EDF hikes Q1 output 8% despite nuclear woes, awaits ASN position by end-May

Europe's biggest power generator EDF increased first quarter output by 8% to 146 TWh despite record-low nuclear production in France, the company said May 4.

Nuclear production in France declined by 7.5 TWh year on year in Q1, with the fleet hit by an unprecedented high number of outages and currently over half of French reactors offline for various reasons.

Three reactors were confirmed for stress corrosion (Civaux 1, Chooz 1 and Penly 1), with another nine units showing indications of stress corrosion awaiting further analysis of lab test results, according to EDF management.

French power has become Europe's premium market with winter quarters trading above Eur430/MWh, more than tenfold the regulated ARENH price, and nuclear risks adding a premium over average generation costs already boosted by record-high gas prices across Europe.

Platts assessed French PEG gas for the month-ahead at Eur82.40/MWh May 3, a discount to Dutch TTF, German and Italian gas, but a premium over the UK's NBP and Spanish gas prices, data from S&P Global Commodity Insights showed.

Positive impact of about Eur6 billion from higher power prices on EDF's 2022 earnings was expected to be outweighed by negative impacts of about Eur24 billion from regulatory measures -- tariffs caps, additional fixed price sales -- and buybacks at high prices, due to the underperforming nuclear fleet, EDF said.

Nuclear stress corrosion

EDF's entire fleet of 56 reactors was undergoing tests for signs of stress corrosion first detected late 2021 at Civaux, with the program to be completed by end-2023, the company's management said at an analysts' call presenting Q1 results.

A key aspect will be the position of French nuclear safety regulator ASN on the topic expected by the end of the month following further lab analysis to better understand the nature of the problem, EDF said.

Currently it was too early to quantify the impact of the issue on capital expenditure and reactor availability, but a high level of requirement was to be expected, EDF CFO Xavier Girre said.

EDF already cut its 2022 nuclear production estimate twice to a range of 295-315 TWh and reduced its 2023 estimate to 300-330 TWh.

S&P Global forecasts monthly output to average around 28 GW for May and June, with annual output currently on course to be just below the top end of the estimate's range, implying a drop of over 45 TWh, the biggest annual decline on record.

Grand Carenage II

EDF also said May 3 that it launched the second phase of its "Grand Carenage" program covering 2022-2028 for an estimated cost of Eur33 billion.

The first phase over 2014-2025 estimated to cost Eur55 billion was to extend the lifespan of its 900 MW reactor fleet beyond 40 years. The second phase was now also preparing to extend the lifespan of its second generation 1,300 MW units, amongst other items.

CFO Girre said that focus of the new presidential and legislation period to 2027 in France was reform of the ARENH, with the current mechanism under which EDF has to sell 100 TWh/year of nuclear to domestic suppliers at Eur42/MWh expiring in 2025 and a financing mechanism for the six new EPR2 reactors proposed by President Emmanuel Macron.

The 83% French state-owned utility also flagged the installation of its first offshore wind turbine in April, with the 496 MW Saint Nazaire projects set to start this summer in France.

Across the group, some 7.9 GW of renewables were under construction, of which 4.6 GW was solar photovoltaic, 1.9 GW offshore and 1.4 GW onshore wind, EDF said.

EDF POWER GENERATION (TWh)

Source: EDF