Late last year the European Commission published its winter package, also known as the clean energy package, setting out energy and climate objectives for the EU towards 2030.
This came against a backdrop of European utilities being forced to make major operational adjustments because of falling electricity prices, which were in turn the result of a larger share of subsidised zero-marginal-cost renewable energy in the power mix which squeezed margins for thermal plants.
And more recently, many in the industry have been taken by surprise by a rapid decline in production costs for offshore wind and ground-mounted solar PV.
In the UK, new nuclear is being built because CfD’s enabled investment in the 3.2GW Hinkley Point nuclear plant – a deal seen by some as vital for UK security of supply. Nevertheless, the plant’s strike price was almost double the spot electricity price in the UK at the time of the agreement in 2013, and power prices have fallen since then.
As Europe’s largest electricity producer, EDF is in a good position to influence European energy policy – and it is doing so by exerting pressure on the European Commission to look at policies that could bring more clarity to long-term investments.
The producer is right when it says securing future investment in power projects with very high upfront costs is practically impossible against the current backdrop of low forward wholesale electricity prices ( see accompanying story ).
However, producers today have to be more creative in slashing costs.
The new generation European Pressurised Reactor (EPR), developed by Areva with the first being built at the 1.65GW Flamanville 3 plant in northern France, has had more than its fair share of problems, with costs spiralling out of control, delays stretching into the years, and the reactor vessel under investigation by French nuclear watchdog ASN.
At the same time, many countries have over the years lost their appetite for nuclear power, most notably, Germany.
And cutting costs is particularly difficult for the nuclear industry, which has to meet myriad safety requirements.
But nuclear remains a reliable source of electricity, and the backbone for many industrial economies’ low-carbon ambitions, which means a huge export market will be there for the company with the right expertise.
It is worth EDF continuing its work to make nuclear power more affordable in the future – no matter the cost of this work today. email@example.com