nuclear-news

The speed with which the renewables industries will be able to grow in the years ahead will be much affected by the course of the gas and nuclear industries’ efforts to grow. Having considered gas in my last column, let me turn to nuclear, and focus on a project that will have much to do with nuclear’s prospects globally: EDF’s Hinkley Point C plant.

I start with a set of numbers surely destined to become a classic case history for business schools. Imagine you are the CFO of a company that has a market capitalisation of €18 billion. You are being asked to find investment of €22 billion for a new nuclear plant, the first of a whole new fleet. Without that fleet your company cannot hope to grow, assuming it sticks with nuclear generation, and therefore without that one plant its business model will be exposed as broken.  Yet your plant is the most expensive power station in the world, and one of the most expensive human construction projects ever, in real terms. And here is the thing: you carry €37 billion of net debt on your balance sheet.

You have two further problems. The first is €55 billion in estimated liabilities to keep a fleet of aging reactors, of earlier generations, open beyond their long-scheduled closedown dates. The second is an unknown number of further billions to fix a grave safety flaw in the steel of a pressure vessel in the forerunner of the new plant you must build.

What do you do?    You resign, of course.   Which is exactly what EDF CFO Thomas Piqemal did on 8^th March.

Now imagine you are the abandoned CEO. You face a few problems beyond the loss of your CFO, the market signal that sends, and the reasons for his departure. Moody’s, the ratings agency, haswarned that your credit rating will be downgraded if you go ahead with the plant, making it far more difficult for you raise yet more debt. Your labour unions are begging you not to go ahead, andthreatening to strike if you do. They are openly saying that they fear this single project will bankrupt the company. Worse, they have seats on the board, because the workforce are part owners of the company.

What do you do?  In a rational world, you resign too.

But now imagine you have a rock solid belief system. You cannot conceive of a world without nuclear power, or at least your vital power plant. So instead of resigning you elect to announce your renewed determination to build the project.  ……..

As for the denouement, the only thing yet to be resolved is the the exact shape of the inevitable tragedy.

Including the extent to which this white-elephant product of a broken and dying belief system in society can slow down the growth of renewables. http://www.jeremyleggett.net/2016/06/the-nuclear-white-elephant-that-stands-in-the-way-of-green-growth/?utm_content=buffer99a62&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer