EdF lowers nuclear output targets because of shutdowns

OREANDA-NEWS. September 23, 2016. French state-controlled utility EdF has lowered its target for nuclear production and now expects to produce 6.9-16.9TWh less on the year than it did between 22 September and 31 December last year.

EdF has lowered its expected nuclear output for 2016 by 10-15TWh, to 380-390TWh from 395-400TWh. The company had already lowered its expected nuclear production in July, from 408-412TWh to 395-400TWh.

EdF extended maintenance periods at a number of nuclear reactors after it suspected steam generators at 18 units of having a similar anomaly as that found in the third-generation European pressurised reactor (EPR) Flamanville 3, which is currently under construction.

The lower target means EdF plans to produce between 101.8TWh and 111.8TWh of nuclear power by the end of the year, compared with 118.7TWh produced between 22 September and 31 December 2015.

EdF narrowed the range for its expected earnings before interest, taxes, depreciation and amortisation (Ebitda) in 2016, to €16.3bn-16.6bn from €16.3bn-16.8bn. This is because of lower nuclear production and an expected revision of regulated household electricity prices.

Lower nuclear output so far in 2016

French nuclear output so far this year was already below levels up until 21 September 2015, with 278.2TWh produced since the start of 2016 compared with 296.6TWh over the same period in 2015. Nuclear's share of overall power production also fell, to 74.7pc so far this year, from 77.6pc between 1 January and 21 September 2015.

An increase in gas-fired power generation partially offset lower nuclear output and could continue to do so by the end of 2016 and in 2017, particularly if cold temperatures in the winter months lead to an increase in heating demand. EdF said it expects nuclear output to be in a 390-400TWh range in 2017, which would be between 15.3TWh and 25.3TWh below nuclear production in 2015. This suggests the French utility only expects a slight improvement in nuclear availability in 2017 from 2016.

Gas-fired power production has already risen by nearly 6.7TWh so far in 2016, to 20.2TWh from 13.5TWh at the same time last year, taking the gas share of power production up to 5.4pc from 3.5pc in 2015. More gas-fired power plants could ramp up to meet demand in the winter months.

Sharp rise in French spark spreads

Prospects of lower nuclear availability in the winter months have provided support to base-load October, 4Q 2016 and 1Q 2017 French power prices, which led to a sharp increase in clean spark spreads for the three contracts.

French October clean spark spreads for plants with 55pc efficiency — calculated on the basis of Peg Nord gas prices — average at €10.69/MWh so far this year, compared with an average of €2.73/MWh at contract delivery in 2015.

The average of 4Q 2016 spark spreads currently stand at €6.24/MWh, up from €3.79/MWh at contract delivery in 2015, while sparks average at €9.11/MWh for 1Q 2017 so far, up from €6.24/MWh recorded as the average last year.

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French clean spark spreads (55pc eff.) €/MWh