business. In late July, EDF agreed to buy 51 to 75% of the Areva NP reactor unit based on a value of 2.7 billion euros for the entire division. But EDF has revised that valuation down to 2.2 billion to 2.3 billion euros and won’t make a firm offer for Areva NP until early 2016. There was a “substantial” disagreement between the two sides on the value of the unit and that the talks “remain very complicated”. “The disagreements are about the amount, but especially about Finland,” another source said, adding that the French government prefers to clear the Finland issue with Areva before finalizing the sale of Areva NP. Finnish utility TVO has a 2.6 billion euro ($2.8 bln) claim against the Areva-led EPR consortium at the International Chamber of Commerce’s arbitration court. Areva-Siemens has a 3.4 billion euro counter-claim. (3)

According to the Guardian, possible buyers of a stake in UK reactors might include the stateowned Chinese companies, who are already committed partners of the Hinkley Point C project. EDF could unveil details of a sell-off plan on 16th February, when it is scheduled to release annual financial figures and is expected to give a final investment decision on Hinkley. (4)

Industry sources told the Guardian that the possible sell off was only one of a number of different options that were under consideration as the group looked at financing Hinkley Point C and other projects. They said it was still likely EDF would give the go ahead to Hinkley next month even though it did not have all the financing in place.

EDF is also said by Les Echos to be considering disposing of its 49.99% stake in three nuclear power plants in the US which are operated by Exelon (Two reactors at Calvert Cliffs Maryland; two at Nine Mile Point, New York, and one at RE Ginna, New York) The sale of EDF’s stake in No2NuclearPower nuClear news No.81, January 2016 12 these five reactors could be complicated. At least two of those reactors are at risk of closure due to economic pressures, and Exelon is having trouble with its nuclear business more broadly. Exelon might not be willing to take on more liability. EDF is also considering selling 50% of its holding in 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.

Meanwhile the National Audit Office says over a third of major government infrastructure projects are at risk of delays and spiraling costs. 37 of the 106 projects due to be completed within the next five years have been branded “unachievable” or “in-doubt” by a government body set up to monitor them. It is not known whether Hinkley Point is one of the projects the NAO considers to be at risk. (5) http://www.no2nuclearpower.org.uk/nuclearnews/NuClearNewsNo81.pdf

January 13, 2016 - Posted by Christina Macpherson | business and costs, France, UK

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