1. Update on the status of the UK nuclear power programme Presentation to INRAG 27 February 2016, Vienna Steve Thomas (stephen.thomas@gre.ac.uk) Professor of Energy Policy PSIRU (www.psiru.org), Business Schoolwww.psiru.org University of Greenwich

2. Outline 5 reasons why EDF cannot take a Final Investment Decision on Hinkley before 2017, at the earliest The other UK projects

3. Flamanville must be online before end 2020 'The Base Case Condition is that satisfactory evidence has been provided that Flamanville 3 has completed the trial operation period and that the requirements of the Guarantor in respect of performance during such period have been met. The Base Case Condition date cannot fall later than 31 December 2020.‘ Until Flamanville is online, EDF must finance mostly from equity. ‘During the period up to the Base Case Condition being met there is a cap on the amount of debt drawn being the minimum of: the debt milestone cap for the relevant project milestone and […] per cent of the Base Equity less development equity, i.e. GBP […] billion.‘ Can EDF afford this?

4. EDF doesn’t have the capital The Chinese partner, CGN, (33.5% of the project) has not agreed to participate It ‘will represent roughly 15% of our total CapEx for the next 10 years, every year 15%’ EDF must sell assets worth €6-10bn to protect its credit rating & to provide the finance The assets are: 29% of British Energy; bought for the equivalent of €4bn 50% of the French transmission company, RTE (must be sold to a public entity); valued at €2bn in 2012 49% stake in Constellation Energy Nuclear; bought for $4.5bn in 2008 Some Polish CHP plants; potential buyer EPH for €0.5bn Are the assets worth what EDF expects, are there buyers?

5. Areva is bankrupt 80% of Areva NP is being sold to EDF for about €2bn EDF wants to sell 29% on to a third party: CGN, Mitsubishi? French government must provide about €5bn to recapitalise Areva French government must guarantee to meet liabilities arising from Olkiluoto, from defective reactor vessel parts and from Chernobyl interim fuel storage facility and ….. Rescue will not be complete before 2017. If it requires a major state aid case, much later

6. Concerns about the reactor vessel ASN is not expected to decide whether the defective parts are OK till 2017 3 possible outcomes: the parts are strong enough and the plants can be completed; the parts must be repaired or replaced; the plants must be scrapped If option 2 or 3, can the 2020 deadline be met? If option 3, can Areva continue to market the EPR Areva made reactor lids and bases for 6 reactors, 1 for Flamanville, 2 for Taishan, 2 for Hinkley, 1 for Calvert Cliffs Who and why was order of these parts (in 2010/11) allowed long before a firm reactor order was placed? Why did Areva use a non-approved manufacturing process?

7. EDF has higher priority needs for capital Life extending the 58 French reactors and carrying out Fukushima modifications is expected to cost €100bn before 2030 Which is a higher priority, safeguarding their market share in their core business in France or taking a risky gamble building EPRs in UK? EDF may need to put significant funds into their decommissioning fund EDF’s credit rating is on review with an expectation of a downgrade: EDF CFO: ‘having the best possible credit rating is key at the time of having to finance a significant capex programme, this is important for the Hinkley Point decision’ EDF’s share price has collapsed & its union board members are against the Hinkley deal If EDF struggles to afford 66.5% of Hinkley, it certainly cannot afford 80% of Sizewell C

8. Other nuclear projects: Horizon Owned by Hitachi, has land at Wylfa & Oldbury Proposing ABWR. Portrayed as proven design. 3 completed but not now operating & 3 under construction but unlikely to be completed. 1980s design, updated 1997 but not ordered & being updated now. At least 2 years from completing GDA Hitachi wants to build & when complete, sell its stake. Will there be buyers, will Hitachi be more effective than utilities at controlling costs and schedules, will financiers trust this model? Wylfa likely to have less opposition than Oldbury Forecast construction start 2020. Realistic? If Hinkley terms are not offered, will not proceed

9. Other nuclear projects: NuGen Owned by Toshiba (60%), ENGIE (40%), has land at Moorside Proposing AP1000. 8 under construction. 4 in China at least 3 years late, 4 in USA at least 3 years late after only 2 years Up to 2 years from completing GDA Toshiba wants to build & when complete, sell its stake. Will there be buyers, will Toshiba be more effective than utilities at controlling costs and schedules, will financiers trust this model? Moorside likely to have less opposition than some sites but transmission links expensive & will be opposed Forecast construction start 2020. Realistic? If Hinkley terms are not offered, will not proceed

10. Other nuclear projects: CGN Owned by CGN (80%), EDF (20%), has land at Bradwell Proposing HPR-1000. 2 versions, CGN & CNNC. 3 under construction in China, 1 of the CGN design but only since Dec CGN claims it will submit HPR-1000 to GDA in 2016 but does CGN understand the requirements of the GDA? CGN owns & supplies reactors & should have access to Chinese finance CGN wants to export reactors & selling to UK would be hugely prestigious Is China a good partner? Concerns about quality, safety culture, strategic security, military connections etc Bradwell will be strongly opposed and may not be a good site (cooling water) No information on number of reactors & time frame If Hinkley terms are not offered, will it proceed?