No plan B for France

After we recorded this episode, French President Macron announced plans to build up to 14 reactors by 2050. But earlier in the week, EDF announced that it would cut its available 2022 nuclear output by about 5% to between 295 and 315 TWh, a record low.

Listen to a discussion on the latest corrosion problems at the country’s nuclear plants and what they could mean for supply security and prices across north-west Europe. Is building more reactors the answer, and are such plans economically viable?

Guests:

• Chris Eales, Editor France, Montel
• Paolo Coghe, CEO, Acousmatics

Transcript

Richard Sverrisson, Editor-in-Chief, Montel: 0:05

Hello listeners and welcome to the Montel Weekly podcast, bring You Energy Matters in an informal setting. This week, we return to France. It's been quite a week for the country's nuclear plants. On Monday, EDF announced that it would cut its 2022 nuclear production target by about 5% to between 295 and 315 terawatt hours. Then after we recorded this episode. President Macron announced plans for new reactor builds. I caught up with Chris Eales editor France at Montel after our recording ended. So Chris, what did Macron say?

Chris Eales, Editor France, Montel: 0:37

Yeah Macron has said that France will launch, will build six EPRs with the first due to come online by 2035. He also said that they would study options to build eight more reactors in horizon of by 2050 in line with carbon targets. He also said that he wanted EDF to extend all of its reactors or as many reactors as possible beyond 50 years of running times. And that would have to be in line with France's Nuclear Safety Authority, ASM. That's quite interesting. He also talks about a massive development of renewable energy, saying that they would increase solar targets by tenfold. By 2050 with the aim of installing a hundred gigawatts of solar capacity by targeting 40 gigawatts of offshore wind. By the same time, France will put in place new regulation of the sale of EDFS nuclear output, which means replacing the current system. The current system is called Aaron, so they will replace that where under this system, EDF is must sell. Output 42 euros to rivals in France. Those are the major major points. I think there's also a reiterating in a billion euro investment in sm small reactors and investments in hydrogen, which he's already has already mentioned in the past.

Richard Sverrisson, Editor-in-Chief, Montel: 2:09

Brilliant. Chris, thanks very much for updating, updating the podcast and now listeners back to our earlier recording, helping me to discuss. France's targets the new output Target in particular was Chris, who you've just heard, but also Paolo Coghe, who's the CEO of Acousmatics. Good to have you back, Paolo.

Paolo Coghe, CEO, Acousmatics: 2:28

Good morning and it's nice to be back.

Richard Sverrisson, Editor-in-Chief, Montel: 2:29

Perfect. Let's start with events this week. What did EDF announce earlier and why is it important not only to France, but its neighbors? Chris

Chris Eales, Editor France, Montel: 2:38

EDF reported a cut. Another cut. In the nuclear output target, as you mentioned in the intro, what's interesting is this cut isn't that particularly deep. It's 5% as you said, but it comes, it's the second cut in less than a month. And so that's what's interesting. And the earlier cut was much more important. It was a 10% cut. From what they had previously predicted. And it's a very low, these figures if it was to go as low as 2 9 5, I think that would be one of the lowest on record. I don't think they predicted that kind of output. The last time they predicted that kind of output was in, I think it was 1991 or something like that. So it's way below. And if you compare to last year, they produced 360 and then before that 20, 23, 35, those are COVID years. So then the next meaningful comparison is 2 9 20 19, and that was 3 7 9. So we can see it's a long way. It's a lot lower than that. So it's interesting. Now they've said that the reason for these cuts in both cases and in the one mid-January and this one is the corrosion issues on which now seem, which could affect the entire fleet because what they said is very interesting, but there are, they're talking about potentially 11 reactors at the moment, affected, five of which are already offline. Three to go off quite soon, and another three where inspections will take place during planned maintenance ass. What's interesting about the latest the latest announcement regarding the corrosion issue. Is that the, these concerned reactors of all types, in other words, of all ages. So it's not just the old ones. We've got the two nine hundreds being looked at 1.3, so that's 1.3 gigawatts and 1.5 gigawatts. So this, could, suggests that there's quite a wide scale problem here. For Francis 56 React is one of the biggest nuclear generator in Europe. This kind of situation is very is obviously boosting prices in France already. Obviously, but it's having an impact right across Europe as well because outages in France, react outages in France have a huge impact across Europe. They drive prices as we all know.

