- “Winter of Discontent”?
- What does this mean for Europe?
French Energy Minister Agnes Pannier-Runacher reportedly said last month that EDF was committed to restarting all of its nuclear reactors this winter.
Jean-Marie Hosatte | Gamma-rapho | Getty Images
France is facing a winter of discontent, energy analysts say, as deep-seated problems with its nuclear power strategy raise serious questions about its preparedness for the colder months.
France has long been a source of national pride roughly 70% its electricity from a nuclear fleet of 56 reactors, all operated by state energy company EDF.
France is home to the largest fleet of reactors in the world after the US and ensured that Paris was less exposed than its neighbours. to a dramatic reduction in Russian gas supplies.
However, more than half of EDF’s nuclear reactors have been shut down in recent months due to corrosion, maintenance and technical problems, partly due to extreme heat waves and fix delays from the Covid pandemic. Outages caused French electricity to drop to an almost 30-year low just as the European Union is facing the worst energy crisis in decades.
“I find the nuclear relationship with France really interesting because it just plainly shows you all the advantages and disadvantages of nuclear power,” Norbert Ruecker, head of next-generation economics and research at Julius Baer, told CNBC by phone.
“Yes, it’s low carbon, but it’s not economical. To make it happen, you have to nationalize EDF. Yes, it offers baseload, but wait a second, sometimes the whole plant disappears for weeks and months, so the promise of baseload doesn’t really exist.” Ruecker said.
A bitterly cold winter after a harshly dry and hot summer would test the country’s electricity reserves to the max.
Managing Director for Europe at Eurasia Group
French Energy Minister Agnes Pannier-Runacher he said Last month, EDF pledged to restart all of its nuclear reactors this winter, Reuters reported, with shutdown reactors reopening weekly since October.
The French operator of the RTE network, meanwhile, reportedly he said there is no risk of a total blackout this winter, but some power outages during peak periods cannot be ruled out.
“Most of the nuclear plants should be back online before the winter, so basically by November or December. So if you trust the French grid operator, everything will be fine,” Ruecker said.
“There should be some conservatism as to whether France will be able to bring these reactors back on time, but we should not be overly pessimistic. The record shows that they have been more or less on time recently.”
“Winter of Discontent”?
French electricity prices climbed to a series of all-time highs this summer, peaking at a tantalizing level of around €1,100 ($1,073) per megawatt hour at the end of August. Analysts fear that the country may struggle to produce enough nuclear power to meet both its own needs and those of its neighbors in the coming months.
Underscoring structural problems in the country’s nuclear fleet, France has not only lost its position as Europe’s biggest electricity exporter this year but, remarkably, has actually imported more power than it exported.
That was data from energy analysts at EnAppSys published in July found that Sweden secured the top spot as Europe’s largest net energy exporter in the first six months of 2022. Prolonged outages in France’s nuclear fleet have halved the country’s exports compared to the same period last year, and analysts at EnAppSys have warned that the situation shows no sign of improving any time soon.
As compensation, France imported expensive electricity from Great Britain, Germany, Spain and other countries.
“Thanks to the market, thanks to the power lines we have, Europe saved France from a big blackout” this summer, Julio Baer’s Ruecker said.
“It was the UK, Germany, Spain and to some extent Switzerland who all stepped in. So for me the last month really exposed some policy conversations that weren’t always objective,” he added, referring to nuclear power as a climate solution among politicians.
Not only has France lost its position as Europe’s largest electricity exporter this year, it has also, remarkably, imported more energy than it exported.
Bloomberg | Bloomberg | Getty Images
President Emmanuel Macron’s administration last month in an effort to protect households and businesses in the coming months he announced plans to limit the increase in electricity and gas prices to 15% next year.
This represents a substantial jump from this year, when additional electricity costs for households and small businesses were capped at 4% and gas at 0%.
Mujtaba Rahman, managing director for European political risk consultancy Eurasia Group, said the expanded subsidies – the most generous in the EU – were likely to add to the French government’s difficulties in facing fiscal and budget battles.
“A lot will depend on two factors,” Rahman said in a research note. “First, the success of the government’s energy saving program (which will be voluntary for households and mandatory for public bodies and industry). Second, the weather. A bitterly cold winter after a harshly dry and hot summer would test the country’s electricity supply. restrictions.”
“For now, we maintain our 65% base case that Macron will dissolve the National Assembly by the middle of next year, but only if he believes his centrist alliance has a strong chance of restoring its majority, albeit under downward pressure, if France suffers. a cold and restless winter,” said Rahman.
“A winter of discontent is not good preparation for an election.”
What does this mean for Europe?
France’s ailing energy performance has renewed criticism of its nuclear-heavy energy strategy at a time when many others in Europe are turning to nuclear power to compensate for Russian gas shortages.
Germany, which originally planned to shut down its three remaining reactors by the end of the year, decided to postpone its nuclear decommissioning to support energy supplies this winter. The UK, meanwhile, does trying to increase nuclear energy productionand the EU put nuclear power on the list on the list of “green” investments.
“It’s important to say that if France has a nuclear problem, Europe also has a problem when it comes to electricity,” Alexandre Danthine, senior associate for the French energy market at Aurora Energy Research, told CNBC by phone.
“Generally they are a big exporter, but in the winter they need energy from neighboring countries to meet the demand – whatever the situation is,” Danthine said.
At the start of his presidency, Macron pledged to reduce the share of nuclear power in France’s energy mix.
Ludovic Marin | Afp | Getty Images
In France, Eurasia Group’s Rahman noted, Macron last month reacted angrily to suggestions, including by outgoing EDF chief Jean-Bernard Levy, that his “stop-start approach” to nuclear power over the past five years was partly responsible for the crisis.
In what was widely seen as a policy turnaround, Macron announced in February his intention for France to build at least six new nuclear reactors in the coming decades, with an option for eight more. At the start of his presidency, Macron pledged to reduce the share of nuclear power in the country’s energy mix.
The turnaround controversially placed nuclear power at the center of France’s drive to achieve carbon neutrality by mid-century.
Proponents of nuclear power say it has the potential to play a major role in helping countries generate electricity while reducing carbon emissions and reducing their dependence on fossil fuels.
But for critics of the energy source, nuclear power is an expensive diversion to faster, cheaper and cleaner alternatives. Instead, environmental campaign groups argue that technologies such as wind and solar should be prioritized in the planned transition to renewable energy.
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