Following the epic delays with the Olkiluoto nuclear power plant in Finland, those of Flamanville in France, and those of Taishan in China, the under-construction plant of Hinkley Point C in south-west England has now joined the long story of an industrial catastrophe which is the third generation EPR (pressurised water reactor) first designed by Areva, once France’s nuclear energy giant.
On January 22nd, state-owned French utilities group EDF, which took over Areva’s nuclear branch in 2018, announced new delays in the construction of the two EPRs at Hinkley Point in Somerset. Originally planned to enter service in 2024, the first of the two reactors is now expected to be, at best, operational in 2029, or possibly “2030 or 2031” and, as usual, the projected costs of building the Hinkley Point C plant are rising massively over budget.
When the project was launched in 2016, its estimated cost was set at 18 billion pounds. Now the estimated cost is between 31 and 35 billion pounds, equivalent to between 46 and 53 billion euros. That is the latest estimate, but it may not turn out to be the last of the regularly rising forecasts.
But one cannot become used to all this. Amid all these failures, such vast sums, and the programmed breakup of a public group and service, EDF is in danger. One can always cite the problems of the design of the EPR, the complexity of the industrial execution of these sites of Pharaonic proportions, the loss of know-how in France’s nuclear branch, all of which has been known since long ago, but that does not suffice. There is above all a political responsibility for the fiasco at Hinkley Point.
While the French government will once again actively seek to bury the subject and, if need be, find scapegoats, the construction of the British plant, which places EDF at grave risk, was wanted and imposed by Emmanuel Macron alone, when he was economy minister. It was allowed to happen amid indifference within the negligent presidency of François Hollande.
Enlargement : Illustration 1
Years later, the connoisseurs of the nuclear industry, and of Hinkley point in particular, are still seeking to discover what exactly was the deep motivation that pushed him, as a minister, to fight tooth and nail for the project. It was not his faith in nuclear energy – Macron’s conversion to championing the nuclear route is quite recent, beginning around 2019. Neither was it driven by a desire to promote the ‘grandeur’ of the French nuclear industry; he had at the time sold off the energy branch of Alstom to General Electric (GE) by knocking down the weak defences set up around activities regarded as strategic and which were put in place by his predecessor as economy minister, Arnaud Montebourg.
Could the motive have been, as some at the top of EDF surmised, that by embarking on a new EPR project, it suggested Areva still had a future? That would allow to hide the bankruptcy of Areva under CEO Anne Lauvergeon and to avoid its subsequent bail out by the state, at a time when Macron’s ministry was pressuring EDF to buy Areva.
The revolt within EDF
But none of these arguments were worth the risks taken by EDF with its involvement at Hinkley Point, and that was argued from the beginning. The dramatic resignation in March 2016 of EDF’s finance director, Thomas Piquemal, should have prompted the government to pull back. His departure was unprecedented within the group, all the more so given what he said at the time.
Piquemal explained that EDF had set off on a road to ruin with the EPR deal at Hinkley Point. He underlined that the project did not have sufficient industrial, financial, legal, and political guarantees – the group was to engage its own funds and without any state support, given that the British government, then gearing up for the Brexit referendum, had decided to withdraw its financial guarantee for the construction of the two reactors.
Piquemal had in effect become the spokesman for all the EDF staff vehemently opposed to the project. That opposition was also unprecedented, bringing together senior management, engineers, trades unions, who all sounded the alarm, at every level, over what they warned would bankrupt EDF.
In a lengthy document produced in March 2016 and published by Mediapart, a group of EDF engineers listed the reasons for dropping the Hinkley Point project. In the document, sent to members of the EDF board and other interested parties, they detailed that the EPR model to be built at Hinkley Point was a second generation reactor that was supposed to correct the mistakes made in the initial EPRs, and also to meet the requirements of Britain’s Office for Nuclear Regulation which were different to its counterpart in France (l’Autorité de sûreté nucléaire). “The new project has become one of extreme complexity,” wrote the engineers, “it is therefore an understatement to say that this UK EPR model will be a hybrid and complex first of the line, and because of that carry a high level of risk.”
