A French union has published a set of last-minute challenges to EDF over its plans to build an £18bn nuclear power plant at Hinkley Point in Somerset, with just days to go before an expected final investment decision.
People close to the deal said they expected the decision about whether the project would go ahead to happen at a board meeting on Wednesday. EDF declined to comment.
The proposed plant is expected to supply 7 per cent of the UK’s electricity in 10 years’ time and the government sees it as essential for meeting targets for cuts in carbon emissions and to ensure energy security.
But the CFE-CGC energy union, which is represented on EDF’s board, has drawn up a list of 15 questions it says have yet to be answered.
The list includes an expression of serious concern about the plant’s viability and what it might cost the company, and is the latest sign of worries about a deal that has attracted criticism in the UK and France.
The document reveals that the Infrastructure UK arm of the government has attached a BB+ credit rating to the project — below investment grade — reflecting worries in Whitehall that it might not be completed. The Treasury confirmed the BB+ rating.
Among the questions from the French union are several asking what happens if the project, which has been delayed many times already, is not built before 2025, as planned.
The union expressed concern that “significant” financial issues related to the Hinkley plant could “put EDF in danger” in the long term.
Plans to build a nuclear power station at Hinkley Point have been in the works since 2010 but the European Pressurised Reactor technology the company plans to use has been beset by delays and cost overruns.
Last September, EDF announced delays to its EPR reactor in Flamanville, Normandy. Initially, Flamanville was expected to cost €3bn and start operations in 2012 — it will now not start until 2018 and will have cost €10.5bn.
The CFE-CGC document highlights the construction problems at both Flamanville and another EPR plant in Finland, which is 10 years behind schedule and €5bn over budget.
It asked: “What is the rationale for starting construction on two EPRs, at the same site, in such a short period of time?”
Given that the other projects appeared to be taking 10-15 years to build, its asked of Hinkley Point: “How can EDF estimate a construction time of nine years?”
Much of the concern in France about the project focuses on how EDF plans to pay for the reactor while continuing to pay its dividend.
A report this month in the French business newspaper Les Echos suggested that EDF’s finance for Hinkley Point could come from selling stakes in eight other British nuclear plants, for more than €6bn. The company declined to comment on that report.
The company, which has €37bn net debt, has some huge investments to make in the coming decades, including an estimated €55bn to increase the life expectancy of the 58 nuclear plants in France from their current 40 years to 50.
It is also taking a majority stake in Areva’s €2.5bn reactor business, which some close to the company said they expected also to be discussed at Wednesday’s meeting.
Last week, EDF, which faces increased competition and difficult markets in France, announced plans to cut 5 per cent of its staff over the next three years. It said that it was planning cost cuts of €700m by 2018.
EDF refused to comment on the questions put by the union.
Francis Raillot, representative of the CFE-CGC, declined to comment on the meeting on Wednesday and which way the union representative would vote, but said that key questions about Hinkley had “still not been answered” by the management.
One person close to the deal said he expected the vote to still be carried but that it could be delayed.
“We have been here before,” the person said. “I wouldn’t bet my mortgage on the final investment decision being this week, even though that is what the company has been gearing up for.”
John Sauven, executive director at Greenpeace, which opposes nuclear power, said: “It is shocking to think that both EDF and the UK government are determined to push ahead with a project that EDF’s own staff say is too risky and too expensive, potentially threatening the survival of the company.”