French nuclear conundrum

France has touted a huge nuclear recovery, but experts question the ability of EDF to bring back a reactor a week between October and January. Listen to a discussion on the outlook for French nuclear availability for the coming winter. Should market participants place their trust in promises that reactors will be online in the New Year?

Host: Richard Sverrisson, Editor-in-Chief, Montel
Guests: Chris Eales, Editor France, Montel
Emeric De Vigan, Vice President Power, Kepler
Yves Le Thieis, Vice President, Compass Lexecon.

Transcript

Richard Sverrisson, Editor-in-Chief, Montel: 0:04

Hello listeners and welcome to the Montel Weekly podcast, bringing energy matters in an informal setting. This week, the discussion returns to France, the country's nuclear fleet has been beset with problems over the past six months with corrosion issues and cooling water problems, hampering electricity output, and for many, a major contributory factor of soaring wholesale energy prices. The base load front quarter contract climbed to almost 1300 euros per megawatt hour. Amongst fears that French reactors would be unable to meet demand in the final three months of the year, prices have since slipped to 900 euros a megawatt hour, a level that would've been unthinkable early in the year. Helping me. Richard Sverrisson. To discuss the outlook for French nuclear availability over the coming months and much, much more is Chris Eales, editor France at Montel. Warm. Welcome to you, Chris.

Chris Eales, Editor France, Montel: 1:00

Hello,

Richard Sverrisson, Editor-in-Chief, Montel: 1:00

Emeric De Vigan of Kepler. Welcome back Emeric.

Emeric De Vigan, Vice President Power, Kepler: 1:04

Thank you very much. Good morning everyone,

Richard Sverrisson, Editor-in-Chief, Montel: 1:05

and Yves Le Thieis of Compass Lexecon. Warm welcome to you as well, Yves. I know it's your first time on the pod.

Yves Le Thieis, Vice President, Compass Lexecon: 1:11

Yep. Thanks for the invitation and good morning to everyone.

Richard Sverrisson, Editor-in-Chief, Montel: 1:14

I'd like to start off by asking you, Chris, what's, the background of French nuclear availability or so far this year? How would you sum up the last sort of six months?

Chris Eales, Editor France, Montel: 1:23

Huh? You could say that it's been a it's a crisis situation has emerged. It's been a rollercoaster ride. All these all these would be true I think. The last six months in terms of nuclear availability has been dominated by the incidents of corrosion that emerged in the autumn of 2021 at the civil one nuclear reactor where EDF found hairline cracks on a a vital safety circuit that led. To more inspections which meant they found problems elsewhere. Thanks. I can say to France the French Montes reporting team. We were able to ex. Suppose corrosion on many more reactors thanks to certain sources in plants. And it's now known that the problem is widespread. Although EDF is saying of course, that they believe the more recent reactors are more likely to be affected by this corrosion outbreak. The corrosion outbreaks had huge impact on availability because they have had to stop reactors. To check these parts. And in order to do that, they, at times they have to actually go into the reactors, cut pipes out, and then check them and then put the pipes back. And if they find problems, then they've got to repair them. And that's a very tricky job. You're in a part of the reactor where you have radio activity. That's difficult for workers.

Richard Sverrisson, Editor-in-Chief, Montel: 2:53

What's the current availability in France then, Chris? How many reactors are offline?

Chris Eales, Editor France, Montel: 2:57

There are currently, according to my calculations this morning, there are 20, 29 outta 56 reactive offline at the moment. So that's, over half the fleet. A very difficult situation for you, diff because according to Jean Bernard Levy, yes. Today on Wednesday, he said that 15 of these reactives are out due to corrosion probes or corrosion repairs. I just wanna say before the other thing I wanted to say, which I didn't say about the last. Six months. Is that uk? Okay. It's a crisis, but you could say there's a crisis every tum in France with reactors. We had if you go way back to September 26 2016, we had steam generat generator issues with cuts, which meant had to stop reactors in 2017. We had earthquake issues, blocked control rods in 2018, which also led to EDF. Having to stop reactors for unplanned outages. You can't argue that this isn't this isn't a new, okay. The reason for the crisis is new. The reason for the problems with avail. This year's problems with availability are new, but not, we seem to see it almost every September. There's an underlying problem here,

