Project Hercules: can we divide EDF without privatizing it?

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The Hercules project to divide EDF into several entities has recently been the subject of discussions between France and the European Union. The resurgence of these discussions worries many representatives of the French political class. What will happen to the national energy flagship?

To answer this question, Barbara Pompili, Minister of Ecological Transition, was asked on Thursday, February 4, to explain to the parliamentary commission on economic affairs the government’s trajectory. On the agenda: EDF’s financial weaknesses and the problem of maintaining the existing nuclear fleet.

Read on energynews.fr: Carbon neutrality: EDF entrusts its objectives to the International Energy Agency

The Hercules project will not privatize EDF according to the government

“There is no question of any privatization”

On the Hercules project to divide EDF, Barbara Pompili first wanted to answer the question of the pure and simple privatization of the French group. She thus states:

“There is no question of any privatization.”

“EDF is public, it will remain public, that is a commitment.”

The need to review EDF’s internal structure

On the other hand, the Minister recalls the need to review the internal structure of the company. The question remains open as to the possibility of opening up the capital, private management of certain facilities, or conversely the nationalization of nuclear and hydraulic activities.

The Minister also reminds us that electricity distribution is a public service. Therefore, the reform should not concern Enedis as some parliamentarians are concerned.

It also rules out the possibility of fiscal intervention (particularly on VAT). For this reason, it mentions the risk of disruption of activities with each new finance law.

But in case of structural inaction, EDF could face financial difficulties in the medium term.

Read on energynews.com: EDF Renewables signs a Charter for Agrivoltaics

Ensuring the maintenance and modernization of the French nuclear fleet

The problem of electricity price regulation

These financial difficulties would be partly linked to the regulation of electricity prices, the Minister reminds us. Indeed, this regulation prevents an equalization of electricity production costs. In this sense, in some cases, EDF is prevented from selling electricity at its real cost. It also recalls that the regulated feed-in tariffs for nuclear electricity have not been reviewed since 2012.

On the other hand, the reform would not involve any change in the rules on regulated tariffs for the final consumer.

Provide the means to maintain the existing nuclear fleet

In the long run, these financial difficulties would have an impact on the maintenance and modernization of the existing nuclear fleet, she says.

However, the Minister reminds us that there is no debate about keeping the existing park in the public domain. On the other hand, no mention was made in the committee of the future of nuclear installations on French soil.

Read on energynews.com: EDF’s digital reactors ready for the end of 2023?

Everything for the energy transition

Providing the means for transition

The government also wants EDF to take part in the energy transition. This will be done through hydrogen, says the Minister. At present, French competitiveness in this market would not be guaranteed if EDF did not have the necessary resources. In fact, structural redesign would be inevitable.

No agreement with the EU for the moment

In short, far from giving solutions, Barbara Pompili recognizes for the moment the absence of a precise scheme. At present, there would not even be the assurance of an agreement with the EU. For its part, France remains intransigent on the issues of keeping EDF in the national fold and maintaining regulated tariffs. For its part, the EU would require certain guarantees of clarity regarding the risks of interference between the public and private activities of the company.

Next week, the Economic Affairs Commission, together with the Sustainable Development Commission, will question Jean Bernard Levy, CEO of EDF, and Bruno Le Maire, Minister of the Economy.

Read on energynews.fr: How does France intend to comply with the Paris Agreements on energy?

To review the hearing of Barbara Pompili, Minister of Ecological Transition, before the Economic Affairs Commission: follow this link.

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