If EDF Sizewell thought the Christmas break would be a nice quiet time to get their Stage 2 consultation over, well, did they get it wrong. Bad news has continued to break for them in France, and has now also emerged for the two other UK nuclear investors, the Toshiba Nugen project at Moorside, Sellafield and the Hitachi Horizon project at Wylfa on Anglesey. Both have financial problems, one near terminal for nuclear prospects, the other, well, indicative? It looks as though EDF’s probems are not just French and their EPR design.
Toshiba (Nugen) has run into financial crisis over its two US nuclear plants, and decided to withdraw not just from Nugen as the main investor/developer at Moorside but also to wind up its global new nuclear business altogether. The reactor to be used is what has gone wrong for them in the USA, but is a new US design, the AP1000. Toshiba’s global financial results were due Feb.14, 2017. Rumours suggest Moorside has no future unless the government puts big funds in directly. Korea’s KEPCO has been in Nugen talks “for months”. (Financial Times). Chancellor Hammond and Energy Minister Clarke have been hunting for cash in South Korea, whose KEPCO nuclear company are building a plant in Abu Dhabi.
Hitachi (Horizon) at Wylfa in North Wales has been heralded as good news, but the truth is that they don’t have enough money for the £19bn project, so the Japanese government have got their international development bank to cough up £6.5 bn , bnut there is still a huge fiancial hole. Hitachi’s own funds are reckoned at only 10% of the total cost, i.e. £1.8 bn. Japan is at the heart of the matter. With Toshiba in trouble, and the really bad news still coming in from Fukushima (see below), the Japanese Government had to do something to keep its nuclear ball rolling. The £6.5 bn deal is also the handiwork of Chancellor Hammond and Energy Minister Clarke. Rough arithmetic says Hitachi are about £10-12 bn short. Where next? China’s nuclear company with its agreement to develop at Bradwell, Essex, would be an obvious place for Hammond/Clarke to go cap in hand. But the cap is very empty. And China may not like being outside Euratom. Equally, China might finish up in charge of UK nuclear instead of EDF. (Sources: Japan Times, Economist, Guardian, NFLA- Nuclear Free Local Authorities).
A global overview has been done by The Economist (28.1.17) drawing on the Global Nuclear Power Database. The Economist said Hinkley C now looks like a “Hail Mary pass”. EDF’s EPR is looking impossible to build and Toshiba’s American Westinghouse AP1000 has caused a crisis. These are the two “new” reactor types.
EDF’s troubles look irresolveable. Their share price (85% French government) has dropped by half in two years, so the whle company is now worth only about £16 bn. Areva, the actual nuclear plant maker, has gone virtually bust and has had to be taken over by EDF and the French government. This will take an immediate £4bn injection of funds, but so far only £1bn has been raised. (Figures derived from Bloomburg). Bloomberg says “France’s next president may face €3bn nuclear hangover”. That’s a modest version of the huge problem. Here are the rest of the figures. EDF’s total share value is about the same as the cost of Hinkley C power station, given some China Nuclear Corporation capital. A share issue of €5bn has been made, raising €1/2 bn (half) from Japanese sources. The French government has given them a liquidity booster of €3bn. A bit difficult to get one’s head around, but these bits and pieces pale into insignificance compared to their debt. The Times (Feb 6, 2017) said that EDF has total debts of €37 bn.
EDF has faced too much competition - against rigid nuclear prices - from gas and renewables pushing overall energy prices downwards, plus the costs of a bad reactor (the EPR).
Then there are capital problems from the decommissioning of old plants, for which EDF has had to set aside €36 bn, much less than Germany, though there are many more French reactors. Then the nuclear engineering parts problems (French and Japanese imports apparently), the connected too-much-carbon-in-steel problem, the inadequate office paperwork on quality assurance, Areva’s collapse and the debt pile from Finland. This is rumoured to have been caused partly by concrete quality problems. Flamanville (France’s own EPR) is well behind time and over cost and also has valve design problems (Economist 3rd Dec. 2016). Some 8 older reactors have been idle for inspection, 18 out of a fleet of 58 EDF reactors having been down at one point. Their workers in France have now been told that 3,900 redundancies are necessary. SAGE awaits the end April/early May EDF UK results. Maybe EDF Sizewell were wise, after all, to get Stage 2 through while the going was, well, not too bad...it now looks extremely serious.
* Times Business Feb 2th 2017 Paris.