Richard Sverrisson, Editor-in-Chief, Montel: 4:10

absolutely Emeric, but if I can turn to you now, what? Are you confident that these corrosion issues can be fixed and quickly before the onset of winter? I know you're not a I know you're not a nuclear physician, but

Emeric De Vigan, Vice President Power, Kepler: 4:21

exactly. And and that's very important to to mention. I cannot be confident for various reasons. The first one. In this world where there's a lot of different numbers communicated by the different stakeholders we have EDF saying they're very confident in their ability to return the nukes before the winter. In the meantime, we have the government saying they're also confident in returning the news. And that leads to the famous remit publication that is showing actually what would be a fantastic availability for the end of Q4 and the beginning of Q1. In the meantime. We have the corporate generation target from EDF that stands at 280 Tet hours. That is far from what the remit number are showing. And if you believe in this number, which let's be honest, has been the most reliable in the past using, it's quite unlikely that we see the units returning to the grid at some point in Q4 and q1 or at least. All the units will come back. And yesterday we had this press conference from RTE where they showed their different scenarios regarding the nuclear availability for the winter. And their base case scenario stands at 45 gigawatt for Jan and February. Which is somewhat 10 gigawatt lower than EDF remit scenario, if you can if you can call it that way.

Richard Sverrisson, Editor-in-Chief, Montel: 5:50

Yep. I think for those listeners who are unaware of these this remit messages, this is where EDF and all producers and consumers of energy have to post information about outages or stoppages that affect energy infrastructure. Absolutely. Thanks Emily. But Yves, if I can turn to you. What do you make of these numbers? There's something that doesn't quite add up. What's your view?

Yves Le Thieis, Vice President, Compass Lexecon: 6:12

So between the the remit figures and the RT conservative conservative TSO perspective of the restart of the nuclear plant Yeah.

Richard Sverrisson, Editor-in-Chief, Montel: 6:21

And also the output target that DDF has announced for the year. Or as Emek mentioned to the 280 tewa hours.

Yves Le Thieis, Vice President, Compass Lexecon: 6:28

I think what I wanted to say first on, on the energy crisis was that it's effectively a, an energy crisis for the French electricity system. But interestingly as well, showing some good crisis management from the different stakeholders in the sense that they tried to front load as much as. Possible the different maintenance events of on the other nuclear units that were not directly impacted by the different issues that they found last year round. So they are trying to optimize as much as possible the calendar of the maintenance, either for end of 2022 and as well for next year. Like new maintenance phases on the futures or next round of visit decal and next round of maintenance events as well for the plants that would be unavailable from FE March and so on in 2023. So it, it's a crisis, but there are. Any I would say trying to do as best as they can to optimize the nuclear availability of the winter. Now, as Emeric said, effectively there is quite a bit of discrepancy between the remit say 55 or something like that, gigawatt of availability by end of December and RT Central scenario. Now what is interesting to, to understand is that in the RT Central scenario, they took a lot of conservative assumptions on the restart dates of the different nuclear units depending on whether they are in long-term maintenance or shortterm maintenance or refueling or impacted by the corrosion assumptions, conservative assumptions, reflecting what. As historically happened between the. Publish date of restart after maintenance and the actual restart of the nuclear plants. And simply because the TSO has to have a conservative and prima pragmatic view on the availability to assess the adequacy of the system in a average or average in a realistic scenario. I would say that the TSO view from RT is effectively the, I would say the. A pay 50 estimate, considering the likelihood or the the stati statistical approach that the RT uses to assess the availability of nuclear. Whereas the EDF view from the operator perspective effectively is while trying to do as best as they can to increase and optimize the maintenance of the nuclear fleet doing that, one of the issue for IDF is not necessarily only. Centralized on EDF capacities, but it's linked as well to the subcontractor availabilities to be able to run all of the maintenance and all of the necessary work for the plants to be operational.

Richard Sverrisson, Editor-in-Chief, Montel: 9:07

As you rightly mentioned, RTE, the TSO, it's their duty to maintain security supply and to keep the lights on. EDF is doing its best under extremely difficult situations. And how, but how do you explain these figures? The gap between estimated nuclear output and what they expect. There's, it's such a huge gap. So how do you explain that?

Yves Le Thieis, Vice President, Compass Lexecon: 9:28

Two, I think two things. One is in the remit figures, you don't take into account the fuel optimization that EDF is putting in place to optimize the availability by the end of the of the all midwinter, I would say. So trying to save as much fuel as possible to use it during the winter. And the second thing as well is all of the forced outage. Which we know, for instance I don't remember how minutes are, how many units are in forced outage, but you always have a couple of units which. Are in outage because of because of some unforeseen events as well.