Richard Sverrisson, Editor-in-Chief, Montel: 4:42

What do you make of this latest announcement?

Paolo Coghe, CEO, Acousmatics: 4:45

I'd like to go back with the news and I'd like to expose the, some news from. July, 2021. I think it's newsworthy because back in July, 2021. EDF upgraded its nuclear output estimate, right? So it went up by about 5% to 3 45, 365. So essentially, all along last year, things are going well, market recovery from the 2020 sort of COVID impact proceeding well on on the works and then. Lightning hits again. So this is a little bit the plight of EDF. Everything is fine until it isn't. And this, in this latest case, we've had a sort of a double whammy where EDS realized problems. Problems hit two of the largest and more modern types of units, the 1,450 megawatt units, so that, comparatively speaking hits, only two reactors of that type. Obviously weigh more than the older 900 megawatt reactors. And then as we've seen again and again time and. Since EDF has built its reactors in a succession, using the same or similar slightly more modern technology, it has been able to capitalize on experience, to save on costs, but at the same time, it remains as ever exposed to a fault being found in one of the units or types of the units. Therefore potentially extending to other similar units and therefore blocking operations. To conduct additional inspections. So this is not the first time it happened. Things were going well for EDF, and then all of a sudden they didn't. And then to add to this, of course, the timing is again, as usual, pretty, pretty bad because it's coming in the high season where there is higher demand. Because of seasonality and on top of that, it's coming in a situation which is the European wide sort of energy price crisis that certainly is not making things easier.

Richard Sverrisson, Editor-in-Chief, Montel: 6:44

February has been quite mild, hasn't it, pat? So in a sense, EDS been quite lucky. If we were having Sub-Zero temperatures, the beast from the East that's come in February before then we'd be in a bit more trouble.

Paolo Coghe, CEO, Acousmatics: 6:55

Correct absolutely. So the two things that have been the, in quotes, saving grace for EDF are number one. Up to now and including the forecast by RTE for February, a mild winter, no prolonged long episodes and diffused episodes of cold. They would've certainly made things have made things worse. And then at the same time, the fact that even though things are going much better than recently, even though the pandemic impact has been reabsorbed. The reality is that demand in France, especially at the level of the large industrial com consumers, the ground industry is still significantly lower than the demand from this, customer segment. It's lower than it used to be before the crisis. And so that, all, everything else being the same is helping is helping EDF out. The, in terms of the production, by the way, I looked the number up the last time the number was so low, but above 300 terawatt hours was in 1991 with 315 terawatt hours. So this year, if the forecast is correct, we'll be below. 300 for the first time since 1990.

Richard Sverrisson, Editor-in-Chief, Montel: 8:06

That's that's astonishing. Chris! What do we know about the problems that these reactors, do we have any details of what's been published so far?

Chris Eales, Editor France, Montel: 8:14

What we know is that what we've been told by the Safety Authority and by a DF is that this is a question of corrosion on the on the pipes that are, they're called safety injection circuits, which, they use, they're needed in the event of a of an emergency. Then this circuit would be used to cool reactors to avoid a kind of Fukushima type meltdown. So they're extremely important. What we know is that according to IRSN, which is the technical arm of a SN, the French Nuclear Safety Authority, this stuff, these, this corrosion can lie dormant if you like. For several years, apparently, it's very difficult to detect. This is possibly why they haven't been able to find it in earlier checks. When the reactors go off for their long tenure inspections, these kind of things are examined, but they didn't find these cracks on these pipes during those inspections, during some of those inspections, and that's because of the way these cracks operate, the way they grow very slowly. And can only be detected once cracks have appeared. That, that sounds a bit strange, but what I'm saying is those, this incubation period, if you like, takes a while and then you need a good ultrasound to be able to detect them. So that's a problem for them. They don't know exactly what is causing this, because it's important to point out, Paula, that it's not only the more recent reactors affected because the latest information now is that there, there are at least two 900 megawatts, which are the oldest ones, bougie. And another one, I can't remember the name of immediately, but that suggests that it's that's quite tricky because it's diff it's different ages, that's going to be interesting when they try to analyze the causes for this, I understand. I, from IRSN, I also know that there have been cases. This is not the first time it's happened. There've been 150 cases elsewhere in the world in the past. I don't know exactly where, but these are, these reactions are designed in America. So it might be interesting to probe the Americans to find out what they know about this issue.

