Centrica Needs Government Backing for Nuclear, Evolution Says
Centrica Plc (CNA), the U.K.’s biggest energy supplier, shouldn’t build nuclear power plants with Electricite de France SA unless the British government accepts some construction risk, according to Evolution Securities.
“In new nuclear, Centrica is a minority holder, in a technology in which it has no institutional understanding, and where as emphasised by Flamanville, construction risk is notorious,” Lakis Athanasiou, an analyst at Evolution, said in a note to investors today.
EDF, Europe’s biggest generator, said yesterday that stress tests following the Fukushima atomic disaster and fatal accidents have raised the cost and delayed the start of its new reactor at Flamanville in Normandy. The Flamanville plant is a showcase for the ‘third-generation’ nuclear technology the utility wants to export globally.
EDF acquired all of the U.K.’s atomic plants in 2008 before selling a 20 percent stake to Centrica.
The French utility said yesterday that it is in the final stages of licensing the EPR design for use in the U.K. The company plans to announce an adjusted timetable for building the plants after the release of a report by Chief Nuclear Inspector Mike Weightman later this summer. EDF wanted to complete the first of four new reactors at Hinkley Point in southwest England by 2018.
The EPR at Flamanville will cost around 6 billion euros ($8.5 billion) and start selling power commercially in 2016, compared with a previous estimate of around 5 billion euros and 2014, the Paris-based company said. Before the disaster at Fukushima, U.K. Energy Minister Charles Hendry said new nuclear plants may cost as much as 6 billion pounds ($9.7 billion) a reactor.
The U.K. is in the process of modernizing its energy market. Changes include long-term contracts that give power producers guarantees designed to help them attract finance for offshore wind turbines, nuclear reactors and carbon capture and storage projects.
British utilities need to spend as much as 200 billion pounds to replace aging power plants and upgrade transmission networks by 2020, according to energy regulator Ofgem.
EDF is developing EPRs in China and has plans for more in the U.K. and the U.S.
EDF operates 58 nuclear reactors in France and 16 in the U.K. Fifteen of Britain’s 19 operating reactors, which account for 18 percent of generation, are operated by EDF.
To contact the reporter on this story: Kari Lundgren in London at firstname.lastname@example.org