France agrees compensation for Fessenheim NPP closure

29 August 2016

The French government has agreed to pay compensation to state-owned utility Electricite de France (EDF) to shut down two 900MWe units at the Fessenheim NPP, the ministry of energy said on 24 August. The continued operation of Fessenheim, France’s oldest nuclear power plant, has been a contentious issue with neighbouring Germany and Switzerland.

"An agreement has been reached with EDF providing for staggered compensation with a first stage of €100m ($114m),” a ministry spokesman said. However, he did not confirm a Bloomberg report citing informed sources that the overall compensation package could total at least €400m, noting  that several payments would follow the initial one, their schedule depending on several factors including the price of energy over a period of years. The agreement must be presented to EDF’s workers committee on 14 September and also reviewed by the board.

Before being elected in 2012, French President Francois Hollande undertook to close the plant by the end of his five-year mandate. France plans to reduce the share of electricity it gets from nuclear power from some 75% to 50% by  2025.  Last year, a law was passed capping nuclear capacity at its current level of 63.2GWe, which means Fessenheim will have to close toward the end of 2018  as soon as EDF has completed the 1,650MWe EPR reactor at unit 3 of the Flamanville NPP.

The Fessenheim plant, near the Rhine River on the border with Germany, was completed in 1977. Seismic activity concerns have been cited by those opposed to the plant, although it is designed to withstand an earthquake five times greater than the strongest on record in the region, that struck Basel in Switzerland in 1356, according to EDF. Germany’s Energie Baden-Wuerttemberg and Swiss group CNP are entitled to 17.5% and 15% respectively of Fessenheim’s output, which last year accounted for more than 3% of France’s nuclear production. In 2015, EDF spent more than €67m to improve Fessenheim’s safety.

EDF said in July that it had agreed with the government that compensation would include a fixed amount to cover the cost of closing and decommissioning the two reactors, as well as other spending such as retraining staff. It would also include variable payments to cover any earnings shortfall, based on power-market prices until 2041 and volumes from other similar plants.



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