As EDF’s finance chief quits, will the Hinkley Point nuclear power plant ever be built?
Alistair Mackie, head of Holman Fenwick Willan’s energy and resources group, says Yes.
The stakes are high with these projects, and politics can often influence their progress. Thomas Piquemal’s resignation reportedly came after a heated board meeting, yet it was only last week that the French government confirmed that it would continue to back the scheme. Plans for Hinkley were first mooted by Tony Blair over a decade ago, when EDF was in an altogether different shape to today, and any abandonment of this ambitious £18bn plant could have further implications – not only for the future of the company, but also for the future of nuclear projects across Europe. Escalating costs always cause a scare for investors in the City, but the surprise resignation could clear the way for EDF to confirm the financing for this project next month. There have been issues around the domestic infrastructure deficit in France, but with all the uncertainty around the Brexit referendum, David Cameron and Francois Hollande will be keen to present a united front.
Tony Lodge, a research fellow at the Centre for Policy Studies and author of The Great Green Hangover – How to cut bills and avoid an energy crisis, says No.
The construction of Britain’s first nuclear power station for a quarter of a century has never been more in doubt. This is despite the government’s determination to do everything possible to get the plant built. It has effectively offered to underwrite the financing costs of EDF with a guaranteed “strike price” for every hour of electricity it would generate. At £92.50 per megawatt hour (which was agreed at 2013 prices and is now almost £97/MWh), this is twice the present price of electricity. It would have been cheaper for the government to borrow the money to build the plant itself. The plans are, in effect, a fixed annuity to the French taxpayer via a French state-owned company for the next half century. But it looks like even these generous terms would still jeopardise EDF’s financial situation. The priority must now be to incentivise the retention and construction of as many gas fired power stations as possible to plug the looming electricity generating gap. They are comparatively cheap and quick to build.