EDF Group’s chief executive Luc Rémont has hit back at the national French auditor’s claims that the energy company should delay its investment in UK nuclear power project Sizewell C.
He said the regulated asset base (RAB) model for financing the Suffolk nuclear power station, where the cost of development is shared with the consumer, should not be correlated with the refinancing of the Hinkley Point C project in Somerset.
The French state-owned energy company has started a search for financiers to help refinance the delayed project at Hinkley Point C, following the French state auditor’s findings yesterday, according to Rémont.
In October, the energy company issued £500m of senior bonds to help finance investments in two nuclear reactors at the site.
Rémont said that the funding model for the Sizewell C nuclear power project on the Suffolk coast “limits” EDF’s capital exposure.
“This [regulated asset base] model therefore limits EDF’s exposure to its capital and allows decision-making on the FID of the Sizewell C project to be decorrelated from the refinancing issues of the HPC [Hinkley Point C] project,” he said in a response to the auditor’s report. “For the latter, EDF has initiated an active search for financiers.”
© Supplied by EEEGR / EDFBy contrast to the Sizewell C RAB method of financing, Hinkley Point is financed through a contract-for-difference (CfD) scheme. The project secured a fixed price of power through the CfD mechanism guaranteed for 35 years in 2016.
Hinkley Point C is majority-owned by EDF, which reported efficiency improvements of about 30% between the first and second reactor units at the Somerset site.
French auditor Cour des Comptes concluded in a report released yesterday that state nuclear power company EDF should delay a final investment decision for the Sizewell nuclear power station following mounting costs at Hinkley Point C.
“In Great Britain, on the Hinkley Point site, EDF is facing a sharp increase in costs accompanied by a new two-year delay, as well as a heavy additional financing constraint caused by the withdrawal of the Chinese co-shareholder,” the auditor said.
The French auditor raised concerns about a “sharp increase in costs” at the latest nuclear reactor that is being built at Hinkley Point in Somerset and further delays to the project, as well as financing constraints “caused by the withdrawal of the Chinese co-shareholder”. In December 2023, the China General Nuclear Power Corp. exited the project.
“As for the new EPR project at Sizewell, delays are already piling up, with the first negative consequences in organisational and financial terms,” the auditor wrote in a report published yesterday. “The Court recommends not approving a final investment decision in this project until a significant reduction in EDF’s financial exposure to the Hinkley Point site has been obtained.”
The auditor’s report come a week after a letter was sent to the national auditor in the UK, the National Audit Office, calling for a review of the government’s spending assessment for Sizewell C.
The campaign group behind the letter raised concerns of rising costs at Hinkley Point C, another nuclear power station being built by EDF, now estimated to be in the region of £46 billion.
The letter from Together Against Sizewell C (TASC) followed a plea by Ecotricity founder Dale Vince, a Labour donor, for the Treasury’s new Office for Value for Money to review plans to develop the new nuclear power project in Suffolk.
EDF is a minority shareholder in the planned Sizewell C project, which involves the construction of a third nuclear power station at the coastal site east of Leiston in Suffolk.
The first of the nuclear power stations built at Sizewell is in the process of decommissioning after it was shuttered in 2015, whereas the Sizewell B nuclear power station remains operational.
The UK government has courted private investors including Centrica, Schroders Greencoat, Equitix, Amber Infrastructure Group and Emirates Nuclear Energy Corporation for investment in Sizewell C, but talks have since stalled.
The UK government indicated in the Autumn Budget that the equity and debt raise process for Sizewell C was due to move to its final stages.
A final investment decision is expected to be taken in the government’s multiyear spending review in June.
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