Life extension for UK NPPs but no Hinkley decision

17 February 2016

EDF is to extend the life of half of its UK NPPs, safeguarding 2,000 jobs and shoring up national power supplies, but failed to make a final decision about the new Hinkley Point C NPP. EDF announced the planned life extensions on 16 February but the statement did not include an investment decision on Hinkley Point C in Somerset. The GBP18bn project was first approved in 2013 and a final investment decision was expected last October following EDF's partnership with Chinese utility CGN. However, the decision has been repeatedly postponed in face of EDF's financial problems and opposition from trade union members on its board.

EDF CEO Jean-Bernard Levy on 16 February said the plant would soon be approved. "We have the intention to proceed rapidly with the investment decision for Hinkley Point. We estimate this final decision is very close," he noted. He expects the first construction on Hinkley to begin in three years and said he did not think the plan would be affected if the UK votes to leave the European Union

Levy said it would take about three years, possibly a bit more, of study and work with sub-contractors before EDF will begin building the first definitive structures on the Hinkley Point C site, though the company will do terracing and other preparatory work between now and then. "Definitive construction of what will be built on the site, what we call the first concrete, is on the horizon for 2019," he said.

Levy also said EDF is looking at how best to finance Hinkley Point in light of low electricity prices, noting that because of overcapacity in the European power market, not a single investment in new power generation projects could be based on current low power prices. He said the only feasible power generation investments in Europe are state-subsidised projects with long-term government-guaranteed power sales prices, such as solar, wind, and biomass, as well as nuclear energy in the UK. "This is a huge problem for Europe. The European Commission is aware of this and is looking into changing the EU power market design by end this year," he said.

Meanwhile, EDF Energy plans to extend the life of eight nuclear power reactors at four nuclear stations in the UK and has said it is close to announcing a decision on its investment in two new reactors at Hinkley Point. The Heysham A and Hartlepool NPPs will be extended by five years until 2024, and the closure dates of Heysham B and Torness NPPs will be delayed by seven years to 2030. Each NPP has two operating advanced gas-cooled reactor units .

EDF Energy said it invests GBP600m a year in its NPPs and that and this investment is worthwhile. In 2015, their output was 60.6TWh, the highest level for 10 years and 50% higher than in 2008 when EDF Energy acquired the stations.

The company said the decision was based on the belief that two important government policies will be maintained and strengthened. The carbon price floor encourages generation from low-carbon sources like nuclear, while the capacity market ensures the UK has the power it needs.

The announcement, EDF Energy said, follows extensive technical and safety reviews of the plants which have been shared with the Office for Nuclear Regulation. Last year, safety performance was the best ever with zero reportable nuclear events, EDF Energy said. The number of unplanned outages in 2015 dropped by more than 50 percent compared with the year before.

The company added, "Today's announcement follows life extensions at EDF Energy's other AGR power stations. In total, the programme has the potential to avoid 80m tonnes of carbon dioxide emissions, equivalent to taking all the cars off the road in the UK for three-and-a-half years."

EDF Energy's other operating UK nuclear power plants include the Hunterston B and Hinkley Point B AGRs - which both started up in 1976 and are scheduled to close in 2023 - and the Dungeness B AGR which was commissioned in 1983 and set to shut in 2028. It also operates Sizewell B - the UK's only pressurized water reactor - which began operating in 1995 and is currently scheduled to close in 2035.

Announcing its 2015 results, EDF said it had met all its targets despite "unfavourable market conditions" and helped by strong performances from its French and UK reactors. EDF reported EBITDA (earnings before interest, tax, depreciation and amortization) of €17.6bn ($19.6bn) in 2015, an increase of 3.9% from 2014 and in line with its target of at least 3% growth. Total sales last year came to €75bn, up from €73bn in 2014. Meanwhile, the group's share of net income was €1.2bn in 2015, down 67.9% on 2014. Total net investments increased to €12.7bn, up from €11.9bn in 2014. Net investments for new developments including new nuclear build increased by €296m in 2015 and were mainly financed by disposals up €478m.



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