Photographer: Balint Porneczi/Bloomberg

EDF to Ask Macron for Helpful Rules for French Nuclear Fleet

  • Company maintains 2017 targets as first-quarter sales decline
  • Macron’s long-term target for the energy mix is positive: CFO

Electricite de France SA, the world’s largest operator of atomic power stations, will seek new rules from President-elect Emmanuel Macron that would help it build new reactors and allow its existing fleet to remain competitive.

“We’ll discuss a consistent set of regulations with Emmanuel Macron’s team and the new government in order to set the right, positive and fair set of regulations for our industry,” the state-controlled utility’s Chief Financial Officer Xavier Girre said Tuesday on a conference call.

It would be “appropriate” to consider a form of contract for difference for future nuclear constructions in France, the CFO said, referring to the mechanism agreed with the U.K. government that guarantees power prices for the Hinkley Point reactor project.

Girre also welcomed Macron’s support for a minimum cost for carbon and called for a “less biased” price mechanism for the so-called ARENH sales system in France. EDF is required to offer about a quarter of its annual French atomic output to rivals under ARENH, with the aim of increasing competition on the domestic market.

EDF maintained its profit targets for this year and beyond even as it reported a 1.5 percent drop in first-quarter sales Tuesday. The utility raised about 8 billion euros ($8.7 billion) in the first quarter by selling new shares and a 49.9 percent stake in the French power grid as it spends billions to renovate its French nuclear fleet and build new generators, including two new reactors in the U.K.

Macron Supportive

“The current situation is unsustainable for EDF, at a time when it needs to ramp up investments in order to support France’s security of supply,”  Vincent Ayral, an analyst at JPMorgan Chase & Co., said in a research note. “Macron understands well the challenges faced by EDF and the implications for the country’s security of supply. As such, he is likely to be pragmatic and overall supportive of the nuclear operator.”

Macron has endorsed current President Francois Hollande’s plan to reduce nuclear output from 72 percent of France’s total electricity generation last year to 50 percent by around 2025. At the same time, the president-elect told WWF France in February that he couldn’t say whether the 2025 goal was “reachable,” and that “strategic decisions” on that fleet will be made toward the end of 2018 or beginning of 2019, once France’s safety authority outlines its conditions for approving the extension of reactors’ lifetime.

The 50 percent target might be reached between 2030 and 2033, a Macron adviser who asked not to be named because the matter isn’t public told Bloomberg last month. That objective could be fulfilled sooner should technical issues affect EDF’s reactors or France’s nuclear watchdog impose tough conditions on extending those plants’ lifespans to at least 50 years, the person said.

Macron’s target for the energy mix is “in the long-term, and not specifically stated at the 2025 horizon,” and his support for renewable investments is “positive,” the EDF CFO said Tuesday. EDF is working to get the regulator approval for the lifespan extension of all its reactors, Girre added.

EDF shares were up 1.4 percent at 8.83 euros at 9:05 a.m. in Paris, trimming this year’s loss to 1.6 percent.

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