Beyond the complexity of the project, they also underlined the unrealistic nature of the construction calendar and costs as set out by EDF’s senior management. Even France’s national audit body, the Cour des comptes, warned against the financial risks posed by Hinkley Point.
At the time, Emmanuel Macron, as is his habit, took no notice of the opposition among the group’s staff. Who were they to dare to contradict a minister of the economy? He waved away all the warnings, and Hinkley Point C would be built because he had decided so. Servile, the then EDF CEO Jean-Bernard Lévy and a majority of its directors, supposedly “independent”, obeyed, running against the opinion of the group’s employees.
It was the last major decision taken by Macron before he resigned from his ministerial post in August 2016 to launch his presidential election campaign.
Seven years on, the result is plain to see; the EDF staff were right about everything – about the complexity of the construction, about the timetable, and about the industrial and financial risks. Now the group finds itself caught in a fatal trap, and alone.
EDF's Chinese partner refuses to pay unbudgeted costs
The state-owned group, already deeply in debt, with insufficient equity thanks to its defaulting shareholder, faces a monstruous bill.
Originally, the building of Hinkley Point C was to be carried out by EDF in partnership with China General Nuclear Power Group (CGN). But even before the contract was signed, the state-owned Chinese group obtained adjustments to the deal; while EDF, in charge of the design and construction, was officially responsible for two thirds of the project, it accepted responsibility for 80% of the risks.
The situation has worsened since. Along with the deterioration in relations between the US and China, relations between Britain and China have also cooled. In the summer of 2022, the British government bought up CGN’s stake in the building of another two EPR reactors at a plant at Sizewell, on the coast of Suffolk, in eastern England. The construction of Sizewell C was to be an equal joint venture between EDF and CGN, but the British move was part of a wider strategy to cut ties with Chinese public companies.
EDF, once a longstanding partner with China, also saw that once flourishing partnership reach a low, aggravated by the EPR delays at the Taishan nuclear power plant and American surveillance of the project. “The probability that CGN will no longer finance the Hinkley Point project beyond its committed equity cap is high,” warned EDF last July. That materialised in December, when EDF told the British government that CGN had halted payments towards the overrun of costs of Hinkley Point (which, at the time, the French government and EDF did not make public).
Since then, EDF has been seeking new investors to cover the shortfall. But who would join a project that is industrially and financially out of control? EDF turned to the British government, which flatly refused.
Following the announcement of the new delays at Hinkley Point, Paris said it intended to renew talks on the issue with London. “It’s a Franco-British matter,” a French economy ministry official told the Financial Times. “The British government cannot say EDF has to figure it out alone on Hinkley Point and at the same time ask EDF to put money into Sizewell. We’re determined to find a global solution to see these projects through.”
Which means that while Hinkley Point is already a catastrophe, the French government is ready to ask EDF to double its risk (which is not obliged to) with Sizewell, convinced that the EPR, after having already costed hundreds of billions of euros, will one day finally function.
Until now, the British government, in response to the demands of French economy minister Bruno Le Maire, has made clear that the overrun of construction costs of the EPRs are EDF’s responsibility.
The road to disintegration
The state takeover of EDF will change nothing about the financial wall now facing the group, which has already been weakened by the numerous constraints placed upon it in the name of competition. One can already second-guess the response that the government, advised by banks and other consultants, intends to make – that of breaking up EDF's activities and privatising the most profitable parts among them, just as it already attempted to do with “Project Hercules”, the codename of its plan, first revealed in 2019, to restructure the company and separate its nuclear activities into a separate public entity.
The constant rise in electricity prices in France – up 44% across two years – and the plan to reform the electricity market is part of this policy, which is to bring an end the idea that electricity supply is a common asset managed by a public service, but rather to turn it into a commodity. Even if that means doing away with an essential and powerful tool for all of the economy.
Emmanuel Macron’s doggedness over the Hinkley Point project, at whatever the cost, is no doubt explained by that hidden aim. If that is his plan, he should at least dare to present it publicly and clearly.
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- The original French version of this op-ed article can be found here.
English version by Graham Tearse