As if the problems caused by the fall in Russian gas supplies to Europe were not sufficient bad news for consumers, a new cloud looms which could push electricity prices in Europe significantly higher over the next few months.
The French nuclear sector, long seen as a stable, low-cost source providing supplies for export as well as for the domestic energy market in France, is in bad shape. A majority of France’s 56 nuclear power plants have been offline or running at minimal levels through the summer. In some cases, the cause is the discovery of worrying levels of corrosion; in others, the impact of the summer heatwave which reduced river levels and raised water temperatures beyond the regulated limit. Nuclear plants cannot operate without adequate supplies of water—a problem which continues to hinder the prospects for the proposed new nuclear station at Sizewell in Suffolk.
Some of the problems are temporary but many cannot be resolved quickly. France’s fleet of nuclear plants is growing old—most were built in the 1970s and 1980s—and the life extensions they have been granted may no longer be justified. Grand plans for new capacity have been bedevilled by technical failures and management incompetence. The plant at Flamanville in northern France has been under construction since 2007 and is now 10 years late and five times over budget. Industry confidence in the European Pressurised Water Reactor—the chosen vehicle for Flamanville and the Hinkley Point project in Somerset—has collapsed. Plans for a series of further new stations, conveniently announced by President Macron during the French presidential election campaign earlier this year, remain decades away from realisation. Unsurprisingly, EDF is refusing to take the risk of funding the Sizewell plant—forcing the UK government (meaning the UK taxpayer) to step in as the investor of last resort.
The failures of EDF, once the flagship of French postwar industrial renewal, have forced Macron to take the business into full state ownership. The company’s chief executive, who presided over the decline for the last decade, is leaving. Both are necessary steps, but neither will produce a rapid turnaround.
The ageing problems of the nuclear industry are serious in many countries, but France is exceptional. The country has relied on nuclear power to provide around 70 per cent of its electricity as well as energy security since it reduced its dependence on imported supplies. France has been able to claim that its carbon emissions are lower than any other major European economy. But all those gains are now history. France finds itself in deficit in terms of energy supply and will be forced to rely on imports. Areas such as northern Italy, which have come to rely on French exports of electricity, now face having to find supplies from elsewhere. The ripple effects will spread across Europe.
Britain is not immune to the impact of France’s problems. In recent years, the UK has relied on imports from France through the interconnector between Ville-sur-Tourbe in northeastern France and Lee-on-the-Solent in Hampshire. In total, 9.1 per cent of UK electricity demand last year was met by imports, with the majority of that coming from France. In the current circumstances, France will inevitably direct any available electricity produced by the remaining nuclear plants to its own consumers. Given the tightness of the market in the EU, it would be unrealistic to expect supplies to be maintained through the other interconnector lines from countries such as Belgium and Holland.
In the short term, the only possible option for replacing the lost power is natural gas. More renewable supplies from wind and solar will be brought onstream over time but the time lag involved runs to two to three years at best. Natural gas, as we know, is already in short supply and a new surge in demand as a result of the problems in France can only push retail prices even higher.
The prospect of a very dark winter with cuts in physical supply and even larger bills has come a good deal closer. Britain’s new prime minister will inherit a full-scale energy crisis with no simple solutions in sight.
