EDF pledge to bankroll £10bn nuclear project

EDF Energy, London's electricity company, has told the Government it is prepared to shoulder the cost of building a £10bn fleet of four nuclear power stations without the support of a penny of taxpayers' money.

In its strongest pitch yet to run Britain's nuclear future, EDF has submitted costings to the Treasury that would see it build four giant units capable of replacing more than two-thirds of the UK's current ageing fleet of reactors.

In a private speech to City bankers this week, EDF's UK chief executive Vincent de Rivaz said using state-of-the-art European reactor technology as its business model for the project would make money for investors.

'There is no subsidy in the business case,' said de Rivaz. 'There is no line in the budget which is called 'taxpayers' money'. The nuclear option is based on sound economics.'

The pitch from EDF would see the new UK power stations, equivalent to nearly 10% of the country's power needs, effectively bankrolled by its parent Electricité de France, by far the world's biggest nuclear power generator.

'The case for investing in nuclear energy here in the UK and in many other countries has never been stronger,' de Rivaz told a private meeting at the City offices of French finance house BNP Paribas.

'For EDF and our shareholders, the signs of a nuclear renaissance presents a significant opportunity. With a positive decision from the [UK] Government [on new nuclear build] in the new year and with the right framework in place, we will be willing to invest in up to four new plants.'

De Rivaz said EDF would deploy the European pressurised reactor (EPR) technology being used at EDF's latest plant at Flamanville in Normandy, where construction has just started. The third-generation pressurised water reactor (PWR) design developed in league with Areva of France is far more advanced than Sizewell's PWR reactor, Britain's most advanced nuclear station but already 12 years out of date.

EDF plans to build the plants in partnership with the British Energy, which owns sites including Sizewell in Suffolk and Dungeness in Kent, or with the Nuclear Decommissioning Authority, which has the keys to defunct magnox stations including Bradwell in Essex.

De Rivaz indicated EDF could build 1600-megawatt stations at €3.3bn each, or less than £10bn for the four at 2007 prices. He said the design, component and manpower cost for the project would decrease, the more stations it is certified to build.

'That is key to why we propose to build not one plant in the UK but four,' he said. 'It is key to how we manage the business case.'

He shrugged off fears the credit crunch would put off investors, saying: 'In a world where confidence in easy credit has been shaken, only businesses with real strength based on tangible assets can make the kind of long-term commitment that nuclear requires.

'We have that financial strength. It is based on real, long-lived assets - not credit. It reduces the weighted average cost of capital and it allows us to invest with confidence.'