Letter: France’s Finance Minister says HPC is “an outstanding cooperative effort by France and the UK”

Letter sent to the UK Energy and Climate Change Parliamentary Select Committee from Emmanuel Macron, French Minister of the Economy, Finance and Industry regarding Hinkley Point C on 23 May 2016

Dear Members of Parliament,

As part of your inquiry into UK New Nuclear – in particular into EDF Energy’s Hinkley Point C (HPC) project – you have written to me prior to your session on May 24.

As the majority shareholder in EDF, the parent company of EDF Energy, the French government is paying close attention to this project. This is a major element in the company’s development strategy and proof of its expertise in managing next-generation nuclear power plant projects.

HPC is an outstanding cooperative effort by France and the UK, one that can strengthen our economic, industrial and energy ties in a bid to develop low-carbon energies, in line with the Paris Agreement. As I am responsible for France’s industrial policy, I am aware of the extent to which this project is a strategic driver for the French and British nuclear industries. HPC will create jobs in both countries. It will strengthen the expertise of our operators, and enhance their competiveness, ahead of the renewal of our nuclear fleet. HPC can also rely on the partnership that EDF has built over the past three decades with China General Nuclear Power Group (CGN), through its work on the Daya Bay and Ling Ao plants, and on the two EPRs currently under construction in Taishan.

In recent years, the HPC project has successfully passed a number of important milestones. These include the ONR’s granting of a licence for an EPR adapted to the British context, negotiations with the British authorities concerning an appropriate regulatory framework (including the "Contract for Difference" (CfD)) that was approved by the European Commission, the construction of the partnership with co-investor CGN, and the negotiation of contracts with the main suppliers. All of these stages were achieved within the framework of a balanced partnership with the British authorities and CGN. HPC is a project whose profitability outlook is positive for EDF, provided its construction costs are kept under control and its risks can be controlled.

The French government gave its full support to this cooperation at the Franco-British Summit held in Amiens on March 3 that was chaired by President Hollande and Prime Minister Cameron.

In light of the huge investments set out by EDF in its Cap 30 strategic plan – at a time when the market prices of electricity are plummeting – the group is looking to secure its long-term financial future by cutting costs, optimising its investments, developing a bold asset disposal programme and by bolstering its shareholders’ equity through a market transaction in which the French government has already announced its involvement.

Owing to the importance of the HPC project in the Cap 2030 plan, and to promote exemplary labour/management dialogue, the Chairman and CEO of EDF decided to consult the company’s Central Works Committee on both the project and the partnership with CGN. The French government supports this initiative which will enable all the legitimate questions to be answered. Obviously, the final decision for the HPC investment lies with EDF’s Board of Directors once the consultation has been completed in compliance with effective regulations.

The French authorities remain fully behind the HPC project and this was reiterated by President Hollande on May 17. I can appreciate that a certain amount of impatience may be creeping in as the project is key for the UK’s energy and climate policy. It is also necessary, in the interest of all, that EDF follows due process before committing itself to an investment of this magnitude. The consultation of the Central Works Committee brings legal robustness on the decision.

I have every confidence that a final investment decision can be made rapidly after the end of the consultation of the Central Works Committee and that it will signal the development of a very fruitful collaboration in the industrial and energy sectors between our countries.

Yours sincerely,

Emmanuel Macron
Minster for Economy, Finance and Industry
French Government