The board of directors of the group, despite union opposition and a final stroke of a director, gave the green light to the start of construction of two EPRs in England. A colossal project of 22 billion euros, of which depends the survival of the French nuclear industry.
This time the bet is made, irrevocably. This Thursday, the EDF Board of Directors has approved the “final investment decision” – the “FID” in good English – which commits the French electrician to build and operate two EPR nuclear reactors at Hinkley Point, English Somerset. The amount of investment is huge: 18 billion pounds, 22 billion euros at current prices, of which a third will be funded by the Chinese group CGN who made this project his front door in the international competition of the nuclear construction.
Until the end, this project will have met strong resistance. Thursday afternoon, when the group began the council, a director appointed by the State, Gérard Magnin, founder of Energy Cities which includes cities engaged in an energy transition movement, slammed the door, making public a letter vitriolic: “Hopefully qu’Hinkley Point does not result in an EDF Areva kind of abyss.” a public warning that echoes that of former CFO Thomas Thornton, who resigned on April 1, judging the project too heavy to wear for EDF’s balance sheet, and too risky because of the substantial slippages on the Flamanville EPR and Finland.
This is the ultimate twist came dramatize a bit more actually a historic decision for EDF, heavy financial consequences, and industrial policies. For the company, the equation is simple: either it takes its schedule and construction specifications, and that are 3 billion euros EBITDA (EBITDA), which will return to its coffers from 2026 ( representing profitability of 9%). Either she reveals unable, or EPR appears to be an impossible object to be built, and the project will turn into a disaster
For weeks, it is essentially the EDF unions -. Except CFDT – leading the charge. A paradoxical situation if not uncomfortable for the unions, especially the CGT, very powerful in the field of energy and historically pro-nuclear. “The company has entered a rapid period of change, marked by competition, declining market prices, the energy transition … This creates an anxiety climate and makes the social body at once nostalgic for an idealized past, restive face the changes required, “says a close case. In the public company EDF, baronies and networks do not all pull in the same direction. “Some are already betting the post-2017″ suggests one expert, referring to the turmoil that inevitably generate the presidential elections in public companies.
Agreement on RTE
in fact, the case is very political. Given the government, and in particular of Bercy, the Hinkley Point folder simply represents the last chance to save the French nuclear industry, restore lost skills for twenty years and the last plant built in France. There are big at stake, in the case of a die that the taxpayer will recapitalize at least 7 billion next year (3 billion at EDF, Areva 4 billion). Seen from the Quai d’Orsay, the case is just as crucial. It commits the word of France vis-à-vis its British and Chinese partners.
To the Elysee, Hinkley Point is … a minefield. It indeed forced the state to a showdown, one more, with the unions. Suffice to say that it took many, many meetings in recent weeks around Francois Hollande, Manuel Valls, Segolene Royal and Emmanuel Macron to give the green light to EDF to launch the signing procedure of IDF, despite still committed pending appeals by the works council. “Social consultation took place, does one government source insists, we must move forward, otherwise it would give up.”
Most importantly, the commitment of EDF in the English project makes sense only if it is part of the confirmation of french nuclear creed. This is because it will take in the coming decades replace the existing fleet by new plants as the bet is worth trying. This implies hollow that our country, without turning its back on renewable energies that are also growing, not judge them sufficiently mature and reliable to become the bedrock of the national energy mix in the short or medium term.
But in this case, believe nuclear is easier said than done for Francois Hollande, still on his 2012 campaign promises at the time wages rallying Green on his candidacy. Today is Ségolène Royal, the Department of Ecology, which has the burden of reconciling contradictory imperatives, and translated them into its energy transition law confirming the objective of reducing the share of nuclear generation in France to 50% (against 75% today) in 2025. A goal deemed unattainable by many experts and the government has not declined the implications for reactor closures. The record will undoubtedly reopened after the 2017 presidential election, regardless of the winner of the rest.
This political context forced EDF and the State to commit the Hinkley Point project by tacking. But at least the financial parameters of the group are they known. Besides the decision in the spring to conduct a capital increase, EDF obtained permission to cede 49.9% of RTE, the electricity transmission network.
An operation to be held in within the public sphere. Thursday, the electrician has entered into exclusive negotiations with the Caisse des Depots and CNP Assurances to give them half the manager of the power lines of the French network, based on a valuation of 8.45 billion euros. A price considered “balanced” of both sides, at the end of a negotiation that was also held under high pressure of society EDF and under the compulsion of law which imposes a prison 100 % of this strategic public infrastructure. The option would have been to bring in private investors through holding was not finally retained. A pledge this time of social peace …