Atoms for the Future New Build

Similar documents
Global mining and metals tax survey. From backroom to boardroom. The CFO perspective at a glance

Financial Reporting Developments. Singapore Healthcare Management Congress 2012

Embrace the Solvency II internal model

Global Capital Confidence Barometer

The nexus between transfer prices and extractive industry taxation

Accounting for emission reductions and other incentive schemes

The facts on FATCA. Prioritize, plan and prepare

ALI-ABA Audio Seminar. Moving from GAAP to IFRS (International Financial Reporting Standards) February 18, 2009 Telephone Seminar/Audio Webcast

Comparing global stock exchanges. Stock market listing standards and fees

IASB Projects A pocketbook guide. As at 31 December 2011

Global Capital Confidence Barometer Korea

Worldwide tax reporting in the shared services age: seizing the opportunity and managing the risk. 14 May 2013

Applying IFRS. IFRS 9: New mandatory effective date and transition disclosures

Make capital work harder take action

A snapshot of GAAP differences between IPSAS and IFRS. April 2013

How to make PPP work in Russia

Updates of Tax measures for Great East Japan Earthquake restoration and the 2011 Tax Reform

IFRS 12. Disclosure of Interests in Other Entities

Changes in reporting comprehensive income

Destination IPO. Achieve the right combination of corporate and capital market strategy for your IPO or secondary listing

Current economic conditions financial reporting considerations

Tax risk on the rise in Canada and globally

Capital Confidence Barometer

Fund transfer pricing. Roadmap to managing pricing and profitability for NBFCs

Greece amends tax penalties and interest on overdue payments

Applying IFRS. IFRS 12 Example disclosures for interests in unconsolidated structured entities

Mining and Metals Refining IFRS

Report. by the Comptroller and Auditor General. Department for Business, Energy & Industrial Strategy. Hinkley Point C

Driving integrated ÕfYf[aYd Yf\ kg[ayd j]lmjfk

Growing forward. Automotive industry. About this survey. Automotive survey highlights: Pip McCrostie Global Vice Chair, Transaction Advisory Services

The road to reform. Helping commercial end users of OTC derivatives comply with Dodd-Frank s Title VII

Ninth Annual International Tax Reporting Conference. Boston 7 May 2014

Prepare for success. 5Insights for executives. Operational transfer pricing: Failure to implement can hinder performance

IASB Projects A pocketbook guide. As at 31 March 2013

The new consolidation and joint arrangements standards

Automotive transactions and trends

Financing for Building Nuclear Power Projects : KEPCO s Strategy and Lessons Learned

Capital Confidence Barometer Automotive industry. Growing forward. An imperative to act: seizing first-mover advantage as confidence returns

disclosures will look like

European Automotive Survey Survey results

Why Sustainability. June Richard Betts, EY Senior Manager in Sustainability

Eurozone Ernst & Young Eurozone Forecast Autumn edition September 2011

Eurozone Ernst & Young Eurozone Forecast Spring edition March 2013

Indirect tax alert. EU VAT refunds for non-eu businesses. Are you preparing your 2012 EU VAT refund application?

Financing Renewables. EPG Summit, Prague. 3 December 2012

Overseas listing opportunities for fast-growing companies seeking to raise capital the route to Europe

Notional value under Dodd-Frank: survey of energy commodities participants

Regulation and risk The strategic response to insurance regulatory developments Alex Thomson, May 2013

Canada Revenue Agency announces measures to counter international tax evasion and aggressive tax avoidance

Management letter The School Board of Miami Dade County, Florida Year ended June 30, 2009

Decision on the Financial Services Agency of Japan s Roadmap regarding the adoption of IFRS by Japanese companies

Bringing Clean Energy Projects To Reality: Presentation to the Global Workshop on Clean Energy Development

The UK s new corporate criminal offense. How adopting a robust risk-based approach could open the pathway for future global compliance

Hong Kong Tax alert. New law allows tax deductions for registered trademarks, copyrights and registered designs

Impairment accounting the basics of IAS 36 Impairment of Assets

Solvency II implications for Asian life insurers

New US income tax treaty and protocol with Italy enters into force

Getting up to speed. Solvency II data and systems

HINKLEY POINT C, a project of the EDF Group for the future. 27 June 2016

03/2013. Tax News - Croatia

Acquisitions of interests in joint operations that are businesses

Eurozone Ernst & Young Eurozone Forecast Winter edition December 2012

Q&A on the Dodd-Frank Wall Street Reform and Consumer Protection Act

Eurozone Ernst & Young Eurozone Forecast Summer edition June 2011

Eurozone Ernst & Young Eurozone Forecast June 2013

Eurozone Ernst & Young Eurozone Forecast June 2013

Training seminar The new OHADA Uniform Act on Commercial Companies and Economic Interest Group: What should be known!

Hedge accounting summary of redeliberations

Accounting for waste removal costs

Strategy #1: Partnering with the Private Sector through PPP. EY Infrastructure Advisory. October 2017

Contents. Ernst & Young Shinnihon Tax

Q1 10 Global IPO update. April 2010

June 2013 meeting highlights

Global Capital Confidence Barometer

Mergers, acquisitions and capital raising in the mining and metals sector 1H 2011

Eurozone Ernst & Young Eurozone Forecast June 2013

Solvency II overview

Budget Connect Pre-Budget Survey

Share Purchase Agreements Does the chosen purchase price mechanism impact the end price?

