51.7 billion euros: this is the price of the program of six EPR2 reactors, excluding financing costs, according to the report published by the government on Friday February 18, on the basis of two external audits. “A robust estimate of a median scenario”, is it written. The authors are nonetheless cautious, given the slippages observed on the Finland and Flamanville sites. The first reactor would see the light of day in Penly “by 2037”.
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Whatever the final amount, one thing is certain: EDF is no longer able to pay, as it had done for its historic park, from its own funds first, then by borrowing. The world has changed. 83.9% owned by the state, EDF lost its monopoly and its power to set tariffs to cover its costs. Above all, the company must bear a debt of 43 billion euros.
“No country conducts a major nuclear program without the State being present, as guarantor and as financier”, we explain at the Elysée. The cost of capital, in other words the remuneration paid to those who lend the money, remains an essential factor, given the amounts involved. With a rate of 1%, the price of MW/h would be €40. At 4%, it would be €60 and at 7%, the MWh would reach €100, according to the audit. Hence the importance of having a public guarantee.
No standard model in Europe
No standard funding model really emerges, if we look at what is happening in our neighbours, underlines a study just carried out by the French Nuclear Energy Company (Sfen).
In Hungary, the financing of the two new Russian Rosatom reactors planned for the Paks site will be provided by the State, via a loan of 10 billion euros contracted with Russia. This plan was endorsed by the European Commission, following two years of examination, on the condition in particular that 30% of the production is directly sold on the market by the public electrician MVM, to avoid any distortion of competition.
In the Czech Republic, the reactor to be built at the Dukovany power plant (several candidates are in the running, including EDF), will be financed up to 70% by a State loan to the local company CEZ, with capital mostly public. It will be at 0% for the duration of the construction and at 2% therefollowing. CEZ will borrow the remaining 30% at market conditions. An electricity buy-back system at a guaranteed price might also be put in place.
The British example
For its future system, France might draw inspiration from the mechanism imagined in 2018 by the British for the construction of two EPR reactors by EDF at Hinkley Point. The “CfD” (“ contract for difference ”) is a financing framework originally established for renewable energies that the authorities also wanted to apply to nuclear power. Britain was still in the EU and got the green light from Brussels.
The producer is guaranteed a fixed selling price (“strike price”): £92.5/MW for Hinkley Point, indexed to inflation for thirty-five years. If the market prices are lower, the State pays the difference to the electrician. If they are higher, it is the opposite, the producer transfers the overpayment to the State.
In this scheme, the construction risks nevertheless remain the responsibility of the manufacturer. To reduce them, a new mechanism should be put in place by the government. Already implemented to finance the modernization of London’s sewers, it would be used for the two other EPRs planned by EDF at Sizewell. The electrician would receive income as the work progresses, via a levy on the bills, like what is already done to pay for the electricity networks.
The path to a hybrid solution
“We need a model tailored to French needs, depending on EDF’s situation. We still have work to do and then discussions to carry out, in particular with the European Commission.”we say at the Elysée. The track of a hybrid solution, mixing different contributions, would hold the rope. Large electricity consumers might thus participate in the financing of the reactors, with the assurance of obtaining cheaper electricity in exchange.
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This has already been done in Finland for the construction of a dam, but also in France with the Exeltium consortium, which brings together 27 industrialists. In 2008, they had paid 1.75 billion euros to EDF, a sort of “right of entry” to benefit from a volume of electricity at a reduced price for twenty-four years.