Richard Sverrisson, Editor-in-Chief, Montel: 10:03

What's your response, Emeric, do you agree with that?

Emeric De Vigan, Vice President Power, Kepler: 10:05

So what is is also the ancillary services, the nuclear units that do contribute to the grid stability by providing reserves. So you never see a unit running a hundred percent of his nominal capacity which explains some of the difference. Now it's clear that the difference. For this coming winter and yeah, for this coming winter, I, it is incredibly big, much bigger than it used to be. And that's why the market players or anyone looking at the number is not really comfortable. It doesn't seem reasonable. I fully understand the the way they build remit and the way that yes, they can't take make assumptions on the forced outages. They can't make assumptions on the on, on the way they will run down units that we weekends to save fuel. But still, this year it's way too big. We, and by that, I. Market players, people looking at the number have always been used to a difference, but this year it's incredibly big. And if I cannot add one, one last thing also, that if you look at the remit number, so EDF is announcing that it will return something like 30 units to the grid within a few weeks or months. It would be an absolutely extraordinary performance from them, and I'm surprised that they still set a confidence in doing that would without communicating what they've put in place in order to be able to achieve such an incredible performance.

Richard Sverrisson, Editor-in-Chief, Montel: 11:37

E-D-F-C-O Jean Benard Levy said on Wednesday that he expected nuclear capacity to double to 50 gigawatts by January, much higher than the central estimate bar t as we said earlier. And as well as the restart of 32 reactors. This was also broadcast if you like, by the French Energy Minister. What can be the impact of comments like that? Are they misleading or are they meaningless? They're picked up across Europe, being reported in Sweden, in Germany. The minister seems to be saying, yes, we're gonna restart these reactors, but we seem to also understand the true nature of the figures and planning it. It doesn't seem feasible, does it?

Yves Le Thieis, Vice President, Compass Lexecon: 12:15

Yeah the politics have to communicate on that on that simply because that's effectively structural for the French electricity system for next winter. Now it's a political communication as well. So saying that all of the reactors needs we start, not necessarily, they don't mention the end of the year, they mention the end of the winter, you that they are maintaining some sort of of blur around the exact targets in the sense that they can only rely, in any case, on what EDF is saying in the remit process. Now that kind of communication. Totally avoid addressing, say the fundamental issue that EDF is facing. So it's not only the restart of the 30 each gig units, which are currently unavailable, but it's optimizing the maintenance start of the next set of units in Feb or March or April. And that's a fairly working with the different subcontractors as well to make sure that. The plan of restarting the units is feasible and will not hit too many operational hurdles by the end of 2022. And maybe one, one thing as well that I wanted to mention on the discrepancy between the volumes, the energy produced and the availability in terms of capacities, is that something that we are. Putting a sign somehow is the increasing penetration of renewable in the system as well, which over time, and that's what we've seen in the previous years would basically reduce the nuclear generation when there is an excess of wind. So mainly wind generation, I would say during winter, more solar generation in summer, that would push down the generation figures of the nuclear nuclear fleet as well. So explain the. Growing discrepancy that we see as well. So it's one of the drivers not the only one, but explaining the growing difference that we could see between the target of generation and the availability, assuming that when available you would produce at maximum.

Richard Sverrisson, Editor-in-Chief, Montel: 14:13

I think Yves it's quite clear as Chris mentioned, that it's become a very political issue. It's the first time I've heard of politicians, national politicians talking really what is our bread and butter? The remit messages and bringing them to the fore. And it's clear that, the German economy minister Robert Halbeck he said, France has promised us 50 gigawatts by the start of January. These are clear. Statements from very high up politicians. Now, what's the view of the regulator or the the supervisory authority? Do we have any idea of what they think here, Emeric?

