Problems For UK Nuclear Energy Plans As Problems Mount For EDF & Toshiba

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By Paul Homewood

h/t Patsy Lacey

Problems piling up for EDF. From the Telegraph:

EDF, the French energy giant building the new nuclear plant at Hinkley Point, plans to shrink its dividends for next year as it wrestles with the spiralling costs of maintaining its ageing nuclear fleet in France .

The company issued three profit warnings last year following a string of unplanned nuclear plant shutdowns ahead of its €55bn nuclear upgrade programme. In the clearest sign that the financial pressure facing the group will continue EDF said it will cut its dividend ratio by over 10 percentage points in 2018.

EDF plans to pay its shareholders a dividend ratio of 60pc of its income, or €2.1bn, for 2016 but this will fall to 50pc of recurring earnings by 2018 as the company tasked with building the giant Hinkley Point nuclear plant in Somerset faces looming multi-billion euro costs of upgrading its own aging fleet of nuclear reactors.

EDF’s shares slipped by over 2pc to €9.20 as the company revealed the full impact of the triple hit of nuclear outages, maintenance costs and sluggish market prices which weighed its operating profit down by over 15pc to €4.1bn, compared to €4.8bn in 2015.

EDF’s earnings before interest, tax, depreciation and amortisation fell 6.7pc to €16.4bn last year and is expected to fall further to between €13.7bn to €14.3bn in 2017.

The group is resorting to aggressive cost cuts and plans to issue €4bn in equity in the coming months, of which €3bn will be taken up by the French government in order to shore up its shaky balance sheet.

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Even if Hinkley does end up getting built, it looks increasingly unlikely that Sizewell C and Bradwell B will go ahead, as EDF simply don’t have the capital.

Meanwhile the second leg of UK nuclear policy risks being derailed, with Toshiba threatening to pull out of the Moorside project:

The UK’s plan to build Europe’s largest nuclear power plant risks being derailed after lead developer Toshiba admitted it would have to take billions of pounds’ worth of write downs in its nuclear business and said it would scale back its overseas ambitions.

The consortium behind the plans to build a giant 3.8GW nuclear power plant in Moorside in Cumbria was forced to defend the future of the £10bn project after the Japanese conglomerate said it would scale back its work outside of Japan after booking a 712.5bn yen (£5bn) writedown in its nuclear power business.

Toshiba is a 60pc shareholder in the NuGeneration consortium, which plans to develop the Moorside project alongside France’s Engie, formerly known as GDF Suez. The new plant is slated to use the AP1000 nuclear reactor, which is made by Toshiba’s US-based nuclear company Westinghouse.

But in a shambolic financial reporting day the embattled company raised doubts over its long-term commitment to Moorside, saying it would “consider participating in the project without taking on any risk from carrying out actual construction work".

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The UK’s Nuclear Industry Association has warned that more than two thirds of the country’s power generation capacity would be retiring between 2010 and 2030.