David Cameron and François Hollande threw their weight behind plans to build an £18 billion nuclear power station at Hinkley Point in Somerset yesterday as officials scrambled to dispel growing scepticism over the project.
In a statement, the British and French leaders described Hinkley as a “major strategic project” and a “pillar of the bilateral relationship” that would be a key aspect of British energy policy.
Their support comes at a critical juncture for the badly delayed nuclear station amid growing doubts about how EDF, the cash-strapped state-owned French energy giant, will finance it.
The joint French-Chinese power station, which would supply 7 per cent of UK electricity, was originally meant to start producing electricity next year.
EDF is struggling beneath a €37 billion debt mountain and plunging energy prices have shrunk the company’s market value to about half that level, or €20 billion. That is less than a fifth of its level when it acquired British Energy, the UK nuclear generator, in 2008 and unveiled plans to build a new generation of UK reactors.
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To add to its woes, EDF is also being forced to bail out Areva, the collapsed French reactor designer that has been loss-making for five consecutive years and which is facing huge liabilities linked to the botched construction of a reactor in Finland aiming to use the same technology as Hinkley.
The statement, issued after a summit between the two leaders in Amiens, said EDF was “devoted to prepare all necessary elements” to commit to a “final investment decision in the near future”.
Under a deal struck with CGN of China, EDF, which is 84 per cent owned by the French state, will own a 66.5 per cent share in the Hinkley project.
EDF is examining a variety of financing options, including reducing its stake and selling a stake in RTE, the French high voltage electricity grid, to help bankroll Hinkley, as well as a string of other investments in the French nuclear and renewable energy industries.
There are plans to start generating power in 2025 but analysts believe this could slip further unless a final investment decision is made promptly.
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CGN and EDF signed an agreement in October to collaborate on construction of the plant. The agreement also created a wider UK partnership to develop new nuclear power stations at Sizewell and Bradwell.