France launched its nuclear program in the 1970s to reduce its dependence on fossil fuels as unprofitable coal mines progressively closed and Western economies were roiled by two consecutive oil shocks. EDF commissioned 58 reactors between 1978 and 2002, which has seen the country get more of its power from nuclear than any other nation. It also means it’s got an aging energy infrastructure, with its oldest plants embarking on large modernization programs to extend their lifecycle.
“The French nuclear fleet is now aging, meaning that some plants will have to be halted in the next 15 years,” said Marc-Antoine Eyl-Mazzega, director of the Center for Energy at the Institut Francais des Relations Internationales. “Some say that nuclear energy is very risky. Renewable energies come with tens of thousands of jobs, but France has been lagging behind.”
After commissioning its 58th reactor in 2002, EDF started building a new type of atomic plant in 2007. Its flagship Flamanville project in Western France was initially due be completed in 2012, though it’s been beset by construction problems.
EDF has also faced setbacks at its existing fleet of French reactors. In 2016, its main supplier Framatome disclosed anomalies in manufacturing records for large equipment, leading to prolonged halts at almost a third of the utility’s reactors. Tuesday’s announcement’s by EDF that some of its reactors may contain substandard components made by Framatome, now 75.5%-owned by EDF, is reigniting fears of prolonged shutdowns.
Given France gets three quarters of its energy generation from nuclear energy, the financial impact of disruption could be severe.
“There should be a significant uplift in French and Central European power prices based on likely future French nuclear outages, which could potentially mean EDF having to buy French generation output that it is short at a premium price,” Barclays Bank analysts Peter Crampton and Dominic Nash wrote in a note.
The stakes are high for the French nuclear industry, which employs about 220,000 people. President Emmanuel Macron has pledged to reduce nuclear output to 50% of France’s power mix in 2035 by shutting down 14 aging reactors to make room for renewables.
Even as the price of electricity stemming from wind and solar has sunk below that of new nuclear builds, the French president has asked EDF to prove by mid-2021 that it can build more competitively-priced nuclear plants, to provide large volumes of carbon-free power as a 100% renewable electricity system seems likely to remain out of reach for at least several decades.
It comes as state-controlled EDF struggles to fund the billions of euros needed each year to maintain its nuclear plants and build new ones within existing cash flows. It’s considering spinning off a minority stake in an entity that would include its power-distribution, renewables and energy-services businesses to raise funds.
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