EDF nuclear power plant in southern France
: 28 of 56 nuclear reactors are currently idle
Photo: FRED DUFOUR/ AFP
The balance sheet of the once proud energy giant Électricité de France - in short: EDF - for the first half of the year not only shocked investors, but also France's leading nuclear friend
Emmanuel Macron
(44).
A net loss of 5.3 billion euros, 28 of the 56 nuclear reactors in the country are currently shut down, operating profit has fallen by 75 percent, the forecast for annual energy output has been drastically reduced.
2022 will be a "challenging year", commented EDF boss
Jean-Bernard Lévy
(67) on the half-year balance sheet.
This might pass as the understatement of the year.
Enlarge image
EDF boss Levy:
"Special training" for the welder teams
Photo: SARAH MEYSSONNIER / REUTERS
The EDF case is not just about a corporate crisis, but about an energy and supply crisis in France - with repercussions throughout Europe.
The piles that are still connected to the grid are currently producing less electricity than they have since 1999 and will by far not be able to cover national demand in the approaching winter months.
The dream that France could support Germany and other countries with cheap and reliable nuclear power during the transition years towards renewable energies has turned out to be an illusion.
On the contrary: the neighbors are now supplying France with energy.
According to the
Federal Network Agency
, the former electricity net exporter imported more electricity from Germany than it exported in June and July.
This trend is likely to continue in the autumn and thus exacerbate the energy crisis in Europe.
The nuclear debacle is already seen as a decisive factor in the current market turbulence and as an incalculable cost risk for the future.
The announcement by EDF boss Lévy a few days ago that more nuclear reactors will probably have to be shut down in winter due to urgent maintenance work has driven the price of the traded electricity volumes to an interim record high.
In the midst of the energy crisis in Europe, Macron's nuclear strategy is not part of the solution, but a cost driver and thus a problem.
Mismanagement, planlessness and carelessness
How could it come to this?
Mismanagement and a lack of plan on the part of the EDF leadership, but also the carelessness of politicians have driven the group to the brink of the abyss.
CEO Lévy recently sent out several profit warnings.
And EDF's debts are so overwhelming at 43 billion euros that the parliament in Paris decided at the end of July to buy the remaining 16 percent of the shares and thus to nationalize the group completely in order to prevent EDF from going bankrupt.
The 56 nuclear reactors are hopelessly outdated, 41 nuclear power plants will reach their originally intended service life of 40 years within the next 5 years.
The management failed to provide in time for new power plants or for an alternative to nuclear power, from which EDF still generates around 75 percent of its electricity.
The maintenance effort was underestimated for years, now the costs are exploding and the company has to shut down its systems in rows.
The heat wave in France must also serve as an explanation for the dramatic drop in performance.
Some power plants were throttled because they mainly get their cooling water from the Rhone and this would have heated the river at full power.
Completely surprised by rust in the cooling system
In addition, rust has appeared on the water pipes of the cooling systems of the younger EDF piles.
Therefore, twelve nuclear power plants of the younger generation had to be shut down.
The EDF engineers were completely surprised, the group itself presented itself as helpless when it came to the "corrosion phenomenon": The nuclear safety authority had confirmed that the latest investigations into the defective cooling systems had been "appropriate", it said succinctly at the presentation the half-year balance sheet.
Efforts are being made to ensure that spare parts "are available as quickly as possible" and "special training" has been organized for the welding teams so that they can carry out the work "at a high level of quality".
It's not a quick fix.
The renovation work will take many months.
According to calculations by the French Court of Auditors, the renovation and repair of the existing reactors alone will cost at least 100 billion euros by 2030.
Marshall plan and billions demanded from the state
The deficiencies are so serious and the work so lengthy that the head of France's nuclear safety regulator,
Bernard Doroszczuk
, recently called for a "Marshall Plan" for the nuclear industry, including massive government investment.
Around 70 percent of the energy in France is produced in nuclear power plants - more than in any other European country.
The country's nuclear problems are apparently becoming a bigger problem than Russia's gas supply disruptions, according to
Norbert Rücker
, an economist at Julius Baer.
Nuclear friend Macron:
14 new reactors, nationalization and flight to the front
Photo: AFP
But France's economic politicians, who have now been called to the rescue, are also to blame for the malaise.
Macron's governing coalition has introduced a popular "energy shield" and has instructed state-owned EDF to sell almost half the electricity it produces at a reduced price.
"We experience this decision as a real shock," said EDF boss Lévy.
This price cap alone cost EDF around 8 billion euros.
When it comes to bad planning, EDF also blames politics.
As recently as 2014, the Energy Transition Act provided for the proportion of nuclear power to be reduced to 50 percent by 2025.
EDF therefore had no planning security.
In the meantime, Macron has conceded this requirement and is pushing ahead with the expansion of nuclear power all the more resolutely.
The flight forward also means that the government has only just pushed through nuclear power as a "sustainable" form of energy during the negotiations on the EU taxonomy.
Only with this label will the state-run EDF continue to be able to access cheap loans worth billions, which it needs to survive.
The EDF managers slept through a real energy transition.
The group currently produces less than 20 percent of its energy mix from renewable energies - although France offers good conditions for solar and wind energy plants.
Instead, the billions in future investments should flow primarily into nuclear power.
Cost explosion for new EPR reactors
Up to 14 new nuclear power plants are to be built in France by 2035.
As a precautionary measure, EDF has already announced that the new reactors will be "extremely expensive".
The group has already experienced a construction and cost debacle with its new pressurized water reactor (EPR) in Flammanville in Normandy.
After five years of construction, the reactor was originally supposed to be connected to the grid in 2012 – now it should be mid-2023 at the earliest.
The costs have climbed from the initially planned 3.3 billion euros to 13 billion euros.
Investments in the hundreds of billions are estimated for the planned new buildings.
A huge program that the taxpayer has to pay for if necessary.
It's a persistent problem.
Nobody currently knows how France intends to close the supply gap in the coming years.
An extension of the lifespan of the dilapidated piles is already being discussed.
"With the same money that we now want to use to extend the lifespan of nuclear power plants, we could also build up to 70 offshore wind farms," said Left Party MP
Antoine Léaument
during the debate on the complete nationalization of EDF.
"We could generate more electricity with this than with our nuclear reactors."
And his party leader
Jean Luc Mélenchon
(71) attested: "Today, France is the country in the EU that is furthest behind its targets for renewable energies."
For EDF boss Levy, the energy mix is currently of secondary importance.
For the group, which can no longer guarantee security of supply in France, it is now a matter of survival.
The crash of its EDF, so much is clear, will also keep its European neighbors busy.
By 2030, the EU wants to be free of Russian gas – the states should better not count on France in its traditional role as an energy exporter.