Brexit could give the French government the excuse it needs to stop the projectby Simon Taylor / July 14, 2016 / Leave a comment
Hinkley Point C is vulnerable to the effects of Brexit. The Hinkley project is a joint French and Chinese investment, and it is awaiting the final investment decision from the board of EDF which has a 66.5 per cent stake in the project. A decision by the board is expected in September. EDF, which is 85 per cent owned by the French government, has delayed making a financial commitment, amid resistance from trade unions which have a third of the votes on the board. In March, the company’s Chief Financial Officer resigned.
Hinkley is officially costed at £18bn—excluding the costs of capital—which would make it the world’s most expensive power station. The cost reflects the dreadful construction record of the type of reactor planned for Hinkley, the European Pressurised Reactor (EPR). There are reactors of this type in Finland, France and China, where even the Chinese expertise in building nuclear stations could not deliver the project on time. The French reactor, at Flamanville in Normandy, has defects in the pressure vessel (a critical part of the structure) which are being investigated by the French nuclear regulator. As these defects didn’t occur in the Chinese reactor, they probably reflect manufacturing problems rather than a more serious design flaw. But this is hardly reassuring. In addition, the UK has built no nuclear station for 21 years and the industry lacks experience.
All of this, together with EDF’s weakened financial state (heavy debts, borrowing to pay its dividend, a 60 per cent fall in the share price in the last five years), would be enough to justify cancelling or delaying the project. But the hopes of France’s nuclear industry rest on the success of the type of reactor planned for Hinkley, and there remains pressure from the French state to go ahead.
Brexit should not in theory affect the economics of the project. The politics, however, are more problematic. The French government would need to explain to its people that a largely taxpayer-owned company would be…