Spreading corrosion problems, delays in Flamanville, obligation to sell electricity at a loss to its competitors: EDF has had a series of difficulties this week and saw its stock market price plunge on Friday, at a time when the government is nevertheless counting more than ever on the national champion.

Around 11:15 a.m., the title lost 16.08%, to 8.69 euros, in a market down 0.70%. The reaction is “quite violent, but we could expect it”, commented Nicolas Bouthors, analyst at Alphavalue, with AFP, listing the accumulation of bad news.

In order to limit the rise in electricity prices for consumers, the French government on Thursday asked EDF to increase by 20% the volume of nuclear electricity sold at a reduced price to its competitors this year, from 100 to 120 terawatt hours. (TWh), i.e. up to 40% of its planned production.

This decision will cause the group, of which the State is the main shareholder, to lose billions, but it will allow the government to honor its promise to limit the increase in regulated prices to 4% in February. A promise that turned into a puzzle, while the mechanical increase would have been around 35% to follow market prices.

In financial terms, EDF announced Thursday evening that the impact of this measure on its gross operating surplus for 2022 would be 7.7 to 8.4 billion euros.

Figures “which can scare investors”, but Nicolas Bouthors still sees two positive points: the market expected to see the volume of electricity sold off rise to 130 TWh and the price (46.5 euros per MWh) has been increased, which makes it possible “to reduce the total cost for EDF”.

According to him, the cost of this measure is also explained by an extremely unfavorable calendar, with high prices on the wholesale market, persistent tensions on gas and the recalculation of regulated tariffs in February. “By announcing this upgrade now, it leaves a ridiculous margin for EDF to buy back these 20TWh on the market.”

It was the “only lever available to the government which is in a political process as the elections approach”, notes the analyst, stressing that the promise of a tariff shield (in particular through a reduction in tax ) had been announced by Prime Minister Jean Castex when wholesale prices were much lower, at the end of September.

– “Alarming” news –

Second bad news for EDF: the extension of the shutdown period of five of the 56 reactors in its French nuclear fleet. The group has therefore revised its nuclear production forecast for 2022 downwards, to 300/330 TWh, against 330/360 TWh previously.

Today, ten of these reactors are shut down for maintenance or other, which represents 20% of French nuclear production capacity. Other plant closures, in the middle of winter when electricity consumption is high, could disrupt the country’s electricity supply, or even create power cuts.

On Thursday, the Institute for Radiation Protection and Nuclear Safety (IRSN) told AFP that a reactor at the Penly power plant (Seine-Maritime) was also affected by a corrosion problem on a safety system already detected or suspected on four other EDF reactors currently shut down.

The fear is now that other reactors are affected. Thursday’s news is all the “more alarming since Penly is designed differently” from the Civeaux and Chooz reactors, and that “the corrosion problems do not seem to be attributable only to a certain type of reactor”, according to Mr. Bouthors.

“When we know the group’s financial structure, its already high indebtedness and its financing needs (…) there will still be a hole to fill in 2023 and a capital increase or an issue of hybrid securities is not to be expected. exclude,” he adds.

What financial impact in 2022 for the group? Oddo BHF analysts expect a gross operating surplus (Ebitda in financial jargon) of around 10 billion euros. To be compared to the 17.7 billion expected by EDF for the whole of 2021.

Finally, a new delay for the new generation EPR nuclear reactor under construction in Flamanville (Manche) was announced on Wednesday. It should not start until the second half of 2023, instead of the end of 2022.



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