Moody’s has downgraded EDF’s credit rating from A1 to A2, potentially hampering the French energy giant’s efforts to pull together financing for the £18 billion Hinkley Point C nuclear project.

Vice president and senior credit officer at the ratings agency Paul Marty said: “The rating downgrade reflects Moody’s view that the group’s action plan announced on 22 April 2016 will not be sufficient to fully offset the pressures resulting from a low power price environment combined with a significant investment programme.”

The plan included commitments to reduce annual operating costs by €1 billion (£790 million) by 2019 and sell off assets worth €10 billion (£7.9 billion) by 2020. 

Marty said: “Notwithstanding a recent rebound, one-year forward baseload power prices in France fell by 21 per cent in the last twelve months to around €30/MWh currently. A prolonged period of low power prices will affect EDF given its exposure to market-exposed generation activities, which Moody’s estimates account for approximately 50 per cent of EDF’s EBITDA.”

He said the “high degree of government support” entailed by the French government’s 85 per cent stake in the company had continued to hold the rating several notches higher that what it would otherwise be (baa1).

EDF has repeatedly delayed a final investment on Hinkley, primarily because of its struggle to secure sufficient financing. As credit ratings affect the cost of borrowing the downgrade could worsen its struggle, depending on how capital for the project is raised.

The downgrade is also likely to affect the cost of servicing its sizeable existing debts, which stood at €37.4 billion (£29.4 billion) at the end of 2015. 

Earlier this week EDF reported its financial results for the first quarter of 2016, which showed revenues for the group had fallen by almost by 7 per cent on the same period last year.

Yesterday former energy secretary Lord Howell said China has a “plan B” to bypass EDF and take over the Hinkley Point C nuclear project.