Bloomberg News

EDF May End U.K. Nuclear Plan Unless Profit Guaranteed, CEO Says

February 05, 2013

Electricite de France SA’s chief executive officer said he’s willing to join Centrica (CNA) Plc in walking away from building the U.K.’s first reactors in two decades unless the government ensures the project is profitable.

“We won’t do it” if if the price for their power isn’t high enough, CEO Henri Proglio said in an interview in Bure, eastern France. “I won’t qualify myself as confident, but rather conscious that an agreement can be reached” on prices.

Centrica, Britain’s largest household energy supplier, yesterday opted out of a plan to build atomic plants in the U.K. with EDF, citing rising costs and delays. It had an option to take a stake in four new reactors at two of EDF’s power stations. Should EDF follow suit, the country would be left without any commitments from utilities to build new nuclear at a time when it’s seeking investment to replace aging plants.

EDF, the world’s biggest nuclear operator, is looking for an investor to share the cost of reactors at Hinkley Point in southwest England and Sizewell in eastern England. The French utility and the U.K. government are still negotiating how much EDF will earn for power generated at the new plants.

“I have no reason to take the pressure off the people I’m talking to,” Proglio said late yesterday.

China Talks

EDF has held talks with China Guangdong Nuclear Power Group Co. on joining the U.K. projects and there are “potentially other partners,” Proglio said in September. CGNPC’s interest was reaffirmed last month by Herve Machenaud, head of production and engineering. Proglio declined to comment further yesterday on potential partners, saying only that the project must be “clearly structured” before an alliance can be agreed upon.

“We have contacts, but these could change,” he said. “We need more details about the project, to see whether economic conditions are met.”

German utilities EON SE (EOAN) and RWE AG (RWE) abandoned a British atomic-power project last year, saying they couldn’t justify the capital expenditure. EDF’s U.K. reactors would be the same model as one being developed in Flamanville, Normandy, where costs have swelled following revisions to its design, as well as changes made in the wake of Japan’s Fukushima disaster.

EDF began building the 1,650-megawatt Flamanville reactor in December 2007 for an initial estimate of 3.3 billion euros ($4.4 billion). It has revised cost projections every year since 2010, bringing the figure to about 8.5 billion euros in December.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

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


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