EDF is increasing the cost and timetable of the project of the EPR reactors in Britain, after having endorsed the decision to invest more than 20 billion euros by September 2016. The rate of return declines to the eye, which alarmed the ministry of Economy and Finance, which requests the p-dg of EDF to better control costs.
And if the chief financial officer, Thomas Piquemal, and the director Gérard Magnin, resigning in 2016, had been right ? The adventure “Hinkley Point C” of the EDF appears to be poorly engaged for the electrician French that comes to review a copy of it with delays and rising costs. While the investment was initially estimated at 20.6 Bn €, it would amount now to 22.3 Bn €, representing an increase of 1.7 Bn € result of “a better understanding of the design, adapted to the requests of regulators, the volume and sequencing of on-site work and the gradual implementation of vendor contracts” ensure the French group.
And this is not all. According to his own words, “the risk of postponement of the delivery is estimated at 15 months for unit 1 and 9 months for tranche 2“. Delays, which would lead also to additional costs, of the order of 800 M€, which potentially increased the total bill to more than 23 Bn €. Assumptions that decrease the rate of return estimates for EDF and the back of 9 % to 8.2 %. For the time being, the milestone of the first concrete of the nuclear safety building of the first tranche is expected in mid-2019, provided, however, that the final design, “of which the schedule is tight“, warns already in the group, is arrested at the end of 2018…
The ministry of Economy requires the rigor
All signs of excesses and costs – even before the site between the phase of realization – that concern the government, still smarting from the avatars of the EPR Flamanville 3. Bruno Le Maire, minister of Economy and Finance has therefore asked Jean-Bernard Levy, chairman and ceo of EDF to undertake “a rigorous ‘ action plan for the control of the project Hinkley Point C before the end of July“. It also suggests that the precise causes of this re-evaluation, the risk factors and the content of the review of the project to be shared and analyzed within the board of directors of the company, which will provide “a detailed follow-up (…) at a steady pace“. The ministry’s press release provides that “the State will ensure that this action plan would support the project schedule as it has been agreed with the uk authorities,” and “reduce as far as possible the financial impact of this revaluation“.
- The british government gives its green light to the EPR for Hinkley Point
- EPR reactors at Hinkley Point : new obstacle for the CEO of EDF
For its part, EDF remains impassive : the electrician stated that its management remains mobilized on the initial target for delivery of the first tranche in 2025, while maintaining its financial targets for the next two years. Remember that in France, the invoice of the EPR has been multiplied by 3.5 between the initial estimates and the current amount, while in Finland, the reactor Olkiluoto 3 has been multiplied by 2.3. The risk Hinkley Point C is, therefore, real for the French group.