Richard Sverrisson, Editor-in-Chief, Montel: 10:08

And I'm sure some, we have some reporters on the case.

Paolo Coghe, CEO, Acousmatics: 10:10

Can I just add then more in general, emphasis and concern for the nuclear industry are skewed towards. SA system safety, right? First and foremost at the expense of production and efficiency. So whenever there is a problem, they'll pause everything to make sure that the problem is investigated appropriately. And if EDF already obviously does this, in case EDF was not compliant or less than compliant, there. Plenty of regulatory bodies for the nuclear industry in France that would force CDF to take the appropriate measures. And therefore, when things, when faults like this happen, one should not be optimistic in terms of how long it will take to solve the problem.

Chris Eales, Editor France, Montel: 10:53

The other thing, sorry, just to add is that on the time taking to deal with these issues, is not clear what the cause is. So that's obviously a problem. Secondly, where they are doing. Repairs where they are actually carrying out repairs at Seaville where the first place they found this corrosion and that's taking months. And that, that, that reactor has been extended, months and months. And that's because of the time needed to repair the pipes. So it's a, it is a very complicated issue and lengthy and will require lengthy, does require lengthy out.

Richard Sverrisson, Editor-in-Chief, Montel: 11:21

That was gonna be my next question guys, but about the duration and the the expected return of these reactors that are gonna be online. Could there be a case, you said last year, Paolo, that EDF upped it, its forecast for annual output. Could there be a case with saying it might have to reduce further?

Paolo Coghe, CEO, Acousmatics: 11:37

It is a possibility. Again, a lot depends on, little bit on luck, so to speak. So a milder march. And February would help as well as perhaps a little bit of a break for a DF on the technical side. But if everything regarding these and all types of outages goes according to what we've seen in the past, I would not be expecting outages to be, certainly to be shorter than already announced. Possibly a little longer. It's really difficult to be able to tell, if and how much. But if one could only say, longer or shorter, I would say longer. And then whether that leads to a decrease in annual forecast, again, I think EDF will work really hard to make sure that does not happen. But we'll have to see in in a couple months, how things are proceeding before we can say whether EDF will further reduce their their target down.

Richard Sverrisson, Editor-in-Chief, Montel: 12:33

Absolutely. I think we'll, be waiting on the results of a lot of the, these tests. But Paolo, if I can also ask you what, France has historically been a net exporter, but in the fourth quarter last year. It flipped to being a net importer. What do you expect to happen in the coming months?

Paolo Coghe, CEO, Acousmatics: 12:50

To my memory. The only other time that France was meaningfully importing is during the sort of cold snap episode in January, February, 2012, where for a few days there was a lot of really cold weather over very wide area of Europe and France was, once again in a position of need in the winter. But other than that, France, throughout the period, if you go back, 10, 15 years or more has always been an exporter on the strength of its nuclear generation. Now, this is a period where this. Strength is coming, is under challenge, so to speak, because of the combined effect of the pandemic. As we said, the long lived problems that EDF has been dealing with that have to do with the reduction o of its workforce IE in terms of engineering capability and the, I'm not gonna judge over the ambitious, they're very ambitious. Program, the Grand Karaage program, which has, is, has been done so that the decimal visits, the 40, the fourth 10 year visits to extend the lifetime of these nuclear units are being carried on. Which is a very crucial point as we move, as we look forward to 2030 and beyond. It is extremely important that EDF. Gets to prolong the life of its nuclear units where possible, right? And so this is gonna take additional inspections. So anyways, EDF is very much under pressure situation. And this pressure situation is not going to be let down anytime soon. So EDF and with it France and with IT Europe will have to deal with these situation for a bit longer.

