Lwill the rout of EDF end one day? Friday, February 17, the French energy company announced the worst results of its existence: 17.9 billion euros in losses in 2022, with a debt which reached the record level of 64.5 billion euros. This is one of the biggest losses of a French company in recent history. This fall may seem paradoxical: on the European markets, wholesale prices have exploded and EDF, the leading operator of nuclear reactors in Europe, should have benefited greatly and seen its profits climb.
But the group was struck by a double curse. On the one hand, it experienced a series of setbacks in the nuclear fleet, which led to the most powerful reactors being shut down during a crucial period, winter. This loss of electricity production – to which must be added the low availability of dams due to prolonged drought – cost EDF some 29 billion euros.
On the other hand, the group had to financially assume the government’s desire to limit the rise in electricity prices for all French people from February 2022. The “tariff shield” policy thus cost the public company more than 8 billion euros.
Loss of skills
These difficulties illustrate two of the greatest challenges facing the energy company. First, the weaknesses of the nuclear industry. The corrosion problems encountered on some of the reactors were added to increasingly long maintenance times and dragging work sites on other reactors. Result: the production of French nuclear power plants is at its lowest for thirty years. And the years to come promise to be difficult: many reactors will in turn be subjected to major work to ensure the extension of their lifespan by ten years. In this field, the nuclear industry is facing the aging of installations which will not last forever and the loss of skills which it has not succeeded in stemming. This project is a priority for the group’s new CEO, Luc Rémont, and the challenge is immense.
The other aspect is just as worrying: the government’s short-term policy, with the introduction of the tariff shield, illustrates the lack of strategic vision on the part of the State. The nationalization of the company, almost complete, in no way solves the industrial, economic and financial challenges. For fifteen years, the State has imposed a messy and sometimes contradictory policy on EDF.
In this regard, the current President of the Republic is just as inconsistent as his predecessors. After closing the Fessenheim power plant (Haut-Rhin) and announcing the upcoming closure of twelve reactors, Emmanuel Macron has turned around and now wants to keep them and build new ones.
Mr. Macron also tried to carve up the group, before deciding to nationalize it. And the government continues to defend the Arenh mechanism (by which EDF must resell part of its production to its competitors at a preferential price), which is nevertheless a « poison » for the company, according to its former CEO Jean-Bernard Lévy.
However, to deal with the climate and energy crises, France and Europe need a reliable energy company, capable of investing massively while being supported by public authorities which have a long-term vision. EDF’s results show that everything needs to be rebuilt.
