Fears over UK's energy as EDF dodges Hinkley nuclear plant decision

Europe's biggest energy firm, EDF, fuelled concerns about keeping Britain’s lights on after it was forced into a backdoor rights issue and failed to commit to the UK’s biggest nuclear project.

The UK’s energy future was left up in the air after EDF dodged a decision on Hinkley Point C, the planned nuclear plant which will provide 7% of Britain’s electricity and employ 25,000 people by 2025.

The French giant said the first phase of construction would launch “very soon”, but failed to commit to a timescale or confirm whether it had funding in place, casting doubt on the future of the project.

“Hinkley Point C is a strong project which is fully ready for a final investment decision and successful construction. Final steps are well in hand to enable the full construction phase to be launched very soon,” it said.

Prime Minister David Cameron has been trying to smooth through the £18 billion construction costs of the plant in Somerset by wooing Chinese investors to back the project.

EDF has already sold a 33.5% stake to China General Nuclear Power Corporation, but today’s dividend cut could ignite fears the energy giant lacks the firepower to execute the plan.

The group confounded investor expectations by slashing the dividend to €1.10 for 2015 from €1.25 in 2014. It has also offered shareholders the choice of taking shares instead of cash.

The French government, which owns 82% of EDF, will take shares instead of cash to give the energy group an extra €1.8 billion (£1.39 billion), an effective rights issue backed by the French taxpayer.

The move was cheered by investors, heartened by EDF’s bid to boost its beleaguered finances, and its shares rose 12% in Paris by €1.27 to €11.56.