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Electricite de France (EDF) now recognising the reality that new nuclear power is not economically viable

FT 23rd April 2018 , Nick Butler: In the rapidly changing global energy environment nothing is
sacred, no business model is beyond challenge and no company is safe. The
latest business being forced to rethink and restructure is the French state
group Electricité de France.

EDF has become a symbol of technical weakness
and French decline. But, as with so much else in France since the arrival
of an ambitious president who feels no need to defend decisions of the
past, change is becoming possible.

For all its problems the company could be reborn as a successful player in the new energy economy. But where would
that leave nuclear power? The continuing transformation of the global
energy market is not just about climate change and the move to a lower
carbon economy. It is also about the advance of new technology, the
changing geography of the energy market in favour of Asia and, above all,
the move from a time of scarcity and energy insecurity to an age of plenty.

Nuclear costs remain too high, private investors sensibly run away from the
construction risks involved and, crucially, there are alternatives. Wind
and solar costs have fallen dramatically. In many markets they are now half
the cost per megawatt hour of large-scale new nuclear.

The prospect of commercially viable techniques of grid-level storage opens the way for an
even bigger shift. If the challenges of intermittency can be overcome and
the need for subsidies removed or much reduced, wind and solar can become
the natural economic choice for energy supply.

At last, EDF appears to be recognising reality. There is much discussion of the company being divided
in two, with the legacy nuclear assets held by the French government and
the rest of the business, including a major new division called EDF
Energies Nouvelle, being allowed to operate on proper commercial terms in
the open market, under new management.

The company is also pulling back from further investment in new nuclear. UK chief executive Simone Rossi has
for the first time talked about the possibility of the company dropping its
interest in the next prospective nuclear venture at Sizewell in Suffolk. To
go ahead, he said, would require a new financial deal.

In the absence of enthusiastic private investors that can only mean funding from the French
or British governments – and Mr Rossi should not hold his breath for that
given the state of public finances in both countries. If EDF steps out of
the new nuclear business, it will be the end of European involvement in the
sector. With nuclear power in the US also in real trouble that leaves
Japan, Korea and China as the main players. Such is the tough logic of
globalisation.
https://www.ft.com/content/39f30854-4001-11e8-803a-295c97e6fd0b

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April 25, 2018 - Posted by | business and costs, France

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