Stop Hinkley Press release
13th October 2010
EdF's American nuclear dream shattered
The EdF dream to export its nuclear technology to the United States looks shattered after its partner company has withdrawn from the project to build four EPR reactors.
Constellation Energy decided the cost of a loan from the US government would be prohibitive to the project. The 11% fee was apparently no cheaper than commercial loans and would add $880million to the already spiralling cost of building the nuclear reactors.
EdF must also apply for commercial loans for its Hinkley reactors: the French government cannot supply cheap loans due to competition laws.
EdF's shares dropped at the news.
Jim Duffy, spokesman for Stop Hinkley said: "Here we see that the truly commercial costs of building new reactors is prohibitive. The UK Government should take note and stop the Hinkley project which may go belly-up at some stage, perhaps with a half-built reactor that needs a financial rescue as British Energy did in 2003. EdF's debts have spiralled to £45billion following their export ventures into the US and the UK . It's only common sense they will want to claw back their debts either from the Government or in electricity prices to the consumer."
Jim Duffy, Stop Hinkley Coordinator
EDF executives were virtually speechless with anger this weekend over what they described as a unilateral withdrawal by US partner Constellation Energy from their project to build a French-designed EPR reactor on its Calvert Cliffs site in Maryland . The Baltimore-based utility's decision threatens to set back the French groups progress in the US by two or three years if a solution cannot be found.
EDF had ambitions to build at least four EPRs with Constellation in what it once sold to its shareholders as the worlds biggest and most attractive nuclear generation market. But in private, many investors and analysts are delighted, at least in the short term. Assuming that the EPR project falls victim to the increasingly acrimonious relationship between the two companies, EDF would find itself with more time and money to focus on more pressing issues.
In the past two years EDF has seen its net debt shoot up from 25bn to an estimated 45bn ($63bn) after acquiring British Energy in the UK at peak prices and then fighting off billionaire Warren Buffett to secure its partnership with Constellation in a costly rescue deal. EDF will struggle to find a new partner for its costly and complex EPR reactor, the first new generation nuclear plant to have been launched on the market, but which has been fraught with delays and cost overruns.
FT 12th Oct 2010 |
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The US Congress heralded a new dawn for the country's nuclear industry in 2005, approving federal loan guarantees for reactor construction projects. Yet as the politics have swung in favour of nuclear power in the US , the economics have swung against it. By the end of 2008, the US Nuclear Regulatory Commission had received applications approvals for 22 new reactors. Last year, there was just one further application, and this year there have been none. Constellation Energy's decision that it cannot proceed with its $10bn Calvert Cliffs 3 project in Maryland under the loan guarantee terms offered by the government, appears to have dealt a fatal blow to one of the new plants that stood the best chance of going ahead.
FT 12th Oct 2010 |
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A U.S. loan-guarantee program is testing how much risk the Obama administration is willing to take to revive the nuclear-power industry. Constellation Energy Group Inc said last week it was pulling out of talks on a $7.5 billion loan guarantee to build a reactor at its Calvert Cliffs facility in Maryland . The estimated $880 million the company would have to pay the Treasury Department was "shockingly high," Chief Operating Officer Michael Wallace said in an Oct. 8 letter to the Energy Department. The administration offered terms no better than Constellation could get from private investors, said Christine Tezak, a senior energy and environment analyst for Robert W. Baird & Co., a Milwaukee-based brokerage.
Bloomberg 12th Oct 2010 |
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