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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--French state-owned energy major Électricité de France SA (EPA:EDF) (Paris) is facing a difficult year ahead after warning of an 8.4 billion-euro (US$9.6 billion) financial blow from government price caps, growing safety concerns at older nuclear reactors, and additional delays and rising costs at its newest nuclear power project.
EDF warned investors that the French government's promise to reduce the impact of rocketing power prices for consumers will cost the company billions of euro as it withdrew net debt and profit guidance for 2022. The news caused share prices to drop 23% at one stage. France has seen wholesale electricity prices rise in recent months due to the European gas crisis, but its nuclear fleet of more than 50 reactors has meant it has not been as exposed as other EU nations. The government has promised to keep the cost increases in household electricity bills to 4% this year, telling EDF that it will have to sell additional nuclear power to rivals at costs well below the current, inflated market rate. The government said the price that EDF can sell to rivals will be increased slightly to 46.2 euro (US$53) per megawatt-hour (MWh) from the current 42 euro (US$48) but this is far below market prices in December and January. EDF claimed the measures will hit earnings before interest, tax, depreciation and amortisation by 7.7 billion to 8.4 billion euro.
The company has also revealed that the nuclear fleet will supply 10% less power in 2022 due to extended outages at five nuclear reactors. It stated that it has revised its 2022 nuclear generation estimate to 300-330 terawatt-hours (TWh), down from 330-360 TWh. In December, cracks were found near welds on a safety cooling system for two reactors at the Civaux plant in central France during routine safety checks by EDF. Two further reactors at Chooz were shut down as a precaution because they are built to the same design and may also be affected. Last week, France's nuclear regulator IRSN revealed that the 1,300-megawatt (MW) Penly 1 reactor is suffering from the same corrosion problem.
"The performance of the checks, the investigation of technical solutions and their deployment led EDF to extend the shutdown of the Civaux 1, Civaux 2, Chooz 1, Chooz 2 and Penly 1 reactors," EDF stated. "The development of the inspection program for the entire nuclear fleet is continuing, gradually integrating the lessons learned from the first appraisals carried out. The impact on EDF's financial outlook is currently being analysed."
To add to the company's woes, more problems have emerged at its flagship Flamanville 3 nuclear project, the first in France to use its new European Pressurized Reactor (EPR) design. EDF has announced new delays and cost overruns that will add 300 million euro (US$342 million) to the bill, bringing it to 12.7 billion euros ($14.42 billion). This is more than four times the original project's costs. Flamanville 3 was originally expected to begin operating commercially in 2013.
"EDF has adjusted the schedule for the Flamanville 3 project, taking into account the state of progress of the operations and the preparation for start-up in an industrial context made more difficult by the pandemic," the company said. In December, Industrial Info reported that French President Emmanuel Macron had announced plans for the country to restart construction of new nuclear plants to meet growing energy needs and achieve carbon neutrality by 2050. According to reports, France will continue to add renewable energy to its portfolio, but also has plans to add six new EPRs. Industrial Info is tracking 28 active capital nuclear power projects, worth nearly US$59 billion, in France. Subscribers can click here for the reports. For additional information, see December 14, 2021, article - France May Relaunch Nuclear Power Program.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
EDF warned investors that the French government's promise to reduce the impact of rocketing power prices for consumers will cost the company billions of euro as it withdrew net debt and profit guidance for 2022. The news caused share prices to drop 23% at one stage. France has seen wholesale electricity prices rise in recent months due to the European gas crisis, but its nuclear fleet of more than 50 reactors has meant it has not been as exposed as other EU nations. The government has promised to keep the cost increases in household electricity bills to 4% this year, telling EDF that it will have to sell additional nuclear power to rivals at costs well below the current, inflated market rate. The government said the price that EDF can sell to rivals will be increased slightly to 46.2 euro (US$53) per megawatt-hour (MWh) from the current 42 euro (US$48) but this is far below market prices in December and January. EDF claimed the measures will hit earnings before interest, tax, depreciation and amortisation by 7.7 billion to 8.4 billion euro.
The company has also revealed that the nuclear fleet will supply 10% less power in 2022 due to extended outages at five nuclear reactors. It stated that it has revised its 2022 nuclear generation estimate to 300-330 terawatt-hours (TWh), down from 330-360 TWh. In December, cracks were found near welds on a safety cooling system for two reactors at the Civaux plant in central France during routine safety checks by EDF. Two further reactors at Chooz were shut down as a precaution because they are built to the same design and may also be affected. Last week, France's nuclear regulator IRSN revealed that the 1,300-megawatt (MW) Penly 1 reactor is suffering from the same corrosion problem.
"The performance of the checks, the investigation of technical solutions and their deployment led EDF to extend the shutdown of the Civaux 1, Civaux 2, Chooz 1, Chooz 2 and Penly 1 reactors," EDF stated. "The development of the inspection program for the entire nuclear fleet is continuing, gradually integrating the lessons learned from the first appraisals carried out. The impact on EDF's financial outlook is currently being analysed."
To add to the company's woes, more problems have emerged at its flagship Flamanville 3 nuclear project, the first in France to use its new European Pressurized Reactor (EPR) design. EDF has announced new delays and cost overruns that will add 300 million euro (US$342 million) to the bill, bringing it to 12.7 billion euros ($14.42 billion). This is more than four times the original project's costs. Flamanville 3 was originally expected to begin operating commercially in 2013.
"EDF has adjusted the schedule for the Flamanville 3 project, taking into account the state of progress of the operations and the preparation for start-up in an industrial context made more difficult by the pandemic," the company said. In December, Industrial Info reported that French President Emmanuel Macron had announced plans for the country to restart construction of new nuclear plants to meet growing energy needs and achieve carbon neutrality by 2050. According to reports, France will continue to add renewable energy to its portfolio, but also has plans to add six new EPRs. Industrial Info is tracking 28 active capital nuclear power projects, worth nearly US$59 billion, in France. Subscribers can click here for the reports. For additional information, see December 14, 2021, article - France May Relaunch Nuclear Power Program.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
