Energy group: Why France nationalizes EDF

Status: 07/07/2022 4:52 p.m

France’s government has announced the complete takeover of the energy company EDF. She is not only concerned with financial stabilization, but also with strategic issues and the implementation of central projects.

By Julia Borutta, ARD Studio Paris

It has long been clear that things cannot go on like this: Europe’s largest electricity provider, Electricité de France (EDF), has gotten into financial difficulties. EDF has net debts of around 42 billion euros plus interest, and the rating agencies are rating the group increasingly poorly.

But it wasn’t the desolate condition of the company, which is already 84 percent state-owned, that the prime minister cited yesterday as the reason for the complete renationalization. During her government statement, Elisabeth Borne spoke of a strategic decision. “We need full control over our electricity production and its performance. In view of the war in Ukraine, we have to assert our sovereignty,” she said. “That’s why we will nationalize EDF 100 percent. This will allow EDF to implement the ambitious essential projects that are important for our future.”

That means building the six new pressurized water reactors announced by President Emmanuel Macron. In addition, eight more reactors are to be envisaged by 2050. Cost all in all: around 50 billion euros. The group should also invest in renewables.

State must invest eight billion euros

After yesterday’s announcement of nationalization, EDF’s stock price soared. Experts estimate that the purchase of the minority shares will cost the state around eight billion euros. Economics Minister Bruno Le Maire thinks it’s money well spent. He says: “Energy independence has no price.”

With the purchase, the government also wants to solve structural problems. These have contributed to the fact that the group is financially ailing. For reasons of competition, EDF has to sell its nuclear power to the competition below the market price. In addition, the state has made EDF specifications for price caps for end users. So did Electricité de France lower revenue.

In addition, half of all 56 reactors are currently idle. Expensive maintenance and an unforeseen corrosion problem in twelve reactors mean that EDF is currently far from being able to produce the amounts of electricity that the reactors could actually produce. “The big challenge will be to produce more electricity to get through the winter well,” says Economics Minister Le Maire.

Group faces restructuring

As far as the acute problems. In the long term, however, the question arises as to how the giant group can be made fit for the future. A restructuring has been considered for a long time: “Herkules” is the catchy name of the project, for which you would need the green light from Brussels.

“It’s possible that Hercules will be implemented. But it can’t be, either,” says Nicolas Goldberg, an energy specialist at the consulting firm Columbus Consulting. “This will be the second act. There are questions like: Will EDF not only continue to produce electricity, but also sell it? Will the company be split into renewables, nuclear power plants and hydroelectric power plants? – It’s possible. How will the group’s nuclear branch be financed , how will prices be regulated in the future?” With the government’s decision, only one thing is clear: it is putting a whole bunch of problems on its own table.

The French government wants to nationalize the EDF electricity company entirely

Julia Borutta, ARD Paris, 7/7/2022 4:47 p.m

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