November 27, 2018 / 11:26 AM / 15 days ago

EDF restructuring expected as France reduces reliance on nuclear

PARIS (Reuters) - France is considering restructuring state-owned utility EDF and plans a steady reduction to the country’s reliance on nuclear power, the government said on Tuesday.

French President Emmanuel Macron flanked by Prime Minister Edouard Philippe, Ecology Minister Francois de Rugy and Finance Minister Bruno Le Maire attends the meeting "The presentation of the strategy for ecology transition" at the Elysee Palace, Paris, France November 27, 2018. Ian Langsdon/Pool via REUTERS

In a long-awaited speech on energy strategy, President Emmanuel Macron said France would reduce the share of nuclear in the power mix to 50 percent by 2035, down from 75 percent today, rather than the total phasing out planned by neighbor Germany.

The fate of EDF, long a symbol of French industrial might and a world leader in nuclear technology, is a politically sensitive issue in France. It has already led to the resignation of Macron’s former ecology minister, Nicolas Hulot, who accused the president of dragging his feet on nuclear power.

“I was not elected on a promise to exit nuclear power but to reduce the share of nuclear in our energy mix to 50 percent,” Macron said in an hour-long address, adding that 14 of EDF’s 58 nuclear reactors would be closed by 2035.

EDF shares fell up to 4 percent on news of the plans, which a source close to the president’s office said could involve the state increasing its stake in the company. By 1630 GMT the shares were down 0.25 percent.

Macron’s action plan is broadly in line with EDF’s desire not to close any reactors before 2029, besides the previously scheduled closure of Fessenheim’s two reactors near the German border. No further closures are planned before the end of Macron’s term in 2022

Another two will be shut down over 2027-28 and a further two could face closure as early as 2025-26 if there is no risk of jeopardizing France’s power supply.

In his election campaign, Macron promised to stick to the former Socialist government’s target of reducing the share of nuclear to 50 percent by 2025. But he rowed back on the pledge a few months after taking office, angering environmentalists.

‘PRAGMATIC APPROACH’

As France reduces its dependence on nuclear energy, EDF is wooing overseas markets with the EPR model of reactor it is building at Hinkley Point, Britain’s first new plant in decades.

Macron said the schedule for shutting down reactors would depend on the evolution of France’s energy mix, including the planned increase of renewable energy and the expansion of interconnection capacity with neighboring countries.

“It is a pragmatic approach ... which takes into account security of supply,” he said.

An Elysee note on the long-term strategy said the closures would focus on the oldest reactors, including at the Tricastin, Bugey, Gravelines and Chinon plants. It also said that, to limit job losses, no sites would be closed completely.

Macron did not mention a possible EDF restructuring but the Elysee note said the state could raise its 83.7 percent stake.

“The state will consider boosting its stake in the capital of the company in line with the challenges and risks linked to the nuclear activity,” the note said.

Ecology Minister Francois de Rugy told a news conference that EDF’s structure was not necessarily the most efficient in the long run.

“We want EDF to remain an integrated group. There could be a parent company and subsidiaries,” he said.

Financial markets have long speculated that EDF’s nuclear activities could be put into a separate legal structure and renationalized, which would allow the state to subsidize the business and make nuclear energy available to EDF as well as its competitors.

Slideshow (3 Images)

Several of EDF’s major business activities are already operating as separate legal units, such as power grid operators RTE and Enedis, as well as its renewable energy division.

Greenpeace said that Macron had fallen prey to corporate interests.

“For the umpteenth time, the government has caved in to the nuclear industry lobby,” said Alix Mazounie, head of Greenpeace France’s nuclear campaign.

Additional reporting by Michel Rose and Jean-Baptiste Vey; Writing by Geert De Clercq; Editing by David Evans and David Goodman

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