EDF shares plunge after faults found at French nuclear power reactor

Steam rises from a cooling tower of the Electricite de France (EDF) nuclear power station in Civaux
Steam rises from a cooling tower of the Electricite de France (EDF) nuclear power station in Civaux, France, October 8, 2021. REUTERS/Stephane Mahe

PARIS, Dec 16 (Reuters) - Shares in EDF (EDF.PA) plunged on Thursday after the French power giant found faults at a nuclear power station and shut down another plant using the same kind of reactors, leading it to cut its core profit goal for this year.

France's Nuclear Safety Authority said EDF had informed it that it had detected cracks on the pipes of a reactor at the Civaux power plant in western France due to corrosion.

It said EDF, which has extended the outage of its Civaux station as a result and also stopped the Chooz plant in eastern France that uses the same technology, was investigating the cause of the faults. The watchdog will closely monitor EDF's review, it added.

Separately, the French Institute of Radiological Protection and Nuclear Safety, another public agency, said checks on other EDF reactors were likely to be necessary.

Shares in EDF were down nearly 13% at 1410 GMT.

The setback comes as France plans a major nuclear power station building programme, diverging from neighbour Germany which retreated from nuclear power after Japan's Fukushima nuclear disaster in 2011.

The outage of the four reactors, with a combined daily capacity of 6 Gigawatt (GW), equivalent to around 13% of current availability in France, also comes close to the peak winter season and with power prices at record highs.

"The risk of a power crunch for end-December is relatively weak but our models show that in January things could become more difficult," said Emeric de Vigan, head of energy data provider COR-e.

"It's too early to say how cold it's going to be, but if we have temperatures of 2 to 4 degrees Celsius below the season's average, then we'll start seeing some tensions."

European forward curve power prices surged to new contract highs on Thursday on the back of the French shutdown.

Foward curve contracts continued to surge on Thursday

France's biggest electricity supplier said late Wednesday that some faults were detected close to the welds on the pipes of the safety injection-system circuit in the two reactors at Civaux.

It said having the Civaux and Chooz reactors offline would result in a loss of about 1 Terawatt-hour by the end of 2021. As a result, it cut its core earnings (EBITDA) estimate to a range of 17.5 billion-18 billion euros from a previous target of more than 17.7 billion euros, based on current market prices.

JPMorgan Cazenove said the impact was likely to drag into next year.

It said the French utility could need to spend about 2 billion-3 billion euros ($2.3 billion-$3.4 billion) in 2022 to buy back some of its power to cover outages at the nuclear reactors.

"These estimates are a worst-case scenario, yet this is very material," it said in a report.

Jefferies analysts said the new core profit guidance for 2021 was 3.5% below consensus.

Additional reporting by Dominique Vidalon; Writing by Silvia Aloisi; Editing by Mark Potter and Mark Porter

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