Commenting on the news of the approval, Moody’s vice president and senior credit officer Paul Marty said this was because of the “very considerable size” of the investment, as well as execution risks.
“Should the project go ahead following the new UK government review, the significant scale and complexity of this project are likely to affect both the group’s business and financial risk profiles as EDF’s balance sheet will have to shoulder the financial implications of a very long construction phase during which the investment will not generate any cash flow,” he said.
The board of energy giant EDF gave the go-ahead to its Hinkley new nuclear power plant yesterday (28 July), approving the project by 10 votes to seven.
However, just hours later, business and energy secretary Greg Clark released a statement announcing a delay to the government’s final decision.
With an agreed strike price of £92.50/MWh, critics have questioned Hinkley’s value for money, particularly when the cost of renewable alternatives is falling fast.
There have also been concerns over EDF’s ability to finance the project through construction. At the end of 2015 the company had net debts of £37.4 billion and, at £18 billion, the cost of building Hinkley is almost equal to the value of the entire company (£19.2 billion).