(Reuters) – Electricity futures contracts have fallen sharply in France in recent months and threaten to fall below the operating cost of the nuclear fleet managed by EDF, undermining the profitability of the public electrician, already heavily in debt.
The base price for 2026, the first year of entry into force of a new agreement between EDF and the French state, has fallen by around 30 euros in three months and is currently trading around 71 euros/MWh, just above above the reference price of nuclear electricity of around 70 euros established in the pact concluded in November.
EDF’s operational costs have been calculated by the Energy Regulatory Commission (CRE) at around 60 euros per MWh, meaning that EDF could produce electricity at a loss if its contracts are not covered properly .
“If prices continue to fall, EDF’s ability to finance major investments could be called into question,” warns Clément Bouilloux, analyst at EnAppSys.
EDF did not respond to a request for comment.
According to analysts, the drop in prices is explained by weak demand, the increase in the supply of renewable energy and the continued fall in gas costs in Europe.
“No one is going to rush to buy 3-5 year contracts at 90 euros which are more expensive than the market, so there is some cause for concern, because that means that EDF will be forced to sell in spot, or at prices lower than what they expected,” underlines an industrial source.
“The government has made a bet that prices will not fall in the coming years. If prices drop significantly, EDF will be in a very difficult situation since they have not negotiated a floor,” adds she said.
“At that point, how does EDF finance itself? I think that the situation will be complicated.”
EDF’s costs rose sharply in 2022, during the European energy crisis, after a large part of the nuclear fleet was taken out of service due to corrosion problems, forcing the company to buy back at record prices the electricity that it had previously sold.
“If this drop is temporary, the impact will be small. But remember the period 2015-2018: during these years, the situation was very complicated financially for EDF,” underlines Nicolas Goldberg, associate director at Colombus Consulting.
French prices fell to around 27 euros/MWh between 2015 and 2018 and the group had to sell electricity at a loss, which hurt its results.
(Report Forrest Crellin and Benjamin Mallet, Augustin Turpin, edited by Blandine Hénault)
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