The boss of the French state-owned company behind the UK’s first new nuclear power station for 20 years has threatened to pull the plug on the £18bn project without further backing from François Hollande’s government.
Jean-Bernard Levy, chief executive of EDF, said he needed more financial support from the Elysée to proceed with construction of the plant at Hinkley Point in Somerset.
A letter sent to the company’s staff admits the “tense” financial situation at EDF and the potential danger to a scheme that is at the centre of British energy policy.
“We are negotiating with the (French) state to obtain commitments allowing us to secure our financial position. It is clear that I will not engage in this EDF project if these conditions are not met,” said Levy.
The pressure on Levy increased last week when his finance director resigned, saying Hinkley needed to be postponed for at least three years while the company restructured its finances. French trade unions on the EDF board, angry at planned job cuts at home, have also called for Hinkley to be shelved. Those concerns were echoed on Thursday by France’s top public auditor, which warned over the cost and complexity of the project.
Explaining why he was taking the usual step of addressing staff, Levy explained: “In recent weeks, our group is the subject of much debate, especially around the renewal of our nuclear fleet and the construction of two EPR (European Pressurised Reactors) in the UK at Hinkley Point C.
“You know, the financial situation is tense, and this issue deserves to be clarified. I receive your messages of encouragement, but I also hear some concerns. That is why I address myself directly to you.”
Despite the problems facing the group, Levy underlined both his and the French government’s desire to make the Hinkley project successful.
“Hinkley Point C has the support of the French government and the British government, which places it at the heart of new nuclear energy policy. The UK needs to secure its supply of electricity and decarbonise its energy mix.”
Referring to the British government subsidy for the project, represented by a guaranteed electricity price of £92.50/MWh , he said: “I am convinced of the robustness of the guaranteed selling price, approved by Brussels”.
EDF has seen its share price slump and its debts rise over recent years but has also been hit by falling power prices and demands from the French government that it took over ailing nuclear engineering group Areva.
Its difficulties have put enormous pressure on the British government, which has already promised generous financial subsidies for Hinkley, to be paid for by bill payers. The subsidy agreements have drawn scorn from investment bankers in the City.
One analyst earlier this week described the Hinkley project as “insane” because of the problems EDF and Areva had experienced at similar schemes at Flamanville in Normandy and Olkiluoto in Finland.
Meanwhile, the Japanese prime minister at the time of the Fukushima nuclear accident has warned that nuclear power is unsafe and too expensive to justify building new plants anywhere in the world.
Speaking on the fifth anniversary of the disaster, Naoto Kan said he was against the idea of Japanese manufacturers such as Hitachi and Toshiba building plants in the UK.
“Nuclear power is not safe. In the worst case scenario up to 50 million people would have had to be evacuated. Nuclear power is not a suitable technology and renewable power is much better,” Kan told the Guardian.
The former prime minister insisted he did not want to tell other countries such as Britain what to do but he said he did not support the reactors being switched back on in Japan. Neither did he support the idea of Japanese companies working on new nuclear schemes.
While EDF is at the centre of the Hinkley scheme, Hitachi and Toshiba are behind similar initiatives being developed for new reactors at Wylfa on Anglesey, Oldbury in South Gloucestershire, and Sellafield in Cumbria.
Kan said it “did not make sense” to construct new atomic plants because of the cost, especially in those countries where there were no long-term storage facilities for high level radioactive waste. This includes Britain and Japan.
“What I experienced as prime minister made me feel that it does not make sense to rely on nuclear. New generation plant designs are supposed to increase safety but all these do is increase the cost.”
Tom Greatrex, chief executive of Britain’s atomic lobby group, the Nuclear Industry Association (NIA), said he was comfortable that Hinkley and the other reactors being planned in Britain would be safe because they would go through the UK’s most rigorous regulatory scrutiny.
“The process of assessing the reactor design is done in a different way in the UK and that gives confidence that the reactor design (EDF’s European pressurised reactors) will be safe and that is what we need to see.”
A spokesperson from the Department of Energy and Climate Change also said the safety of British reactors would be paramount. “Any nuclear power station built in the UK will need to comply with our world-leading nuclear safety regulation.
“The British government is backing new nuclear. It is an important part of our plan to give hardworking families and businesses clean, affordable and secure energy that they can rely on now and in the future.”
This article was written by Terry Macalister Energy editor, for theguardian.com on Friday 11th March 2016 19.14 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010