EDF Hit by EU Subsidy Probe Into €73 Billion Nuclear Plans

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(Bloomberg) — Electricite de France SA has been hit with an in-depth probe by the European Union’s competition enforcers over a €72.8 billion ($83.5 billion) plan to built six nuclear reactors backed by the French government. 

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The European Commission said Tuesday it must check whether the financing may give EDF an unfair advantage — even though initial findings show the project is “necessary” and contributes to “security of supply and decarbonization.”

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EU regulators — under antitrust chief and nuclear skeptic Teresa Ribera — will now examine whether the funding is proportionate, while not adversely affecting trading conditions or distorting competition. Under the bloc’s rules, the commission has powers to order an EU government to retrieve any aid deemed incompatible with the law — although such decisions are rare.

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“In particular, the commission has concerns that the measure may consolidate or indirectly reinforce EDF’s market power,” the EU authority said in a statement. Regulators “will also investigate whether there are sufficient safeguards to ensure that EDF’s trading strategy will not lead to market distortions, and to prevent that aid is transferred to specific market participants.”

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The plan to build the new reactors — alongside swathes of renewables — is part of France’s effort to ensure long-term energy security as some of its existing units near their retirement age. It’s central to the nation’s ambition to be carbon neutral by the middle of the century. But long delays and cost overruns at projects in France and the UK have caused EDF’s debt to balloon, complicating efforts to get new projects underway.

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The French government aims to support the construction of the sites via a subsidized loan, risk-sharing mechanisms, and a two-way contract for difference.

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EDF didn’t immediately respond to a request for comment.

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Nuclear Renaissance

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France is at the forefront of trying to usher in a nuclear renaissance in Europe, with the technology seen as providing a crucial source of clean “baseload” power for times when wind or solar fails to provide enough to meet demand. While the country still gets around two thirds of its electricity from nuclear, the new reactors are seen as crucial to prepare for the replacement of part of EDF’s aging fleet of reactors in the coming decades.

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Most new nuclear projects need large amounts of public support in order to reach fruition: the EU has estimated it will cost €241 billion to scale up nuclear as part of its 2050 goal to reach climate neutrality. Italy has signaled its willingness to restart its nuclear energy program, but doing so won’t be easy amid high costs and long delays elsewhere in Europe.

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—With assistance from Francois de Beaupuy.

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(Updates with background throughout.)

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