The national electricity generator EDF has reported one of the worst years in French corporate history, losing €18 billion and seeing debt rise to an unprecedented €65 billion in 2022. The impact of the Ukraine war and idling nuclear reactors spelt financial disaster for the state-controlled entity.
Although EDF's revenue grew by 70 percent to over €144 billion – driven by the rise in energy prices – the group went into the red with a net loss of almost €18 billion, compared to a profit of €5 billion in 2021.
EDF has been unable to produce sufficient power with its existing plants, a situation which forced the group to buy electricity at a premium on the international market.
Speaking on Friday, recently appointed CEO Luc Rémont commented, "Despite a strong increase in turnover supported by electricity and gas prices, EDF's gross operating margin has been heavily penalised by the drop in nuclear production as well as the exceptional regulatory measures put in place in France for 2022, in difficult market conditions."
Rémont however confirmed there would be an increase in nuclear production in 2023, signalling a gradual end to the crisis.
Stress corrosion – a problem that has shut down a number of nuclear reactors since late 2021 – is being addressed.
Ce matin, @EDFofficiel dévoile ses résultats annuels 2022. Une première pour Luc Rémont, PDG du Groupe depuis novembre dernier. De nombreux médias ont répondu à l’invitation. #tread ⬇️ pic.twitter.com/dBShckzN23
— EDF (@EDFofficiel) February 17, 2023
EDF and 'nuclear renaissance'
Reacting to the announcement of EDFs losses, the French government immediately put pressure on the group, stating it was "counting on the new CEO and on all the employees to reestablish – as soon as possible – the totality of EDF's electricity production capacity."
Minister of the Economy, Bruno Le Maire and Energy Transition Minister Agnès Pannier-Runacher both underlined that the recovery of EDF's finances will be achieved first and foremost by increasing the volume of production.
The ministers also called on EDF to move forward with "the preparation of the project for new EPR reactors, as decided by the President of the Republic."
This comes as the French State is renationalising EDF to push through a €60 billion nuclear renaissance plan involving six EPR reactors, supported by President Macron.
2022 was a particularly complicated year for the electricity company, which has seen its nuclear and hydroelectric production fall to its lowest point in the midst of the global energy and climate crises.
EDF has faced an accumulation of problems stemming from pipe corrosion and delays in the maintenance of power plants due to the Covid pandemic.
Last year, the average output of France's 56 nuclear reactors fell to 54 percent – compared to 73 percent over the previous five years – raising the threat of power cuts in the middle of winter.
Low output and price caps
Thanks in part to a relatively mild winter, power outages were avoided through the importation of electricity, the implementation of energy saving efforts among the French population and EDF's endeavours to reconnect its flagging reactors.
Nevertheless, the cost has been high.
Not since 1988 have so few terawatt-hours of nuclear power been produced in the country – a mere 279 TWh in 2022 compared to a peak of 430 TWh in 2005.
The war in Ukraine exacerbated the problem, sending gas and electricity prices sky-high.
In order to offset the bill for French consumers, the State – the majority shareholder and soon to be the only shareholder in EDF – obliged the group to sell low-priced electricity at €42 per MWh to its competitors and alternative electricity suppliers.
That measure alone cost the utility a whopping €8 billion.
The global oil & gas industry's income jumped to almost $4 trillion in 2022, a huge rise from its recent average of $1.5 trillion
— Fatih Birol (@fbirol) February 11, 2023
The sector has a unique opportunity to invest a significant chunk of this in clean energy transitions, especially in emerging & developing economies pic.twitter.com/uTAzgbESjb
'Unprecedented' profits for fossil fuel industry
EDF's woes come as the five largest western oil and gas companies made a combined €200 billion in profits, making 2022 the most lucrative year for the fossil fuel industry.
Annual results released at the beginning of February from the so-called “big five” – Exxon, Chevron, Shell, BP and TotalEnergies – all revealed that 2022 was the most profitable in history, as the rising cost of oil and gas helped turbocharge revenues.
Meanwhile, the head of the International Energy Agency, Fatih Birol, announced on Tuesday that the global oil and gas industry earned profits amounting to some €4 trillion in 2022.
