Economy and business
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France is in a sea of doubts about electricity and, above all, nuclear power. With a debt of 42 billion euros and an extensive shareholder and industrial reorganisation plan pending, the state-owned electricity company EDF is postponing its conversion pending tariff discussions in Brussels and its environmental obligations. Emmanuelle Macron's government, however, is betting against all odds on its nuclear power plants, which account for almost 70% of France's electricity generation, as opposed to wind and photovoltaic plants, whose development is far from meeting EU targets.
The reorganisation of EDF will involve a separation of its activities. Nuclear and hydroelectric power plants, which in 2020 accounted for 67.1% and 12.1% of electricity production respectively, will be managed by a 100% state-owned EDF. The same will apply to the little that remains of fossil energy: 6.9% generated by combined cycle power plants (natural gas) and 0.3% from the last active thermal power plant. Everything else (wind farms and photovoltaic plants, with respective contributions of 7.9% and 2.3%) will pass to a second EDF, also controlled by the State, but with 30% private capital.
Part of the problems posed by the critical financial situation of EDF, which with its debt of 42 billion is not in a position to finance its ambitious investment plans, lies in Brussels. This is the tariff mechanism (ARNH) implemented since 2012, which allows alternative suppliers and large and medium-sized companies to purchase some 63 TWh of nuclear energy annually from the national electricity company, with regulated tariffs for long-term contracts (15 years), and also with fees and taxes of only 3 euros per MWh.
Paris has long been calling for a review of the remuneration system, arguing that its continuation would jeopardise EDF's financial viability and development plans. More seriously, the French electricity company needs to increase its resources to guarantee not only the stability of the service and the electricity system, but also the safety of its 56 nuclear reactors. Emmanuel Macron wants to have the problem fixed before the 2022 presidential elections. Brussels continues to offer some resistance, because what the French government is asking for does not fit 100% with EU competition rules.
But beyond EDF's financial woes, now more accentuated by the health crisis (last year, turnover and net profit fell by 3.2% and 87%, respectively, to 69 billion and 700 million euros), the big issue today is the future of the French nuclear fleet, all in the hands of the state electricity company: 19 plants built and operated since the 1970s and 1980s, with a lifespan of 40 years but which, with some controversy, have been extended for another 10 years.
Unlike Spain and other European countries (Germany, Switzerland, Belgium, Austria, Greece, Italy, etc.), France has no plans to abandon nuclear energy, with an installed capacity of 63.1 GW. Thus, despite the recent closure of the Fassenheim plant in Alsace (it did not comply with the safety rules required after the Japanese nuclear catastrophe at Fukushima) and four others planned within a decade (from 2025), due to expiry dates, by 2035, France will maintain 44 active nuclear reactors in 14 plants (some of which have old pipes and welds), which will continue to provide 50% of the electricity consumed in the country.
Moreover, it is possible that when the time comes for the planned closures, the Nuclear Safety Authority (ASN) will give in to pressure from the government of the day to extend the life of the reactors beyond the 50 years allowed until now. Proof that France will continue to be strongly committed to nuclear is the project to build six EPRs - third-generation reactors using pressurised water - with a capacity of up to 1,900 MW, double that of the current reactors. Emmanuel Macron did not have a clear idea about this when he became president, but according to analysts, he is now just waiting for the right moment to give his "green light".
He will most likely announce his decision before the 2022 presidential elections. Not so much because of the risk of jeopardising the project (the far-right leader Marine Le Pen, who has a serious chance of becoming president, also sees no alternative to nuclear energy), but as a matter of prestige. Macron would thus guarantee to see his name associated with a historic decision (the construction of the EPRs by EDF will take some 15 years, at an estimated cost of more than 47 billion euros), as if he wanted to imitate General de Gaulle, who took on the paternity of the French nuclear project, which began in the 1960s.
In fact, France is already developing an EPR reactor in Normandy, at the Flamanville nuclear power station. But from the very beginning, everything went from bad to worse, to the point that the project sounds today like a nightmare for both EDF and public finances. Started in 2007, with a "pharaonic" budget of 3.5 billion euros and a construction period of 5 years, according to the latest estimates, the construction of the first French EPR will only be ready in 2024, i.e. 12 years behind schedule, and by then, the investment made will be between 12.5 and 19.1 billion euros.
The same thing happened, or almost happened, with another French EPR project, but developed at the Finnish nuclear power plant of Olkiluoto, whose construction, which started in 2001, also turned out to be a compendium of technical problems, missed deadlines, brutal cost increases, etc. EDF only took over responsibility for the project in 2015, following the bankruptcy of its subsidiary Areva, which fell victim to its nuclear ambitions. What is certain is that by 2022, when it is operational (13 years late), the investment made will have tripled, reaching - and perhaps exceeding - 9 billion euros.
However, apart from the problems related to the quality of welding and some infrastructure, nobody questions EDF's know-how, which has been successfully applied in other EPR projects around the world. Specifically, in the only four EPRs already operational: two in China (Taishan) and two in the United Kingdom (Hinkley Point). The French utility is also participating in the auction for the construction of another 6 EPRs in India (Jaitapu): a pharaonic project, which, with an installed capacity of 9,900 MW, will cover the energy needs of 70 million households (140 million consumers). Its development will take about 15 years and will involve an investment of at least 38 billion euros.
In any case, with so much nuclear energy installed and planned in the country, and without having suffered any major national disasters (the "risks" reported at the Fassenheim and Tricastin plants cannot be compared with the Chernobyl and Fukushima catastrophes), the French are in the minority in criticising the delay in the deployment of renewable energies. It could even be said that, for many French people, the possibility of seeing the landscape "adulterated" by gigantic wind farms and photovoltaic parks is more repugnant than living with nuclear power - a CO2-free source and therefore essential to combat climate change.
The fact is that the share of renewable energies does not exceed 25%, and that more than half is accounted for by hydro, which ended 2020 with a renewable mix of 50.4%, compared with 32.9% for onshore wind farms, which, despite having overtaken natural gas for the first time, still account for only 7.9% of the country's total electricity generation. With offshore wind power, France is still at the bottom in Europe: it has only one wind farm connected to the grid, compared with 2,300 in the UK, 1,500 in Germany... The same goes for photovoltaic energy, which accounts for only 2.3% of the country's electricity generation.
So what would the French be without their nuclear energy?
