Billions Financing Gap: France Wants Financial Aid From The UK For Construction of Hinkley Point C Nuclear Power Plant
Paris, London - The construction of the British nuclear power plant Hinkley Point C is facing a financing gap worth billions. Just one day after the presentation of the new EDF interim report, France and the UK are already wrangling behind the scenes over how to cover the huge additional costs for the British nuclear power plant. This was reported by the Financial Times (FT).
Paris wants an overall package to finance Hinkley Point C and Sizewell C
According to the FT, Paris is pushing for an "overall package solution", i.e. the French government now wants to combine the financing gap at Hinkley Point C with financing issues for the planned British Sizewell C nuclear power plant. However, the UK takes a different view, as the British state is the main shareholder in the Sizewell C nuclear power plant, while the French state-owned energy group EDF has a majority stake in the Hinkley Point C nuclear power plant project.
The current situation is made even more difficult for the French EDF by the fact that the Chinese CGN (China Group Nuclear Power Group) has met its payment obligations in accordance with its 33.5 per cent stake in Hinkley Point C, but does not wish to provide any further funds and is not obliged to do so. Furthermore, the state-owned company EDF, which is in debt to the tune of over €64.5 billion (as at the end of 2022), still has to finance planned new nuclear power plants in France.
London does not want to put any money into the Hinkley Point C construction project - government price guarantees for nuclear power should be enough
It is therefore not surprising that the UK does not want to put any money into the Hinkley Point C construction project, especially as the British are already providing state price guarantees for the ongoing operating income, i.e. the sale of nuclear power. Under a Contract for Difference (CfD) model, EDF and the UK government agreed a government-guaranteed price for the nuclear power when the contract was signed, starting at £89.50/MWh (10.3 cents/kWh) and then rising in subsequent years at the annual UK inflation rate.
According to the extract from the British CfD register as of 1 September 2023, the current price for nuclear power from Hinkley Point C has already risen to the new interim high of £128.09 /MWh (approx. 14.8 cents/kWh) due to inflation. Assuming an annual inflation rate of 3 per cent in the UK until the end of the decade (currently planned commissioning of the Hinkley Point C nuclear power plant), nuclear power could reach around 18 cents/kWh. If the price that can actually be achieved on the electricity markets is lower than this, the difference to the then applicable guaranteed settlement price will be borne by the British electricity customer or the taxpayer.
Impact on British nuclear power plant roadmap - 24 GW nuclear power plant capacity
In view of the long nuclear power plant construction times of 10-15 years and the dispute and financing problems associated with the construction of a single nuclear power plant such as Hinkley Point C (gross output: 3,280 MW), it is not clear how the recently presented British roadmap, according to which the future British nuclear fleet is to increase to 24,000 MW (24 GW) by 2050, can be realised technically and economically.
The UK currently only has nine nuclear power plants in operation with a gross output of 6,500 MW (at one point it was 13,000 MW). According to plans, however, a further eight AGR nuclear power plants will have to be shut down in the next few years for technical reasons of age, leaving only the Sizewell B nuclear power plant with a gross output of 1,250 MW until Hinkley Point C is commissioned. A ramp-up of the British nuclear fleet to 24,000 MW is therefore likely to take many decades, if at all.
Source: IWR Online, 27 Jan 2024
