May 9, 2017 / 6:38 PM / 8 months ago

EDF hopes for UK-style support for new French nuclear plants

PARIS (Reuters) - French utility EDF hopes for UK-style subsidies for the construction of new nuclear plants in France and expects that President-elect Emmanuel Macron’s plan to reduce the share of nuclear in the French power mix is a “long-term” plan.

EDF chief financial officer Xavier Girre said on an earnings call with analysts on Tuesday that EDF would discuss power market regulation with Macron’s team “in order to set a right, positive and fair set of regulations for our industry”.

“Regulation is absolutely key, and I am very optimistic that we will be in a position to discuss these matters in depth with the new administration,” Girre said.

He said state-owned EDF was hoping to convince the Macron government to introduce state subsidies for new nuclear plants, modelled on the British “Contracts for Difference” (CfD) scheme under which EDF is planning to build two nuclear reactors in Hinkley Point, Britain.

“We consider it will be appropriate to discuss a kind of CfD for future nuclear newbuild in France,” Girre said.

For its 18 billion pound Hinkley Point project, EDF has signed a CfD with Britain under which it can sell power at 92.5 pounds per megawatt hour for 35 years. If the market price is above that level, EDF refunds the difference, if it is below that level it receives a top-up.

Girre also said that Macron’s campaign target to reduce the share of nuclear in the French energy mix to 50 percent by 2025 from about 75 percent today was a “long-term” target and that his plans for CO2 floor price should be positive for the utility.

“His programme and public statements, include the development of renewables, and a clear target for the energy mix in the long term and not specifically stated at the 2025 horizon. These points are positive,” he said.

Last week EDF shares jumped about 8 percent over two days after a source close to the Macron campaign team told Reuters that Macron might delay his plans to reduce the share of nuclear power in the French power mix and was considering a UK-style subsidy mechanism for new nuclear.

An official spokesman for Macron said later that he would stick to the policy outlined in his campaign platform.

Girre said that EDF also wanted to talk to the new government about the ARENH mechanism under which it is forced to sell up to a quarter of its nuclear output to competitors as part of measures to improve competition in the retail power market.

“We consider that it is necessary and fair to reform the ARENH mechanism in order to prevent it from being as biased as it is today,” he said.

He said EDF hoped that the outcome of the talks would be a “right, positive and fair set of regulations for our industry”.

Reporting by Geert De Clercq; Editing by Mathieu Rosemain and Alison Williams

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