Bloomberg News

EDF Sticks to U.K. Nuclear Projects as RWE, EON Quit Vent

April 03, 2012

EDF Chief Executive Officer Henri Proglio told reporters today in Paris, “The British government is eager to develop new sources of energy and we will accompany them.” Photographer: Balint Porneczi/Bloomberg

EDF Chief Executive Officer Henri Proglio told reporters today in Paris, “The British government is eager to develop new sources of energy and we will accompany them.” Photographer: Balint Porneczi/Bloomberg

Electricite de France SA, the world’s biggest operator of atomic plants, remains committed to developing nuclear reactors in the U.K. even after Germany’s two biggest utilities abandoned projects in the country.

EDF has no intention of following EON AG and RWE AG (RWE), which announced last week they’ll scrap a plan to build reactors in Britain through their Horizon venture, Chief Executive Officer Henri Proglio told reporters today in Paris. “The British government is eager to develop new sources of energy and we will accompany them,” he said.

All of Britain’s operating reactors are scheduled to shut by 2035 as they age, leaving the U.K. with an energy gap of almost 10,000 megawatts. EDF, with partner Centrica Plc (CNA), plans two new generators at its site in Sizewell in eastern England. The company also intends to make an investment decision on two new reactors at Hinkley Point in southwest England, costing an estimated 10 billion pounds ($16 billion), by the end of 2012.

RWE and EON, which operate plants fired by coal, gas and renewables in Britain, said March 29 they’re seeking buyers for Horizon, a venture with sites in Wales and western England. RWE said high costs of capital and leaner budgets as a result of Germany’s forced reactor closures helped drive the decision.

Proglio declined to comment on whether state-controlled EDF (EDF) would be interested in acquiring Horizon.

Government Issue

“The question of buying the German venture is more for the government,” the CEO said.

EDF rose 3.4 percent, the most in four months, to 17.685 euros in Paris trading today, for the biggest performance in France’s CAC40 index. Kepler Capital Markets raised its recommendation on the stock to buy from reduce yesterday, urging investors to acquire the shares ahead of the French presidential elections later this month.

The future of nuclear generation in France has split candidates in the run-up to the elections. Socialist contender Francois Hollande is seeking to reduce the share of atomic power in the country's energy supply to 50 percent in 2025 from about 75 percent now, a measure President Nicolas Sarkozy says will raise electricity prices and cost jobs.

France gets more of its power from nuclear generation than any other country. The nation shouldn’t abandon atomic energy because EDF’s nuclear plants give it a “competitive advantage” over its neighbors, Proglio said today.

Reactor Closure

Hollande has committed to closing reactors after 40 years of service. A third of France’s 58-reactor fleet have operated for more than 30 years, meaning they would shut within the next decade if their lifespan is capped, according to Bloomberg New Energy Finance data.

“There is no doubt any French government will benefit from nuclear, so I’m not too concerned about it,” Proglio said. EDF operates 95 percent of France’s electricity generation, and closing aging reactors would reduce that share to 59 percent by 2025, BNEF said.

Hollande has committed to shut the Fessenheim atomic plant, EDF’s oldest, within five years if he’s elected. The first round of the presidential vote will be held on April 22.

To contact the reporters on this story: Ladka Bauerova in Paris via lbauerova@bloomberg.net; Caroline Connan in Paris at cconnan@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.


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