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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--France's leading energy company Électricité de France (EDF) (Paris) has posted its worst financial losses in 20 years and has warned that prices will rise for its flagship U.K. nuclear power project.
The company posted record annual losses of 17.9 billion euro (US$19.1 billion) for 2022, citing a price cap brought on by the war in Ukraine and spiraling repair costs to a large number of its nuclear reactors. Luc Rémont, chairman and chief executive officer of EDF, commented: "The 2022 results were significantly affected by the decline in our electricity output, and also by exceptional regulatory measures introduced in France in difficult market conditions. Despite all the challenges, EDF actively focused on service and support for all its residential and business customers, and made every endeavor to ensure the best generation fleet availability for the winter period. 2022 also confirmed the new impetus for nuclear power in France, and accelerated expansion for renewable energies. The French President, during his speech at Belfort, announced a clear, coherent energy plan and the EDF group's strategy is part of it. Our priority right now is improving EDF's financial position, and I am confident that the benefits of the actions taken will begin to show in 2023."
EDF revealed that prices will again rise for its ongoing Hinkley Point C nuclear power project, the U.K.'s first new nuclear power project in almost 30 years. In its statement it warned that costs could rise by up to 20% to more than £32 billion (US$38.7 billion), up from last year's estimate of almost £26 billion (US$31.4 billion). In 2016, the original price was £18 billion (US$21.7 billion). EDF blamed the rising costs on inflation and the strong possibility that its Chinese partner, China General Nuclear Power Corporation (CGN) (Shenzhen), will not pay its share of extra payments to finance the plant. It stated: "The agreements between EDF and CGN include a compensation mechanism between both shareholders in case of overrun of the initial budget or delays. This mechanism was triggered in January 2023. As the project's total financing needs exceed the contractual commitment of the shareholders, shareholders will be asked to provide additional equity in H2 2023. The probability that CGN will not fund the project after it has reached its committed equity cap is high. The EDF Group would be required to contribute in place of CGN."
EDF was hit by a "tariff shield" put in place by the government in 2022 to protect citizens from surging power prices, sparked by Russia's throttling of European gas supplies as part of its ongoing invasion of Ukraine. In 2022, EDF's power price increases were limited to 4% with that expected to ease somewhat this year with a 15% cap. However, with prices and demand for power hitting record highs in 2022, half of France's fleet of 56 nuclear reactors were offline for scheduled maintenance and emergency repairs. Nuclear output fell 30% to its lowest levels since the late 1980s, and France was forced to import power for the first time in decades.
The French government is planning to take full control of EDF in an effort to secure its own energy supply and return to being a key exporter of power to Europe. It already owns an 84% stake but aims to take full control with a 9.7 billion (US$10.3 billion) payment. Last November, Industrial Info reported that the French government was powering ahead with legislation to fast-track the construction of more nuclear reactors to help combat its energy woes. French President Emmanuel Macron wants to build six new reactors based on the EDF's European Pressurised Reactor (EPR) design. For additional information, see November 23, 2022, article - France Powers Ahead with Faster Nuclear Rollout .
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The company posted record annual losses of 17.9 billion euro (US$19.1 billion) for 2022, citing a price cap brought on by the war in Ukraine and spiraling repair costs to a large number of its nuclear reactors. Luc Rémont, chairman and chief executive officer of EDF, commented: "The 2022 results were significantly affected by the decline in our electricity output, and also by exceptional regulatory measures introduced in France in difficult market conditions. Despite all the challenges, EDF actively focused on service and support for all its residential and business customers, and made every endeavor to ensure the best generation fleet availability for the winter period. 2022 also confirmed the new impetus for nuclear power in France, and accelerated expansion for renewable energies. The French President, during his speech at Belfort, announced a clear, coherent energy plan and the EDF group's strategy is part of it. Our priority right now is improving EDF's financial position, and I am confident that the benefits of the actions taken will begin to show in 2023."
EDF revealed that prices will again rise for its ongoing Hinkley Point C nuclear power project, the U.K.'s first new nuclear power project in almost 30 years. In its statement it warned that costs could rise by up to 20% to more than £32 billion (US$38.7 billion), up from last year's estimate of almost £26 billion (US$31.4 billion). In 2016, the original price was £18 billion (US$21.7 billion). EDF blamed the rising costs on inflation and the strong possibility that its Chinese partner, China General Nuclear Power Corporation (CGN) (Shenzhen), will not pay its share of extra payments to finance the plant. It stated: "The agreements between EDF and CGN include a compensation mechanism between both shareholders in case of overrun of the initial budget or delays. This mechanism was triggered in January 2023. As the project's total financing needs exceed the contractual commitment of the shareholders, shareholders will be asked to provide additional equity in H2 2023. The probability that CGN will not fund the project after it has reached its committed equity cap is high. The EDF Group would be required to contribute in place of CGN."
EDF was hit by a "tariff shield" put in place by the government in 2022 to protect citizens from surging power prices, sparked by Russia's throttling of European gas supplies as part of its ongoing invasion of Ukraine. In 2022, EDF's power price increases were limited to 4% with that expected to ease somewhat this year with a 15% cap. However, with prices and demand for power hitting record highs in 2022, half of France's fleet of 56 nuclear reactors were offline for scheduled maintenance and emergency repairs. Nuclear output fell 30% to its lowest levels since the late 1980s, and France was forced to import power for the first time in decades.
The French government is planning to take full control of EDF in an effort to secure its own energy supply and return to being a key exporter of power to Europe. It already owns an 84% stake but aims to take full control with a 9.7 billion (US$10.3 billion) payment. Last November, Industrial Info reported that the French government was powering ahead with legislation to fast-track the construction of more nuclear reactors to help combat its energy woes. French President Emmanuel Macron wants to build six new reactors based on the EDF's European Pressurised Reactor (EPR) design. For additional information, see November 23, 2022, article - France Powers Ahead with Faster Nuclear Rollout .
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
