EDF: historic loss of 5 billion to nuclear difficulties

In this era of rising electricity prices, the first half could have been a source of historic gains for EDF, which owns one of the largest fleets of nuclear reactors in the world. But the exorbitant bill for shutting down the concern’s reactors affected by corrosion, on the contrary, caused a massive loss.

In the first six months of the year, EDF certainly recorded a 66% increase in sales to 66 billion euros. But its earnings before interest, taxes, depreciation and amortization (Ebitda) literally plummeted to €2.7 billion from €10.6 billion a year ago. EDF’s consolidated net profit share is largely negative at a loss of 5.3 billion euros.

“Has there ever been a semester in the history of EDF where the numbers were this negative? I very much doubt it,” acknowledged the group’s CEO, Jean-Bernard Lévy, who probably presented his last half-year accounts on Thursday before handing over to his successor.

Expensive electricity bought on the markets

The shutdown of the twelve reactors affected by corrosion resulted in an operating loss of 7.3 billion euros. Government measures (increasing the amount of nuclear power sold at regulated prices, price caps, etc.) also led to an operating loss of 6.2 billion euros. Eventually, the drought caused a drop in hydraulic production and another €1.4 billion operating loss.

In the first half of the year, nuclear power generation fell by 15% and that from its dams by 23%. For EDF, the lack of nuclear production combined with the Ukraine crisis and rising prices create hellish mechanics. Since the production is insufficient to supply its customers, EDF buys back electricity on the market every month. However, the bill continues to rise as prices on wholesale electricity markets continue to rise.

Unfortunately, the second half was to get even worse for EDF’s accounts. “We expect a significantly lower Ebitda than in the first half of the year,” said Xavier Gire, CFO of the group. Overall, the impact of the lack of nuclear production on EBITDA during the year is estimated at 24 billion euros versus 18 billion previously expected.

The group still targets core electricity production of 280 to 300 terawatt hours (TWh) in 2022, then between 300 and 330 TWh in 2023. A significant part of this is likely to be mobilized again to lower electricity prices in France, via the Increasing the quantities sold at the regulated price provided by the “Arenh” mechanism.

hell spiral

“We think an Arenh cap of 135 TWh for 2024 and 2025 is a reasonable compromise. We hear the concerns expressed in the National Assembly and Senate. I can submit a corresponding amendment,” said Minister for Energy Transition Agnès Pannier-Runacher in the Senate on Wednesday. Currently, the maximum core power cap that EDF can sell to its competitors is 150 TWh.

To stop the spiral of hell, EDF will initiate its repair and control plan for its corrosion-affected power plants. This has just been validated by the Nuclear Safety Authority. The group will also have to delist very soon and return to the bosom of the state at 100%. A first step in a restructuring that could be more far-reaching.

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