French authorities are drawing up plans to provide an interest-free loan to state power company EDF to finance a significant part of the construction of six new nuclear reactors, two people familiar with the matter said.
The financing would clear a major hurdle for one of the country’s biggest public projects in years.
The plans are similar to resources recently agreed for a single reactor in the Czech Republic and, although the size of the loan is still unknown, it shows the growing need for state support to finance new nuclear projects in Europe.
The plans also include a guaranteed long-term price for the power generated, known as a contract for difference (CfD), said the people, who declined to be identified because they are not authorized to speak to the media.
Discussions over financing the projects that could cost well over €50 billion come as the French government faces a potential no-confidence vote over a draft budget that contains measures to cut spending and raise taxes to contain the country’s soaring debt. country.
President Emmanuel Macron announced in early 2022 plans for six new reactors with a total production capacity of about 10 gigawatts to partly replace an aging nuclear fleet and secure future energy supplies.
Construction of the first reactor is due to begin in 2027, but Macron has never said who would pay for the project, which at the time was estimated to cost around €52 billion. Recent media reports suggest that costs could be higher, reaching up to €67 billion.
France’s current 57 operating nuclear reactors were largely financed by EDF, which was a publicly traded company until it was fully nationalized last year.
But the company is unlikely to be able to secure private financing for new projects, given its already high debt, and there have been multiple delays and cost overruns on recent projects such as Flamanville in France and Hinkley Point in England.
Although there is a general agreement to grant an interest-free loan to EDF during the construction phase, the amount has not yet been decided and there are still “intense discussions” on issues such as the distribution of risks between the electricity company and the State in the face of possible costs. additional costs and delays, one of the sources said.
The plan also needs approval from the Finance Minister once EDF presents a final estimate of the projects’ costs, expected early next year. As it is a form of state aid, it must also receive the approval of the European Commission.
Europe is experiencing a resurgence of interest in nuclear energy projects, with countries such as Poland and the United Kingdom planning new plants to strengthen their self-sufficiency following a serious energy crisis in the region.
Financing remains a major challenge as construction risks weigh on power companies’ balance sheets and credit ratings.
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