EDF’s backing of the new Hinkley Point development, which marks the UK’s first major nuclear power project for a generation, is in jeopardy due to financial concerns, it has been claimed.
According to Mycle Schneider, ex-energy adviser to the French government, a lack of funding has cast the energy giant’s support for the £14 billion initiative into serious jeopardy.
Speaking to BBC Radio 4, Mr Schneider said he has grave concerns about the future of France’s energy industry, with EDF in particular the subject of uncertainty, due to overall debts of more than £33 billion.
“EDF is in big trouble. The whole of the nuclear power industry in France is in big trouble,” he elaborated.
According to Mr Schneider, the continuing uncertainty that surrounds the Hinkley Point development is unlikely to guarantee solid backing from any major company, particularly one which is currently working to reduce debts through surefire means.
“There are a long list of issues that need to be agreed, not only the strike price. Even if there is an agreement the financing package has to be put together. It’s a very long-term investment of very uncertain levels of realisation,” he said.
Degree of uncertainty
Talks between the coalition and EDF have stalled over a failure to settle on a price for electricity and a number of other guarantees – something that prime minister David Cameron was set to iron out with French president Francois Hollande during recent talks.
The French president is a key figure in the deal between EDF and the UK, as he has previously expressed his preference for his country’s energy suppliers to focus their efforts on investing and improving France’s power plants.
There is also a desire to increase the investment in, and reliance on, renewable energy – something that is slightly at odds with the nuclear plants set to be developed at Hinkley Point.
Centrica, parent company of British Gas, has already abandoned nuclear power, and so EDF is also in the position of searching for another partner on the project.
As the UK government aims to secure the support of President Hollande and, subsequently, EDF, Treasury commercial secretary Lord Deighton has the task of forging an agreement that will be crucial to meeting the UK’s nuclear power objectives and reassure consumers that there is no danger of the plug being pulled on their power supplies.
It comes as further doubt was cast on the Hinkley Point development following the publication of an open letter to the Sunday Telegraph, in which MPs and academics called for the UK’s National Audit Office to re-examine the negotiations over the new nuclear power development.
According to the authors, there needs to be a greater degree of transparency with regards to the deal that the government is signing up to.
The set price for nuclear energy is set to be well above the market price for electricity, which could mean that the UK public pays the difference and consumers see the increase reflected in their energy bills.
“This contract will be locked in for very many decades – up to 40 years. The impact of this contract will be to shift the economic risk of building new nuclear facilities from the nuclear corporation to the consumer,” the letter said.
The authors have therefore called for guarantees from the government that consumers will be protected from any direct increases in the cost of fuel resulting from new Hinkley Point agreements.