England: US loan to finance Hinkley Point nuclear reactor

The American fund Apollo will provide a loan of 4.5 billion pounds, or 5.25 billion euros, mainly to finance the Hinkley Point C nuclear reactor project led by EDF in the United Kingdom, the French electricity giant announced on Friday.

This agreement to issue bonds of up to 4.5 billion pounds sterling will "secure a substantial portion of the sterling financing for its investments in the United Kingdom over the next three years, in particular the Hinkley Point C project," EDF said in a statement.

The project could cost up to £34 billion, according to an estimate by the group last year that does not take into account price increases since 2015.

This project for a pair of new-generation EPR reactors, already under construction in Somerset, in the southwest of England, has seen its schedule and costs slip repeatedly.

Initially estimated at almost 18 billion pounds in 2016 when it was given the green light by London, its total cost could ultimately reach between 31 and 34 billion pounds, according to an estimate by the group last year which does not take into account price increases since 2015. Adjusted to current conditions, the cost of the project would reach between 41 and 46 billion pounds, or between 47.9 and 53.74 billion euros.

In January 2024, EDF announced a further delay to the commissioning of the first of these two EPRs, now expected at best in 2029, or even 2031 in the least favorable scenario, compared to the initially planned end-2025 deadline. As for the second unit, it is not expected before 2030.

EDF, which holds a 72.6% stake in the project, had begun seeking financing "partners" for this project, while since 2023 its co-shareholder with a 27.4% stake, the Chinese partner CGN, has indicated that it no longer intends to participate in the additional costs.

The bond issue announced Friday, repayable in a maximum of 12 years, can be used "in three tranches," the first of which "with a total nominal amount of £1.5 billion, will be issued on June 26," EDF said in a press release. EDF will then be able to use the other two tranches in 2026 and 2027.