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france 24 Business

France’s Hollande backs EDF’s Hinkley Point nuclear plant

© EDF | An artist's impression of the planned Hinkley Point nuclear power plant in the UK

Text by FRANCE 24

Latest update : 2016-05-17

French President François Hollande reaffirmed his support Tuesday for a controversial project that would see France’s state-owned energy company, EDF, build two nuclear reactors at Hinkley Point in the UK.

Hollande's comments came after France’s Energy Minister Ségolène Royal questioned whether the project made financial sense due to its “colossal” £18 billion (23 billion euro) cost.

“I’m in favour of this project going ahead,” Hollande told Europe 1 radio.

“We need a nuclear industry of high performance, of high security in France, and … we cannot let others export to markets that up to now have been French.”

Massive debt

Hinkley Point C in Somerset, southwest England, is due to be built by EDF in partnership with the China General Nuclear Power Corporation (CGN).

It will be Britain's first nuclear power plant to be built in decades and is expected to provide seven percent of the UK’s energy needs when it becomes operational.

Its projected 23 billion euro cost would also be one of the world's most expensive nuclear power plants. And while the British government says it would guarantee the price of energy the reactors produce for 35 years, the plunging wholesale cost of electricity puts this commitment in doubt.

Questions have been raised about the financial viability of the project as EDF, which is 85 percent owned by the French state, is struggling with a debt pile of more than 37 billion euros.

Last month, the French government announced that it would inject three billion euros into the energy provider, as part of a four-billion-euro capital increase.

But France’s powerful unions, which have representatives on EDF’s board, are not convinced that the capital injection is enough to quell fears over the Hinkley project.

‘Colossal’ sums

In an interview with the UK’s Financial Times on Friday, Energy Minister Royal said she was worried about the impact the project would have on EDF’s already stretched finances.

“I am wondering if we should go ahead with the project. The sums involved are colossal,” she said.

Royal, who is also Hollande’s former partner, is so far the only French government minister to publicly question the project. The country’s economy minister, Emmanuel Macron, has insisted construction of the reactors will go ahead.

Despite voicing concern over the project, Royal conceded that if France backed out now it could damage the country’s reputation.

“It would send a bad signal [and] competitors would say: ‘Look at France, the state does not keep its word’,” she told the Financial Times.

“That kind of thinking tends to weigh very heavily on decisions over whether we can reverse things when we got a bit carried away,” Royal added.

Date created : 2016-05-17

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