French President-elect Macron supports reducing nuclear share

17 May 2017

French President-elect Emmanuel Macron has endorsed current President Francois Hollande’s plan to reduce nuclear output from 72% of total electricity generation last year to 50% by 2025. However, he told WWF France in February that he was not sure that the 2025 goal was “reachable,” and that “strategic decisions” on that fleet will be made toward the end of 2018 or beginning of 2019, after the Autorite de Surete Nucleaire (ASN - Nuclear Safety Authority) outlines its conditions for approving the life extension of reactors.

The 50% target might be reached between 2030 and 2033, a Macron adviser, who asked not to be named, told Bloomberg in April. That objective could be fulfilled sooner if technical issues affect EDF’s reactors or ASN imposes tough conditions life extensions. EDF said on 9 May that Macron's target to reduce the nuclear share is a "long-term" target, adding that it is hoping for UK-style state support for the construction of new nuclear plants. “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,” EDF Chief Financial Officer Xavier Girre said on a conference call. It would be “appropriate” to consider a form of contract for difference for future nuclear constructions in France, referring to the mechanism agreed with the UK government that guarantees power prices for the Hinkley Point reactor project.

Girre told analysts on 16 May that targets in Macron's programme for a CO2 floor price should be positive. "There are also other points in his programme and public statements, including the development of renewables, and also a clear target for the energy mix in the long term and not specifically stated at the 2025 horizon. These points are positive and clear points," he said.  He 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, despite reporting a 1.5% drop in first-quarter sales. The utility raised about €8bn ($8.7bn) in the first quarter by selling new shares and a 49.9% stake in the French power grid to renovate its French nuclear fleet and build new generators, including two new reactors in the UK. “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, according to Bloomberg. “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.”

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