Nuclear woes drain 20pc from EDF’S earnings
EARNINGS at energy giant EDF plummeted by a fifth in the first half of this year due to ongoing woes in its French fleet of nuclear reactors and lower profits from those in the UK.
The French state-backed group behind the UK’S first new nuclear plant in a generation, Hinkley Point C, has suffered a major setback to its domestic reactors, some of which have been closed for safety checks since October.
French nuclear power output fell by 3.9pc from the first half of last year to 197.2TWH in the six months to June 30, the group said.
Despite a 4.2pc rise in UK EDF’S nuclear generation to 32.2TWH, the fleet of reactors was still a drain on earnings due to the weaker market price for electricity. The slump in its two core markets wiped more than 20pc from its underlying earnings before interest, tax, debt and amortisation to €7bn (£6.3bn).
The group none the less assured investors that it remains on track to meet its guidance of between €13.7bn to €14.3bn for the year.
Jean-bernard Levy, EDF’S chairman and chief executive, underlined the “unfavourable market context” but said the group’s move towards renewable energy was accelerating.
The roll-out of subsidised renewables in the last decade has in effect driven the wholesale price of power down, cutting revenue for existing nuclear power plants, which sell their electricity into the market.
The decline in income highlights the need for a guaranteed set price for the new Hinkley Point plant in order to recover its large costs.
Earlier this month, EDF confirmed that the cost of developing Hinkley had gone up from £18bn to £19.6bn but was quick to point out that this would not be borne by customers because of the fixed price of £92.50 per megawatthour already agreed with the Government.
However, the declining wholesale market price means the top-up payment needed to meet this set price, which is paid by consumers, has spiralled to £50bn over the lifetime of the project from the £6bn bill estimated back in 2013.