July 28, 2016 / 12:48 PM / 3 years ago

EDF board member resigns ahead of Hinkley Point vote

PARIS (Reuters) - An EDF board member has quit ahead of a vote expected to give the French utility the go-ahead to build the Hinkley Point nuclear plant in Britain, saying the project is financially risky and will lead France further away from renewable energy.

A tractor mows a field on the site where EDF Energy's Hinkley Point C nuclear power station will be constructed in Bridgwater, southwest England in this file photograph taken October 24, 2013. REUTERS/Suzanne Plunkett/Files

One of 18 board members, Gerard Magnin was the only one with a background in alternative energy and his appointment in 2014 had been seen as a sign that the French government - which owns 85 percent of EDF (EDF.PA) - would steer it towards more investment in renewable power.

His resignation is not expected to scupper the final investment decision on the 18 billion pound Hinkley Point project, but raises further doubts about EDF’s strategy following the surprise resignation of its chief financial officer Thomas Piquemal in March.

In a resignation letter to Chief Executive Jean-Bernard Levy, seen by Reuters, Magnin said that at the time of his appointment he had expected a reorientation of EDF’s strategy towards renewable energies, but that instead its centre of gravity was moving more and more towards nuclear.

“As a board member proposed by the government shareholder, I no longer want to support a strategy that I do not agree with,” Magnin wrote. He will not attend Thursday’s board meeting.

He also said the Hinkley Point project was “very risky”, echoing the criticism of French unions which say the project is too big for EDF and jeopardises the survival of the company.

EDF has net debt of more than 37 billion euros and will issue 4 billion euros worth of new equity later this year in order to shore up its balance sheet.

“Let’s hope that Hinkley Point will not drag EDF in the same abyss as Areva,” said Magnin, founder of Energy Cities, an association of European cities working towards the energy transition.

Areva had to be rescued by the state from bankruptcy earlier this year.

Magnin said the imminent decision about the project, together with EDF’s planned takeover of Areva’s AREVA.PA reactor building unit and plans to extend the lifespan of its French nuclear fleet, all went in the same direction.

He said France’s nuclear-dominated energy strategy made the country highly vulnerable, without elaborating. France produces about 75 percent of its power with nuclear energy, about 10 percent with hydro, and has one of the smallest shares of renewables in its energy mix among European countries.

Union sources told Reuters the six union members on EDF’s board would vote against Hinkley Point. A non-union board member, who was not aware of Magnin’s resignation letter, told Reuters he expected there could be one or two abstentions but that there was no doubt the UK project would be approved.

Hinkley Point is also controversial Britain, where it will be the first new nuclear plant to be built in decades.

British critics say that the price at which the government has agreed to buy power from EDF for 35 years - at more than twice current market levels - is too high.

Several sources familiar with the situation said that EDF’s board this afternoon will not only decide on Hinkley Point, but will also discuss the offer of EDF for Areva’s reactor unit and vote on extending the depreciation period of EDF’s ageing French nuclear fleet from 40 to 50 years.

Reporting by Geert De Clercq; Editing by Pravin Char

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