EDF agrees to Fessenheim closure compensation protocol

The board of directors of French utility EDF yesterday approved the terms of the protocol negotiated between the company and the government for setting compensation for the closure of the Fessenheim nuclear power plant. Under France's energy policy, Fessenheim - the country's oldest nuclear power plant - must close when the Flamanville EPR is commissioned in late 2018.

The board of directors of French utility EDF yesterday approved the terms of the protocol negotiated between the company and the government for setting compensation for the closure of the Fessenheim nuclear power plant. Under France's energy policy, Fessenheim - the country's oldest nuclear power plant - must close when the Flamanville EPR is commissioned in late 2018.

Fessenheim's two 880 MWe pressurized water reactors have been in operation since 1977 and 1978, respectively (Image: EDF)

French President Francois Hollande's 2012 election pledge was to limit nuclear's share of French generation at 50% by 2025, and the closure of Fessenheim by the end of 2016. In June 2014, following a national energy debate, his government announced the country's nuclear generating capacity would be capped at the current level of 63.2 GWe. It will also be limited to 50% of France's total output by 2025. The French Energy Transition for Green Growth Law was adopted in August 2015. Nuclear currently accounts for almost 75% of the country's electricity production, making closures of power reactors appear inevitable.

While not calling for the closure of any currently operating power reactors, the new policy means that EDF would have to close older reactors in order to bring new ones online. The utility is constructing an EPR unit at Flamanville which is currently expected to start up in late 2018. EDF would therefore be forced to shut one of its reactors - most likely Fessenheim - by that time in order to begin operating the Flamanville unit.

Yesterday, EDF's board of directors approved the terms of the protocol negotiated between the company and the state setting the terms "governing compensation for damage suffered by the company" as a result of the closure of the Fessenheim plant. The board authorised EDF president and CEO Jean-Bernard Lévy to sign it on behalf of the company "in due course".

The protocol will provide two elements of compensation: a fixed initial portion and a further variable portion. The initial fixed portion - currently estimated at some €490 million ($527 million) - will cover the anticipated costs associated with the closure of Fessenheim. This will include such costs as retraining of staff, decommissioning the plant, the basic nuclear facility tax and post-operational costs. Some 20% of this initial payment will be made in 2019, with the remainder due in 2021.

Further variable payments will be made to reflect EDF's operating income shortfall up to 2041 due to the closure of Fessenheim. This will be determined on the basis of market prices and EDF's 900 MWe generation volumes, without Fessenheim, as established over that period. EDF said its partners in the Fessenheim plant - Germany's EnBW (17.5%) and Swiss group CNP (15%) - will be entitled, "under certain conditions, to receive a share of the shortfall compensation in proportion to their contractual rights over the generation capacity of the power plant".

EDF noted the closure of Fessenheim also requires a decree revoking the plant's operating licence, to be issued at its request and which, in accordance with France's energy transition law, will take effect at the same time as the commissioning of the Flamanville 3 EPR.

The utility said it had requested the revocation of Fessenheim's operating licence "subject to entry into effect of the permissions necessary to proceed with the construction of Flamanville 3 and the continued operation of Paluel 2 ... and also confirmation from the European Commission that the protocol complies with state aid regulation".

Lévy said, "With this decision on the part of its board of directors, EDF is guaranteeing compliance with legislation imposing a ceiling for France's installed nuclear electricity generation capacity, while at the same time safeguarding to the utmost the interests of the company and its customers."

Energy Minister Ségolène Royal welcomed EDF's decision to accept the protocol. "The decision taken today will enable EDF to save the investments that would have been necessary for the extension of the plant and thus give priority to investments in its major industrial projects (hydroelectricity, other renewable energies, Flamanville 3, the Grand Carénage life extension program, and export projects)," she said. The State will "accompany" the company in the implementation of this industrial strategy, the minister added.

In a statement, Royal called on German Energy Minister Sigmar Gabriel to set up a joint Franco-German commission to implement new industrial projects in the Haut-Rhin region in Southern Alsace. These include a Franco-German factory for a new generation of batteries; an application for the establishment of a plant to produce Tesla electric vehicles; and, the establishment of an industrial dismantling sector.

Researched and written
by World Nuclear News