News April 2016

30 April 2016

Hinkley

Plans for Hinkley Point are creating turmoil within EDF, which also needs to spend €50 billion ($56.5 billion) to renovate its network of French nuclear reactors by 2025. In March, EDF’s chief financial officer quit rather than continue with the U.K. project. Ratings agencies have warned of a possible credit downgrade, and employee unions are threatening to strike. Private investors, who own 15 percent of EDF shares, are spooked: The stock is down 50 percent over the past year. On April 22, EDF said it plans to sell €4 billion in new shares to raise cash. News of the plan caused shares to drop even further. Even in France, says Simon Taylor a professor at Cambridge University’s Judge Business School who specializes in energy finance: “there are voices in the nuclear industry saying, ‘We must come up with a plan B.’ ”Public support for the project in Britain has fallen to 33 percent, down from 57 percent in 2013, according to a YouGov poll released on April 26 commissioned by New Nuclear Watch Europe, a pro-nuclear group. Britain can offset the closure of old nuclear and coal plants and put off the need for new reactors for another decade by increasing its investment in renewable energy, says Deepa Venkateswaran, a utility analyst at Sanford C. Bernstein in London. New, less expensive technologies might be developed to store energy from wind and solar, helping to ensure reliable supply. Building Hinkley Point now, she says, “is not make-or-break.” “The decision-makers on both sides (France and Britain) are totally underestimating” the risks, says Mycle Schneider, an independent nuclear analyst in Paris. “But the farther they go on, the more difficult it is to pull out.”

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Posted: 30 April 2016

29 April 2016

Hinkley

True or false? A new nuclear power station in the south-west of the UK will be the most expensive object on Earth. That’s the claim about the proposed plant at Hinkley Point in Somerset – but has anything else ever cost so much to build? “Hinkley is set to be the most expensive object on Earth… best guesses say Hinkley could pass £24bn ($35bn),” said the environmental charity Greenpeace last month as it launched a petition against the project. This figure includes an estimate for paying interest on borrowed money, but the financing arrangements for Hinkley C are so opaque that it is impossible to calculate exactly what the final cost will be. Even if you stick with the expense of construction alone, though, the price is still high – the main contractor, EDF, puts it at £18bn ($26bn).

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Posted: 29 April 2016

28 April 2016

Hinkley

A renewable energy developer and operator – which is, inter alia, developing a wind farm site in Wormit, Fife – has published a new report showing that a mix of renewables, energy storage and backup gas generation can provide the same low carbon baseload power as Hinkley Point at a 25% cheaper price. In the report – ‘Hinkley Point Through The Looking Glass’ – Niels Kroninger, Joint Managing Director, Green Hedge Energy, shows how this would save UK consumers £720 million per year for 35 years. He said: “We’ve invited DECC to start negotiating such a contract with us and other renewable energy firms if they are committed to technology neutrality. This also goes to show that the cost assumptions we make, albeit surprising, are realistic today”.

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Posted: 28 April 2016

27 April 2016

Hinkley

EDF executives have been called back to parliament to explain why they have further delayed making an investment decision on a planned £18bn nuclear power station at Hinkley Point in Somerset. MPs on the energy and climate change committee want to hear from EDF chiefs after the French economy minister, Emmanuel Macron, said the final decision could be delayed until September – four months later than expected. Angus MacNeil, the chair of the committee, said: “When EDF appeared before us in March, company bosses were insisting that a decision would be made in May. At that hearing, we said that we would call them back in if that timetable slipped again and that’s what we are doing now.” The committee said it expected the hearing to take place in late May. “If Hinkley does not go ahead, it could have huge implications for our future energy security and efforts to cut climate-changing emissions. We will therefore be watching progress on this closely. If we have to see EDF back here in September as well, we will,” MacNeil said.

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Posted: 27 April 2016

26 April 2016

EDF

EDF shares dropped more than 11pc on Monday as investors reacted to its plan to sell 4bn euros (£3bn) of new shares to help it finance the building of the Hinkley Point nuclear plant. The French energy giant, which is 85pc-owned by the French state, announced the plans for a rights issue as well as further cost-cutting measures after the market closed on Friday night. The French Government has indicated it will subscribe to 3bn euros of new shares through the rights issue as well as taking a scrip dividend option for 2016 and 2017, so diluting the value of existing shareholdings. EDF has been forced to shore up its finances as it is hit by increasing exposure to falling wholesale electricity prices, at the same time as it tries to afford its share of the £18bn nuclear plant in Somerset and upgrades to the existing French nuclear fleet. As well as the rights issue, EDF said it planned to sell 10bn euros of assets by 2020, including a stake in French power-grid operator RTE, and deepen planned operational spending cuts from 700m to 1bn euros by 2019. Analysts at Jefferies said: “Execution of the new plan will buy EDF time with the credit rating agencies, allowing it to maintain solid investment grade rating till 2018. “However, for this to be the case in the long term, a recovery in power prices is essential. Also, the new plan is likely to result in painful earnings dilution.”

