When in 2016 France’s EDF signed up to build Britain’s first new nuclear power plant in two decades, defenders of the costly Hinkley Point C project included Emmanuel Macron, then economy minister.
“If we believe in nuclear power, we have to do Hinkley Point,” France’s now president told a parliamentary enquiry, rejecting some lawmakers’ concerns that state-backed EDF, which was already struggling to deliver a new French prototype plant in Normandy, may not have the financial bandwidth to take on the British site, originally estimated to cost £18bn.
Eight years on, with cost overruns surging at Hinkley due to repeated delays and EDF on the hook for at least another £5bn on top of previous budget revisions, Macron’s government is on a mission to ensure the French nuclear operator can indeed withstand the fallout — and keep on top of ballooning investments and orders at home.
French ministers are trying to get the British state to stump up some support for the soaring Hinkley bill, which could reach a total of £46bn at today’s prices for the two reactors, people close to the talks have said.
That would be roughly double the original budget in 2015 prices, compared with an EDF project in Finland that ended up costing more than twice what it was supposed to and a plan for one reactor at Flamanville in France that is running four times over budget, at €13.2bn.
But the Hinkley setbacks have also revived a core strategic question that is becoming more pressing than ever for EDF, a former French electricity monopoly that operates Europe’s biggest fleet of 56 domestic reactors: whether it is equipped to handle multiple projects at once, internationally and at home, and financially as well as from an industrial perspective.
Already an issue in 2016, when French labour unions at the group opposed the Hinkley plans on the basis that the financial set-up was risky, this tension now has a different edge to it.
Climate concerns are fuelling a revival of the low-carbon technology globally. In France alone Macron has committed EDF to at least another six new reactors, which could even rise to 14 or more in the coming decades — a huge change after a tiny trickle of orders since the Fukushima disaster of 2011.
EDF, meanwhile, is only just emerging from one of the worst periods of financial turmoil of its 78-year history: outages at French plants led it to a near €18bn loss in 2022, and the group, with debts already reaching €65bn, was fully renationalised last year.
Its chief executive Luc Rémont, appointed just over a year ago, has not missed a chance to remind politicians EDF’s day-to-day investment needs are now €25bn a year to cover work on existing plants and to prepare a massive recruitment drive for the plants to come — a sum that does not even cover the construction costs that will be needed.
This burden has made the Hinkley problems Rémont has inherited even more unwelcome, at a time when he has tried to make headway for the group with a deal with the French state for future electricity prices a decent margin above its production costs. This would allow EDF to finance some investments itself without even more debt or state help.
Hinkley Point C will now not see the light of day until at least 2029, when teams of engineers and other staff that France is also counting on will be stretched for longer in Britain.
“As long as you have a project running, you are doubly punished. You’re paying for a project to be completed and not generating new revenues,” said Denis Florin, an energy specialist at Lavoisier Conseil.
For now, however, EDF is doubling down on the argument that doing more plants at once will ultimately be beneficial.
The thinking is that it can get to a cookie-cutter level of construction for the complex reactors, with teething problems ironed out and design issues resolved. This would help not only other projects it is aiming for in Britain like the £20bn Sizewell C reactor but also its ambitions from India to the Czech Republic.
“We need to be present at scale,” Rémont told reporters in November. “Like in all industries you’re looking at a massification effect to become more competitive, and that’s something that has not been possible in the past 20 years in the nuclear industry because there were too few projects.”
In a punchy promise he said EDF would be aiming to build one to 1.5 reactors a year by the mid to late 2030s in France once its programme really gets going. It is not a direct stakeholder in all projects: in India, for example — as opposed to the British projects — the company is tendering to be a constructor but would not be implicated financially, reducing some of the risks.
Hinkley was delayed last week because of the estimated time it will take to install new wiring and piping systems. But it was also held back as safety requirements from British regulators evolved, executives said. They cited 7,000 changes that had to be made to designs, requiring 35 per cent more steel and 25 per cent more concrete.
Even some of the plant’s original detractors now believe Hinkley needs to go ahead given how much labour and funding has already been poured into it, not least because of the setbacks, it will be an international showcase for EDF.
“Even if we were against it, we’re in it now and we have to advance,” said Virginie Neumayer of the French CGT union with a large presence at EDF. She added, however, that there was a question over whether the group should continue to expand internationally, “if we end up in so many difficulties”.
The laborious new nuclear constructions are not helping sell the industry to detractors who highlight issues over treating atomic waste, but also the high costs and huge delays. EDF’s Flamanville 3 reactor in France — finally due to come online later this year — is a decade behind schedule.
There are some encouraging signals all the same. The Olkiluoto reactor in Finland, designed by Areva, a French reactor maker EDF had to bail out and absorb in 2015, was 13 years late but came online in 2022 — a big relief in terms of energy security after Russia reduced gas supplies to Europe after invading Ukraine.
“The construction phase was painful and it created political tensions too, but now it’s working and the results are there,” said Cécile Maisonneuve, a senior fellow at the Institut Montaigne think-tank. “We’re in the difficult years of the learning curve.”
One lesson will also be on financing. Under the Hinkley deal struck in 2016, EDF’s revenues benefit from price guarantees once production is up and running, offering returns of more than 9 per cent.
But the construction costs are for EDF and shareholders to stomach alone, a problem now as the French group’s Chinese partner CGN has stopped paying for over-costs.
“It’s likely there will have to be tough bargaining between France, EDF and the British state,” Florin said.
