Pan-European CfD’s called for at EU nuclear Conference

Last week, NNWE attended the ASCPE’s conference: Investments on nuclear energy in Europe: building a long-term framework to allow the upgrading and financing of projects, held in the Marriott Hotel, just off the gorgeous central square – Grand Place – in Brussels.

dsc_1366 Chaired by the indefatigable Claude Fischer, Director of ASCPE, the conference was attended by the who’s-who of the nuclear industry and included contributions from the European Commission, operators such as EDF, Westinghouse, CGN, and Rosatom, regulatory bodies, trade associations and financing experts.

From an investment and policy framework point-of-view, it was made clear that the UK policy of Contracts for Difference (CfDs) and the Capacity Market is clearly the right path to follow for other pro-nuclear member states. Jean-Pol Poncelot, General Director of Foratom, advocated for the roll-out of similar market systems across the whole of the EU as investment in new nuclear falls behind other regions, whilst acknowledging that with Brexit, the political likelihood of a “copy and paste job” on legislation is not looking likely.

Amjad Ghori, Global Head Structured Finance Advisory at Credit Agricole, backed up this argument, but with a slight caveat. Whilst endorsing the structure and security of CfDs as a great model to secure new investment and guarantor of consumer bills, long-term political stability was crucial. He argued that even the recent Hinkley Point C CfD signed earlier this month between CGN-EDF and the UK Government had changed significantly since it was first announced and designed in 2012. Investment banks cannot simply alter financing plans when projects like this are adapted due to shifting political whims. He again endorsed a European CfD model which could work with and be designed into the Energy Union to enhance financial stability.

dsc_1362Overall, the conference emphasised how the onus is on the Member States to make progress on policy and regulation – companies are waiting and willing to invest once the correct framework has been put in place. This was highlighted by Dmitry Sukhanov, Director at Atomenergopromsbyt, who referenced the Baltic NPP project. This new NPP is the first Russian project to open its supply chain to competitive tender to all European companies as well as be open to co-financing – much like the EDF/CGN Hinkley deal. The goal is to interlink Russian and European power grids with smart technology in order to balance security of supply and peak load in the region and act as an example if Russian-EU cooperation.

One of the key take-aways was the demand and need for nuclear energy within Europe, no matter the weakening pro-nuclear argument which seems to hold sway, to meet existing 2DC targets. A clear roadmap towards further harmonisation and standardisation was called for, with a framework being created for associated partnership status (such as the UK post-Brexit) of Euratom and the Energy Union more widely.

dsc_1365Once the Energy Union becomes a reality, nuclear energy will be transferred into the grid and spread widely throughout Europe – no matter the predilection of the member states energy policy. The pricing of new NPP and the electricity they produce then becomes an issue which needs cross-EU support. The benefits of a nuclear powered low carbon energy supply will be to the benefit of all of Europe, but the question of how to reduce and mitigate the costs to the nations building new nuclear, whilst others endanger their security of supply, has not yet been adequately addressed.