France to reduce reliance on nuclear energy, may boost stake in EDF

Reuters , Tuesday 27 Nov 2018

French President Emmanuel Macron flanked by Prime Minister Edouard Philippe, attending the meeting "The presentation of the strategy for ecology transition" at the Elysee Palace, Paris, France November 27, 2018. (Reuters)

France will steadily reduce its reliance on nuclear power to 50 percent of the energy mix by 2035 but will only close two reactors before the end of the current presidential mandate in 2022, President Emmanuel Macron said on Tuesday.

A source close to the Elysee presidential palace said the government will also consider boosting the state's 83.7 percent stake in utility EDF and will ask the firm to make proposals about changing its structure.

EDF shares fell as much as four percent on the comments about the possible restructuring but then recovered to stand 1.7 percent lower at 1140 GMT.

The source said any alterations to the structure proposed by EDF would have to preserve the integrity of the utility and allocate adequate financing for each of its activities.

"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 source said.

The official declined to be more specific, but industry specialists expect that EDF could be asked to put its nuclear activities into a separate legal unit in which the state could raise its stake to 100 percent.

That would take the nuclear risk off the market and could make it easier for the French state to put in place a support mechanism for the struggling nuclear industry.

In a long-awaited speech on national energy strategy, Macron did not refer to EDF's corporate structure, but said the country would reduce its share of nuclear in power production to 50 percent by 2035, from 75 percent today.

He said France would not phase out nuclear entirely, as its neighbour and economic partner Germany plans to do.

Macron said 14 of state-owned utility EDF's 58 nuclear reactors would be closed by 2035, including four to six before 2030, two in 2027-28 and possibly two in 2025-26 if this does not jeopardise the security of power supply.

Already announced plans to shut two reactors at Fessenheim, close to the German border, will go ahead by the summer of 2020, Macron said.

"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," he said in an hour-long televised speech.

The previous government of socialist President Francois Hollande passed a law aiming to reduce the share of nuclear to 50 percent by 2025. Macron had committed to respect that promise in his election platform, but a few months after his election he dropped the objective, frustrating environmentalists.

Macron said the closure schedule would depend on the evolution of France's energy mix, including the planned increase of renewable energy sources and the expansion of interconnection capacity with neighbouring countries.

"It is a pragmatic approach ... which takes into account security of supply," he said, adding that France would not close nuclear reactors to the point that it would have to import power from other countries.

An Elysee note on the long-term energy strategy said the reactor closure schedule will focus on the oldest reactors, notably in Tricastin, Bugey, Gravelines, Dampierre, Blayais, Cruas, Chinon and Saint-Laurent.

Macron said the closures at Fessenheim would happen irrespective of the start-up date of a new reactor in Flamanville, northwest France.

EDF has repeatedly said it does not want to close any reactors besides Fessenheim before 2029.

The president said nuclear would remain a key element in national power supply but that a decision on building new nuclear reactors would not be taken before mid-2021.

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