EDF secures €4bn capital but delays decision on Hinkley Point C (UK)

EDF has secured a state-backed €4bn capital raising (the French energy group is 85%-owned by the state) and delayed again its final investment decision (FID) on the £18bn (€24bn) Hinkley Point C nuclear power project in the United Kingdom. The FID is now expected in September 2016, four months later than expected, after consultation of trade unions and shareholder groups.

The Hinkley Point C project will consist of two 1,630 MW Areva EPR reactors, expected to be commissioned in 2025 at the earliest . Total investment is estimated at £18bn (€24.5bn), with CGNPC investing £6bn (€8.1bn). In September 2015, the UK approved a £2bn (€2.8bn) loan guarantee for the project.

The group had initially set the FID at the end of 2012 (first operation expected in 2017), but it was delayed to July 2014, then to late March 2015. In October 2015 EDF announced that it would take the FID "within a few weeks", after unveiling an agreement with Chinese companies China General Nuclear Power Corporation (CGNPC) and China National Nuclear Corporation (CNNC), under the terms of which CGNPC and CNNC will take over a 33.5% stake in the project.

The project is opposed by the majority of trade unions and by the former CFO, who resigned in March 2016. The group may have difficulties to fund its own 66.5% stake, after the acquisition of Areva NP and in a context of falling wholesale power prices in Europe, and significant delays and cost overruns in the construction of two EPR projects in Europe, Olkiluoto 3 (built by Areva), and Flamanville in France. In addition, EDF will need to invest at least €55bn to refurbish its existing nuclear fleet in France to operate beyond 40 years ("Grand Carénage" programme). The €4bn capital raising (that includes €3bn from the French State) will improve EDF's finances to go ahead with the project.