It has been another bad week for EDF with the cancellation of power sales contracts in France and the emergence of another safety issue with its EPR design chosen for Hinkley and Sizewell (Times, June 4). EDF was in dire financial straits long before Covid-19 and would have required a massive government bail-out before losing much revenue due to plummeting electricity demand and prices across Europe have made the bail-out even more expensive. In Finland, the Olkiluoto EPR, now at least 12 years late and three times over-budget, suffered another setback with the discovery of a leak with the pressuriser safety valves with significant safety implications for other EPRs.
Covid-19 restrictions seem certain to delay Hinkley’s completion and make it more likely it will be a loss-maker. EDF’s only hope is to persuade the British government to increase the power price above the £92.50 (2012 prices) negotiated for a power plant that it is increasingly clear is not needed. It would be a kindness to EDF and British consumers if Hinkley was abandoned before costs mount further and it is still not too late to negotiate a mutually beneficial deal.
The Sizewell project is more attractive to EDF. For Hinkley, EDF is facing the likelihood of serious long-term losses. For Sizewell, under the Regulated Asset Base (RAB) model, EDF and its Chinese partner, CGN, would not own the plant (owned by institutional investors), but would supply, build, operate and maintain the reactor under profitable cost-plus terms. All the risk would fall on consumers. So the Government’s long-awaited verdict on the RAB financing proposals must be a rejection. The Bradwell project will be no more attractive to consumers and abandoning it now would obviate the need to agonise over China’s role in electricity infrastructure. The government should stop wasting time and money on nuclear and focus on energy efficiency and renewables to meet our climate change goals cheaply and effectively.