The UK as a favoured location for Indian investments

The Luxembourg Specialized Investment Fund

Statement on Climate Change

Lessons learned from our review of restatements

Effective screening controls for sanctions and AML risk management

Eurozone Ernst & Young Eurozone Forecast Spring edition March 2012

UK Indirect Tax Conference Environmental Tax Breakout Session

Record to report. Are you audit ready?

Mumbai Tribunal rules on transfer pricing aspects of intra-group software development services

Audit Committee Bulletin

What next for UK auctions of renewable Contracts for Difference?

Automotive transactions and trends 1H16

Q2 10 Global IPO update. July 2010

Implementation of VAT across the GCC

Final Guidance Notes on the administration of the US-UK Intergovernmental Agreement (IGA) issued by HMRC

Third Circuit US Court of Appeals holds UK windfall profits tax not a creditable income tax for US foreign tax credit purposes

Claims transformation. EY claims capability

Irish Government announces Budget 2016 and publishes update on international tax strategy

Electricity Market Reform

Impact Assessment (IA)

Initial steps on the IPO journey. April 2016

Transcription:

Atoms for the Future 2014 - New Build Tony Ward 13 October 2014, Paris

EU approves Hinkley Point C State Aid case 2 8 October 2014 - A hugely significant step.2 years after Generic Design Assessment approval and Site Licence granted Achieving financial close has further to go Being carefully watched by many other European projects

What attracts investors, vendors and suppliers? Factors influencing appetite to pursue opportunities in given countries: Size Imperative Immediacy Experience Carbon Transparency Consensus Process Planning Prospect of multiple nuclear new build projects Capacity issues expected this decade Opportunity is more pressing in some markets Replacement more attractive than green field maturity Commitment to low carbon agenda Doing business in jurisdiction is understood and lower risk Political and public perceptions vital Leadership, consultation, intention Visibility and predictability of regime applies to regulatory regime too Source: Ernst & Young study for UK Government 3

Risk mitigant Issues Cash flow NNB Project Lifecycle: issues and risk Development Construction Operations Decommissioning 4 8+ years 4 7? years 40 60 years 25-100 years Planning Siting Design assessment Environmental Public Skills Regulatory Overruns Project mgt Deliverability Price visibility Volume security Policy consistency Regulatory changes Externalities Competition Safety and compliance Waste strategy Funding Ownership Lenders EPC Contract Lenders Insurance 3rd Parties O&M Equity Recourse Government Government? Consumers Government Developer Developer Owner Decom fund 4

Finance Issues Cash flow NNB Project Lifecycle: consequences for financing Development Construction Operations Decommissioning 4 8+ years 4 7? years 40 60 years 25-100 years Planning Siting Design assessment Environmental Public Skills Regulatory Overruns Project mgt Deliverability Price visibility Volume security Policy consistency Regulatory changes Externalities Competition Safety and compliance Waste strategy Funding Ownership Credit support Credit support Structured fin. S/H debt Bank debt Vendor S/H debt Bank debt Bonds Vendor Re-finance S/H debt The State Equity Recourse Equity Equity Equity Decom fund 5

The financing gap Acceptability of price reduces as risk and return increase Price reduces as return to equity reduces 40 50 60 70 80 90 100 110 Illustrative effective cost per MWh Typical WACC for lower risk projects are 10% 12% through construction, 7% - 9% during operation: Nuclear required returns are higher If Governments wish projects to be majority financed by third parties, they must accept that those finance providers need to earn a return of, and a return on, their investment This in turn leads to a need for long term output price certainty, at an acceptable level In all European projects, there is no readily acceptable overlap between the required returns to finance and the consequent price of output 6

The financing gap UK example UK Day ahead Oct 2014 Winter 2014 Hinkley Point C Strike Price 40 50 Illustrative effective cost per MWh 60 70 80 90 100 110 Levelised cost of output taking all project risks and required returns into account requires sustained price materially above today s market price Solutions need to act to: Lower the project s cost Deliver a higher achievable price for output Enable risks to be borne by parties best able to bear them Mitigate risks where possible But fundamentally mechanism needs to bridge price AND time gap 7

Key factors for investors The global view on opportunities Pays attention to government positions: Changing public opinion or fiscal position can move support quickly A well developed regulatory regime takes longer to put in place Market framework - electricity market and broader economic environment Issues around access to capital Mobility of capital many alternate investments available Plenty of capital in market, but not necessarily with traditional investors Need for openness to international investment: China, Russia etc Leverage of State balance sheet in optimal ways High up-front capital costs + long pay-back periods Determinants of profitability Support mechanisms and security of returns: Bridging the gap An urgent need for the output makes a difference 8

Thank you Tony Ward Global Nuclear Power Leader, Ernst & Young Direct tel: + 44 121 535 2921 Mobile: + 44 7789 922 451 Email: tward1@uk.ey.com

Ernst & Young Assurance Tax Transactions Advisory About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 135,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve potential. For more information, please visit www.ey.com. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. 2010 EYGM Limited. All Rights Reserved. This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.