Richard Sverrisson, Editor-in-Chief, Montel: 14:28

It couldn't have come as a worst time in the middle of the energy crisis. Lack of gas as an alternative, et cetera, et cetera. And there's hardly a day where you don't have energy crisis in the headlines. But Chris, if I can ask you, but the, for an outsider, this seem would seem a bit odd that at one time, on the one side almost not on a yearly basis, but very often, certain problems emerging at reactors, and not just in one series, but across series. But yet at the same time, they're prolonging the lifetimes of these reactors. This does seem a bit odd,

Chris Eales, Editor France, Montel: 14:56

this is continuing what Paolo's saying, these problems are long lived. They're there's a lot of pressure on EDF because they're trying to extend reactors and as reactors age to problems get worse. That, that is very true. And that's the situation that France finds itself in. It has a policy of extending reactors. That's really what it does because, they don't plan to, to close that many. And even that plan to close 12 more reactors by 2035 looks very shaky. Now it looks a lot of analysts and I dunno what partner thinks it is, but so they probably won't meet that target, but it's a question of aging and a lot of. Pressure on them that the, these 10 year visits have all been extended as they find more and more issues. And then on top of that, you get these corrosion things. And almost every every autumn or winter, we have a new problem coming up. It's a combination of different issues, pressure piled on with COVID, et cetera, et cetera. And these latest and these latest issues France is left in a situation where they have to extend reactors, just to say also that there's no at the moment, the French, it's the French safety Authority will decide whether France can actually extend reactors in the way it wants to, because, okay. They've given generic the generic green light for the nine hundreds reactors to be extended, but then they have to be checked individually. Each react has to be checked before they correct the green light, but there's no guarantee. And the a SN have said this several times, there's no guarantee whatsoever that they will be able to extend their reactors beyond 50 years, and that's very important because that's what EDF wants to do. And that puts them in a quite a crunch situation, I would argue, because they can't extend reactors. If they can't extend reactors, they're having difficulty building new ones. As we know about. They can't, they don't have, they're way behind in their renewable targets. This looks like some kind of a crunch.

Richard Sverrisson, Editor-in-Chief, Montel: 16:42

Yeah, I mean that, that was gonna be my next question to you, polo. You have problems with nuclear, problems with old and also with the ones that are being built at the moment yet, what's the answer? Oh yeah, let's build more nuclear. It seems to be there's a sort of stuck in the nuclear rut. Is there a viable alternative for France Polo?

Paolo Coghe, CEO, Acousmatics: 17:01

One way to say it is there's no plan B essentially. So what do I mean by there's no plan B? So we agreed that the, okay, so France needs EDF, Europe needs EDF to produce a lot of nuclear power or power by using nuclear electricity. These plants are old. They need to be inspected, they need to be certified to continue generating. Some of these plants will have to be decommissioned. Some new plans will have to be built. Okay. We're now, we've, as I was speaking, we've stretched all the way to 2035. So in my opinion, once we factor the government intervention and what the importance of these unity is. Unlikely that there will be as many retirements going forward as it was forecast. At the same time, I point out that to build plants, new nuclear plants in scale takes money and time. If we look at the money situation for a second, and necessarily we're speaking about EDF, but these are not just EDFS problems. Clearly, they're also the French government's problems. EDF has, was supposed to spend 4 billion. Euros to take Flamanville. The new EPR reactor online, we're now talking about 13 billions and still not here. Start time will happen sometime in 2023, so you know these latest results and the problems EDF has had. Count up for another, 17 to 20 billion between the money already set aside to continue the grand carnage, the money that EDF will have to spend to go in the market and buy additional power that it itself cannot generate. And so if to this, we add another estimate of 50 billion to build six new generation EPRs. The target of these coming online in 20 35, 37, the pressure is piling up to find a solution because without money and time, these new nuclear stations are not going to happen. If that doesn't happen, how are we going to get electricity in Europe? That's my question to you guys.

Richard Sverrisson, Editor-in-Chief, Montel: 19:02

Absolutely. That, that's something that we will certainly be asking the market about Paolo. Trust, trust us. But Chris, you live in France, there's an election coming up. How much is nuclear part of the debate? And is the, France has always been very pronuclear. We've heard before that if you were anti-nuclear, you're almost anti French. What's the status now in terms of the election campaign? Are the present problems being talked about at Tool? Yes.

