EDF: The bill for the forced closure of nuclear reactors increased by 5 billion

EDF: The bill for the forced closure of nuclear reactors increased by 5 billion

Posted on September 15, 2022, 11:00 AMUpdated on Sep 15, 2022 at 6:58pm

The number is bad. EDF announced, Thursday, that the bill for the forced shutdown of its reactors in 2022 will amount to 29 billion euros. In its most recent estimate dating back to July, EDF Group caused total operating surplus (Ebitda) to fall by €24 billion. But since then, electricity prices have continued to rise and new reactor delays have been announced.

This deficiency is completely unprecedented in the history of the EDF. To hit the scales, in 2019, before Covid-19 disrupted the reactor maintenance schedule, EDF Ebitda generated around €17 billion against sales of €71 billion.

Hell Mechanics

For an EDF, the mechanics are hellish. Since the end of 2021 the group has faced the problem of stress corrosion, an unprecedented general defect affecting its newest reactors in France, the group has had to shut down at least a dozen of its reactors as a precaution. However, the energy company sells in advance the electricity it sees as capable of producing in the next year. In 2022, when electricity prices continued to rise after massive fluctuations in the gas market manipulated by the Kremlin, the group had to buy back electricity at exorbitant prices in the wholesale markets to serve its customers.

The aggravating fact: In the middle of summer, the EDF had to announce the postponement of the operation of four reactors affected by the stress corrosion phenomenon. The group reported several difficulties, notably the work taking longer than expected. The result: EDF will have to buy back more electricity than expected in the wholesale markets in 2022. However, in August, when Gazprom was again emphasizing deliveries in Europe, electricity prices reached an unprecedented peak. Much more than 1000 euros. per megawatt-hour in Europe.

Discounted prices

To arrive at this figure of 29 billion, we must also add the impact of the decision taken by public authorities at the beginning of the year, to the discontent of the EDF. To cushion the shock of rising electricity prices in France, the group was asked to increase the quotas of nuclear electricity sold by 20 TWh at low prices in France under the Arenh Mechanism.

However, good news has crept into the EDF letter published today. The group confirmed its forecast for the production of nuclear electricity for 2022. Although this is a historical low, it is nevertheless necessary if we want to spend the winter without any problems. Moreover, this confirmation is necessary to mitigate the fever that has swept the electricity markets because many market players, including the RTE transmission system operator, do not believe that EDF is able to deliver on its promises.

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