Apollo Global to Back Hinkley Point C with £4.5bn Loan

Strategic Insights -

Apollo Global, a US private capital group, is set to provide a £4.5bn loan to EDF, the French state-owned energy firm, to support the Hinkley Point C nuclear power station in Somerset. The loan will be provided as unsecured debt at an interest rate of just under 7%, with Hinkley Point C expected to be the main beneficiary of the funding.

The nuclear power plant has been plagued by cost overruns and delays since receiving government approval in 2016, with the original estimated cost of £18bn now projected to reach nearly £46bn, and a start date pushed back to 2029. The cost increases are attributed to a combination of labour shortages, the Covid-19 pandemic, and inflation in material costs. China General Nuclear, which held a minority stake in the project, halted funding in 2023, further increasing the bill for EDF.

Hinkley Point C is expected to power around six million homes as the UK heads towards a 2050 net-zero deadline, with the new reactors projected to provide around 7% of Britain's electricity needs. The project is also a key part of the UK nuclear power sector, with a workforce of 27,000 as of June, and an estimated value of £20bn. EDF is also constructing the £14.6bn Sizewell C nuclear power plant in Suffolk, which received approval from ministers in last week's spending review.

Key Takeaways:

  • Apollo Global will provide a £4.5bn loan to EDF to support the Hinkley Point C nuclear power station.
  • The loan will be provided as unsecured debt at an interest rate of just under 7%.
  • Hinkley Point C is expected to power around six million homes as the UK heads towards a 2050 net-zero deadline.
  • The new reactors are projected to provide around 7% of Britain's electricity needs.
  • The project has been plagued by cost overruns and delays since receiving government approval in 2016.
  • The original estimated cost of £18bn is now projected to reach nearly £46bn, with a start date pushed back to 2029.
  • Labour shortages, the Covid-19 pandemic, and inflation in material costs have contributed to the cost increases.
  • China General Nuclear, which held a minority stake in the project, halted funding in 2023, further increasing the bill for EDF.
  • EDF is also constructing the £14.6bn Sizewell C nuclear power plant in Suffolk.
  • The UK nuclear power sector has a workforce of 27,000 and an estimated value of £20bn as of June.
  • Energy secretary Ed Miliband has highlighted the pivotal role that nuclear power will play in ushering in a "golden age of clean energy abundance" and mitigating the climate crisis.

Statistics:

  • £4.5bn: The value of the loan to be provided by Apollo Global to EDF.
  • 7%: The interest rate of the loan.
  • 2016: The year Hinkley Point C received government approval.
  • £18bn: The original estimated cost of the project.
  • £46bn: The current estimated cost of the project.
  • 2029: The revised start date for the project.
  • 6 million: The number of homes expected to be powered by Hinkley Point C.
  • 7%: The percentage of Britain's electricity needs expected to be met by the new reactors.
  • 2025: The year Apollo Global's assets under management were reported to be £641bn in credit and £144bn in equity.
  • 27,000: The workforce size of the UK nuclear power sector as of June.
  • £20bn: The estimated value of the UK nuclear power sector.
  • £14.6bn: The estimated cost of the Sizewell C nuclear power plant.

Sources:

  • FT
  • Energy secretary Ed Miliband
  • Apollo Global
  • EDF
  • Hinkley Point C construction site in Somerset EDF Energy