The French government is breaking down the idea the private sector always does it better by fully nationalising its giant electricity utility, EDF. The French government said the step is needed to manage the transition away from fossil fuels at a time of an energy crisis and the war in Ukraine.
Prime Minister Élisabeth Borne, addressing the National Assembly for the first time since President Emmanuel Macron appointed her to the role, said the government intended to hold 100% of EDF’s shares, compared with the 84% it owns currently.
It was only February of this year that the French government decided to inject €2.1 billion into EDF as part of a €2.5 billion rights issue designed to shore up its capital in the face of the surge in energy costs across Europe in late 2021 and early 2022 (and before the burst from the Russian invasion of Ukraine).
The government justified paying its share of the fundraising as easing the financial pain inflicted by nuclear reactors going offline and the state making the firm supply power below market prices.
“We must have full control over our electricity production and performance,” Borne said in her first state-of-the-nation speech to Parliament on Wednesday, as she tried to court opposition parties to avoid parliamentary deadlock.
“We must ensure our sovereignty in the face of the consequences of the war and the colossal challenges to come … That’s why I confirm to you the state’s intention to own 100% of EDF’s capital.”
The option of fully nationalising EDF was flagged by Macron earlier this year as he intends to make the company the main pillar of a massive investment in new nuclear reactors.
EDF is one of the world’s biggest electricity producers, but the company is facing delays and budget overruns on new nuclear plants in France and Britain, and corrosion problems at some of its ageing reactors, which have undermined its share price.
Half of its nuclear reactors in France are currently offline. EDF has also been hurt by government rules forcing it to sell power to rivals at a discount while prices hit record highs.
The company has estimated that output losses will reduce profits by €18.5 billion ($A27.6 billion) and the discounted power sales will cost it €10.2 billion.
Its debt is expected to rise 40% this year to more than €61 billion.
The French government partially denationalised EDF in 2005 by selling shares to raise around €5 billion. The sale price was €83.10.
Wednesday saw EDF shares close up more than 14% on news of the nationalisation at €8.98, a fraction of that sale price 17 years ago. EDF has 576 million shares on issue to non-government shareholders. Nationalising the company would cost around €4.5 to €5 billion at most.
“EDF is one of the world’s biggest electricity producers, but the company is facing delays and budget overruns on new nuclear plants in France and Britain, and corrosion problems at some of its ageing reactors, which have undermined its share price. Half of its nuclear reactors in France are currently offline.”
This piece of Information needs to be driven home to those in the Murdoch Media who believe Nuclear power is the answer to all of our energy woes, including the outright fallacy that it is cheaper.
This is misinformation, not information. The reactor in France was the second prototype and as expected, did cost money. But the reactors in Britain are the fifth and sixth EPRs. Three years into the build, they have only been delayed by Covid.
These reactors are built to generate profits for 80 years. After 30 years, they have repaid their finance. With fuel being a tiny component of electricity bills, their production over the other half century is money for jam. In contrast, renewables are only profitable while they can parasitise an existing gas-based grid. In the zero-fossil future, renewables could only function as renewables-plus-batteries. When you cost that out across a century, the resulting cost is eye watering. 100% renewables would be impossibly costly. In contrast, mass-produced nuclear will become progressively cheaper.
Well I don’t know where you get your information, promotional brochures? The 2019 DIW Berlin study (among others) found that not one nuclear reactor has ever run profitably. There isn’t a single nuclear reactor, including those currently under construction, that haven’t had massive cost blow outs.
Those who champion nuclear power never consider the cost of the perpetually poisonous waste it creates. It is not possible to assure the safety or cost of adding to and storing a substance that remains toxic for thousands of generations.
Yep reactors are a bit like mining costs, ask a person who works in the real world and see how the costs run. Huge startup costs, and therefor huge tax deductions, then a stream revenue and only maintenance costs.
A simple DCF analysis would show the lack of profitability of these reactors
The British govt bought back all the North Sea oil back in the 70s and reaped $billions until a corrupted govt sold it off again some ten years later for short term gains. By contrast Norway still reaps many billions in oil profits for their people. I’m sure there’s a lesson there somewhere, but I fear we’re too dumb to learn it.
Bref, simple really one lot are dairy farmers and believe in milking a bit every day others are beef farmers who just slaughter the cow once and look for the next cow.
Fact is, we need every source of electricity that produces minimal CO2. When do we need it? Now! Bury coal.
Go the Frogs!
“Half of its nuclear reactors in France are currently offline”. The author lets you believe that half of France’s nuclear generation has been disabled. You’re being taken for a ride here. Checking the facts at eco2mix (see) just now, I see that nuclear is generating 68% of its electricity, much as it has for years past. Unlike its neighbours, France is only relying on gas for 12% of its electricity. In contrast, Germany is almost crippled by its dependence on Russian gas. Germans have been expanding renewables-plus-gas for years, and must now pay for their ideological folly.
Most countries are going to have to nationalise their power generation, to ensure economies of scale and to override vested interests. France is way ahead of the rest of us there. By bearing the development costs of their giant EPR reactors, France is now ready to rebuild its nuclear supply chain and plant more economical EPR reactors all over its National Grid. They will be reaping profits as the countries around them buy EPR reactors for their own electricity grids.
In France the government owns the electricity supply, here its the other way around.