Emeric De Vigan, Vice President Power, Kepler: 14:42

Not on this not on this topic. They've been they've been really quiet. If anything, we know, they understand why the remit numbers are always overestimated for all the reasons we mentioned. The beyond that we haven't had any communication from their side. But it's a very important point. Again, we're in a situation where we have an industrial crisis. We are running at 55 gigawatts, which is incredibly low. In a world where for the last five years, because you were, you're very right in mentioning we have had crisis since 2016, 17. We've been told that the situation would improve in the next 18 months. So supply, it hasn't really improved. So we all very concerned or careful, but the potential outlook. So that's one thing. But on the other hand, we have, and I'm not afraid of the world. We are facing a communication crisis. Because yes, it's political. Yes CEO's Ministries. Can make statements, but then you have the real world where there's a market with rules, where, consumers have to go and buy electricity for next year. And at the moment, they're flying completely blind. They have no idea about what, what could happen. We, we, let's be honest, we and I think Rt, CO yesterday was very right in saying that, even if it's not fitting in his, I'd say, the prices we're seeing at the moment for the winter don't make sense. If we are really confident that we'll have 50 gigawatts of of new cloud availability in December and Q1 next year.

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

Chris, you your team has written about, some analyst expectations, for example, from Energy Quantified. What's their view, Chris?

Chris Eales, Editor France, Montel: 16:24

Their view is quite simply it's it's on the basis of, I don't know, 16, 17 years of experience of the EQ has been looking at the market and looking at remit figures, and they say if you believe remit figures, then you're not gonna get anywhere. They're predicting, I think a 10 gigawatt difference in Q4 between EDFS remit estimates and their own. And that's based on an analysis of nuclear out the nuclear output target and basically saying look, we've got this nuclear output target. We take the average between the two 80 and the 300. And let's see how that works out in actual practice. What would be the likely nuclear output in these months, the nuclear capacity in these months? So you, they, you end up with a figure which is about roughly 10 gigawatts less because they believe that EDF will have to reduce their output to meet. Their capacity to meet these output targets. Yeah, it's and it's a constant, this overestimation.

Richard Sverrisson, Editor-in-Chief, Montel: 17:20

Sure. We've so this is, that would be like between 40 and 45 gigawatts, right?

Chris Eales, Editor France, Montel: 17:24

Yeah, that's right.

Richard Sverrisson, Editor-in-Chief, Montel: 17:24

Yeah. But this week RT also. Had some other scenarios here. And I think stressed very clearly the need to reduce demand Eve. Is there, is there a chance that I'll start again. Is there, what did it. Sorry. Can France reduce demand to avoid rolling blackouts and cuts to industry?

Yves Le Thieis, Vice President, Compass Lexecon: 17:44

That, that's a really good question, and that kind of touch on the specificity of the French market compared to the neighboring countries. So the French electricity market is. The most thermal sensitive, so the one that would react the most to a temperature decrease in winter. I don't have the exact figure in in, in mind, but it's a decrease of one, one degree is an equivalent increase of two point something gigawatt, 2.7 gigawatt of electricity consumption. So obviously. Really temo. Sensitive. Sensitive. And so that's the market that shows the most difference between the summer average consumption and the winter maximum consumption or average consumption, obviously much higher in a in case of a cold spell. We know what, why the French party demand increases so much in, in, in winter. So all of the possible energy savings actions on reducing the the temperature temperature in, in a household or public administrations or services or small industries, would definitely have an impact on the on the demand. So I think the different actors and stakeholders. Responsibility knows exactly what needs to be targeted to reduce the demand. And if necessary, so RT has already put in place the the echo echo echo watch signal which would. Kind of work in the same way has the type of communication for high traffic weekends, for instance. So with different colors depending on the situation of the system. And we would need, if you need to rely on, on, on the on the cust end customers and small small customers answers to these different type of signals. But as soon as you have a sufficient number of customers that, that react to these signals, you would see. Instantaneously a significant decrease of demand. And that's because of the term of sensitivity of the French electricity's demand. So I think if not only rt, but the different stakeholders in responsibility managed to effect get social acceptance that's the responsibility of everyone to, to. Reduce the consumption or to mitigate any possible increase of demand because of a specific, like cold spell or any other events that should be available and that would've a definite impact on the peak demand. And indeed then the Audi demand across winter.

Richard Sverrisson, Editor-in-Chief, Montel: 20:09

Let's, fingers crossed that we don't have a cold winter because we may be odd. Do you, one, let's the fingers crossed that we, it keeps mild and that there is enough capacity available and that demand can be cut when necessary. But gentlemen, we're running out of time unfortunately, so I'd like to thank you Emeric, Yves and Chris very much for being part of the Mont Weekly podcast this week. 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.