Emmanuel Macron hammers EDF as Britain’s nuclear energy future hangs in the balance. The energy giant is our last hope in the push for big new reactors. But the French president has handed it an almighty financial headache. Macron ordered the company to sell more electricity at knock-down prices to its competitors, in order to keep a lid on soaring energy bills. For Macron, it makes complete political sense. Three months out from an election, he is keen to temper voter anger over energy costs, which, as in the UK, have been pushed higher by surging gas prices. EDF is 84 per cent owned by the French state and has to bow to its will — even when the government’s intervention is “painful and defies good economic sense”, as newspaper Le Monde put it. EDF calculated that Macron’s demand would cost it €8.4 billion (£7 billion). The company had no choice but to scrap its profit guidance for the year and warned investors that it may need to seek more capital. Shares in EDF, listed in Paris, plunged. In a leaked memo, chief executive Jean-Bernard Levy claimed that Macron’s demand was a “real shock”. “It is going to weigh very heavily on our results,” he added. Trade union members at EDF have called for a strike this week in protest at the president’s order. Macron’s edict could not have come at a worse time for EDF, which was already facing huge demands on its capital. On the same day that Kwarteng toured Hinkley, the company cut its expected output of nuclear power this year by 8 per cent, after warning that five faulty reactors in France would have to stay offline while being serviced for longer than expected. This pushed the total number of EDF reactors currently offline to nine. EDF is midway through a long, slow upgrade of France’s fleet of 56 ageing nuclear reactors; this project could cost it at least €50 billion. And, earlier this month, it pushed back the start date and nudged up the expected cost for its new reactor at Flamanville in France; the project’s cost has quadrupled from initial estimates in 2004. Flamanville’s overruns have their parallels at Hinkley Point, which is also years late and over budget. It uses the same type of European pressurised water reactor (EPR) as Hinkley, too. Other EPRs designed by EDF have run into problems: the much-delayed Olkiluoto nuclear power plant in Finland is now finally looking to start up this year; and Taishan — in Guangdong province in China — has been offline since July because of a fault. Taishan was supposed to be EDF’s “proof of principle for the EPR design”, said Paul Dorfman, associate fellow in the science policy research unit at Sussex University. “But that has not been the case. To shut down the reactor is hugely expensive in terms of power, reputation, and in potential safety … The EPR reactor has failed miserably in terms of cost overruns everywhere that it’s been built.” EDF remains confident that Hinkley will be completed by 2026. Five and a half years into construction, it is now at the halfway point. When operational, it will supply 7 per cent of the UK’s electricity. About half of the £23 billion earmarked for Hinkley has already been spent, and the remainder is expected to come from EDF’s €27.5 billion cash pile. Hinkley, in other words, should be completed despite the company’s travails. The outlook for EDF’s Sizewell B in Suffolk, the next big nuclear project in the queue, is less clear.
Times 23rd Jan 2022 read more »
The long decline of Electricite de France SA isn’t only a political crisis for the government in Paris, it’s a growing economic threat for much of Europe. The giant nuclear operator, once a source of national pride and reliable low-cost electricity, has become a nightmare for investors and an increasingly wobbly pillar of regional energy security. Technical problems at some of its largest reactors mean EDF is set to produce the smallest amount of atomic power in three decades, slashing France’s exports to neighboring countries. It’s a one-two punch for a region that’s already reeling from record natural gas prices, and shows little sign of abating. Instead of helping EDF deal with its problems, the French government is extracting billions of dollars from the company to shield households from high energy costs. “The generic issue with EDF’s reactors is leading to an unprecedented decline in production, which starts being worrying,” said Nicolas Goldberg, a senior manager in charge of energy at Colombus Consulting in Paris. “We’re going to have high prices on the European market for a while. Everybody’s going to pay more.”
Bloomberg 23rd Jan 2022 read more »