Chris Eales, Editor France, Montel: 19:25

Yes. The, the energy policy, energy, French energy policy is part of the election campaign that's ongoing. We're less than. Less than three months away now. So it is Buffet people, candidates are wheeled out on the radio programs and on the TV to add their views, on this issue. And nuclear comes into it because obviously the energy crisis, the price crisis is a big deal. It's a big deal all over Europe. And what does that mean in France? Then you start talking about nuclear policy. But what you have in France is a situation where it's almost you have a situation, it's right versus it looks like. I don't mean as in right and wrong. As in right and left. The front runners are on the right. Let's put it that way. Okay. Let's call Emmanuel Macron a centrist then center right, if you like, but the, his main opponents, it seems at the moment are on the. And they they some of their ideas quite interesting possibly even entertaining Marian Lapin of the far foreign National or whatever they're called now would actually take down wind parks that are already operating, as well as have a moratorium on wind, for example. But what I'm saying is the right, in general. Wants to build new reactors. That's they don't seem to have, they don't seem to, do they necessarily understand what they're talking about? That's a good question. Do they know about the details of nuclear policy? I think this is a question tied in with sovereignty, perhaps wrongly, independence, stuff like that. Climate change. These kind of words and topics are banded around and do politicians who, occasionally poke their noses into French energy policy. Actually don't understand what they're talking about. I don't know if they do, but it is right versus right in a way that is possibly very wrong. And you have got a situation where it looks like today, you know this France, by the time you hear this, France will have announced new perhaps more details on its nuclear. New nuclear program the first in over 30 years, but we'd potentially up to 14 new EPRs being talked about. But, these are just plans. They're just being talked about. EDF has already said it's very difficult for them to do anything unless they have financial backing from the state and new regulatory measures, they, he levy himself said this not very long ago, the plan's about 14 reactors unless there's some kind of. State backing major, state backing and regularly trained changes that won't happen. They can't do it. They can't actually do it. EDF, they don't have the clout, the financial cloud to do it. But anyway these me, these issues are talked about in France. I dunno how deep you are, how or how accurately, but they are on the agenda and as things stand, France looks like is the next president will probably sign off these new nuclear reactors. Because obviously Macron can't do it unless he becomes president. And even though he's the front runner he still hasn't said he's running for as a candidate.

Richard Sverrisson, Editor-in-Chief, Montel: 22:05

Paolo, the, the sums you mentioned as well, the 17 billion the 50 billion for new build. These are eye watering sums. And if I was a, renewables developer or, in, in building wind or solar farms in France, I'd be weeping in despair. What's the outlook for renewables? Growth in France.

Paolo Coghe, CEO, Acousmatics: 22:21

I think the outlook, despite everything is good because even though this energy crisis has exposed exposed the fact that, some of the projections about having, a fully renewable Europe are a little bit of a, let's say that they're unrealistic at the moment, right? That what that means is that nuclear will still be needed, but it does not mean that we're not going to proceed with more environmentally friendly. Goals and therefore proceed with with renewables. So nuclear needed not going away, but renewables also see a bright future in France. And and alongside Europe,

Richard Sverrisson, Editor-in-Chief, Montel: 22:58

have you had any, made any forecasts or analysis of the place of nuclear in France? Energy mix? Will it stick around the 70% mark or will it fall down to 50 as it planned to do a few years ago?

Paolo Coghe, CEO, Acousmatics: 23:10

So I've not done any specific analysis of these, of this topic, but what I can tell you is that it will be not as strong, again, it takes time, right? Looking at how electricity is supplied will take time for nuclear to. Go off being the major producer. And at the same time, the growth of renewables is starting from a relatively speaking low place, especially in France. So that growth will continue an abated. I don't think we're gonna go back to the days of, the sort of like glorious 30, between 1945 and 1975 in Germany, sorry, in Germany, in France. Where after the war, there was a rebuilding, industry rebuilding, eventually nuclear industry built up and so on and so forth. We're not, those days are a bit. In the past, but what we do and we'll see is a continuation of nuclear because France cannot do without nuclear and neither can Europe without French nuclear to a large extent.

Richard Sverrisson, Editor-in-Chief, Montel: 24:03

Paolo and Chris, thank you very much for joining the Monte Weekly podcast. So listeners, you can now follow the podcast on our own Twitter account, aply named the Montel Weekly podcast. Please direct message any suggestions. Questions or, let us know if you think you have a good idea for a guest on the show, you can also send us an email to podcast@montelnews.com. Lastly, remember to keep up to date with all that's happening in energy markets on Montel News. You can subscribe on Apple Podcasts and Spotify, or wherever you get your podcasts from. Thank you and goodbye.