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Posted: 26 April 2016

25 April 2016

Hinkley

The decision on whether to go ahead with the £18bn Hinkley Point C nuclear power project has been delayed again, after France’s economy minister said the country’s energy giant EDF may not give it the green light until September. Emmanuel Macron’s comments come a week after he said EDF would deliver its verdict on Hinkley Point, which is set to meet 7% of the UK’s energy needs, in “the coming week or month”. EDF said just days ago that it was expecting to make a final decision in the summer, having previously promised to do so by the time of its annual general meeting on 12 May. The fresh delay raises the prospect that even if the project does go ahead, it will not meet its scheduled completion date of 2025, already eight years later than originally planned. The fresh delay is likely to fuel criticism of the project from organisations such as Greenpeace, which last week said the project was an “utter mess”.

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Posted: 25 April 2016

24 April 2016

Hinkley

French state-controlled utility EDF will delay the final investment decision on its project to build two nuclear plants in Britain until September, French Economy Minister Emmanuel Macron said in a newspaper interview. Macron, who had told parliament last month the decision on the 18 billion pound (22.60 billion euro) Hinkley Point project in Britain would be taken in early May, told the Journal du Dimanche three conditions were necessary for it to be given the go-ahead. The strengthening of EDF’s financial situation, which would be assured by a 4 billion euro ($4.5 billion) capital increase announced on Friday, a consultation of trade unions, and unspecified measures to ensure the operational execution of the plants’ construction.

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Posted: 24 April 2016

23 April 2016

Hinkley

The French electricity giant EDF has thrown the British government’s energy strategy into disarray by reportedly delaying – possibly until next year – a decision on whether it will build a new £18bn nuclear power station at Hinkley Point in Somerset. Jean-Bernard Lévy, the head of EDF, has bowed to pressure from unions and senior company engineers and agreed to seek a fresh opinion from the company’s union-management consultative council, the respected French newspaper Le Figaro reported. EDF said it could not immediately confirm the report. Sources in the company told the French newspaper that the consultation process would take several months and that no decision on whether to go ahead with its involvement in Hinkley Point – expected to supply eight per cent of British electricity by 2025 – would be made before next year. Environmental campaign group Greenpeace claimed the delay could be “a sign that the entire project is coming to a grinding halt”, adding that the UK should back renewable energy “as a more reliable alternative” to nuclear power. John Sauven, director of Greenpeace, which has campaigned against the reactor, told The Independent: “Delays to EDF making a decision about whether to invest in Hinkley are nothing new. So much so that it’s been 14 months since it was first said that the decision would be coming imminently. But this latest delay from EDF is different. “President Hollande, the French Economy Minister and EDF’s chief executive have all very publicly promised the UK government a final decision before the 12 May. Backtracking on this pledge now is symbolic of the utter mess that EDF is in. But even if they could agree a finance package, it could be declared illegal state aid by the European Commission. This may now be the sign that the entire project is coming to a grinding halt and the UK government urgently needs to back renewable energy as a more reliable alternative.”

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Posted: 23 April 2016

22 April 2016

Hinkley

Plans to build an £18 billion nuclear power plant at Hinkley Point in Somerset were denounced by a second French minister yesterday. Jean-Vincent Placé, minister for reforming the state, called the proposal a strategic dead end. Although a junior minister who belongs to the anti-nuclear Ecology party, Mr Placé’s comments reflect a deepening rift in President Hollande’s cabinet over the scheme, which critics fear could bankrupt EDF, the energy company that is 86 per cent owned by the French state. EDF is scheduled to take a final decision on whether to build two reactors at Hinkley on May 12. “EDF absolutely must rethink its strategic vision,” Mr Placé said, denouncing the plans as financially unstable and precarious. “It’s not just me who says that,” he added, pointing to opposition to the pro ject from EDF’s pro-nuclear unions and Thomas Piquemal, the company’s finance director, who resigned in protest last month. Mr Placé said that rather than investing in Hinkley, EDF should develop renewable energy. Segolene Royal, energy minister and ex-partner of President Hollande, called two weeks ago for a decision on Hinkley to be delayed.State-appointed directors are likely to swing the vote. EDF’s board is due to meet today and while Hinkley is not on the agenda the meeting will set the scene for a further meeting within days.

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Posted: 22 April 2016

21 April 2016

Hinkley

EDF’S directors have been warned they face legal action if the beleaguered power company pushes ahead with building an £18billion nuclear plant in Somerset. A letter from managers in the French firm said board members could be held personally responsible if their support for the Hinkley Point C project led to a ‘destruction of value’. It came as French president Francois Hollande met ministers to discuss financing for the plant, which would produce enough power for 6million homes. France’s government owns an 85 per cent stake in the company.

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Posted: 21 April 2016