You are listening to Redefining Energy. Your co hosts from Berlin Gerard Reed and from London Laurent segalin today on really defending energy job, We're going to talk about French nuclear Oh la la. But first award from our partner. This podcast is powered by Expo, an international leader in providing sustainable energy solutions for
the future. Yeah, ja aulla Llah. But first question is why should the ninety seven percent non FRENCHI listener be interested in the fate of French nuclear And I can tell you it's because, whether we like it or not, the health of the French nuclear fleet is a key component of europe security of supply and energy price levels and by the way, de carbonization, Yeah, Europe and beyond Europe. A well functioning French nuclear fleet reduces the amount of
imported ler G absolutely absolutely. So. We have this fleet of fifty six reactors, sixty gigawatts, managed by a single company, and it represents between ten and fifteen percent of detricy consuming the continent. And if you just account for zero carbon sources, it's even a much larger part. And that's been really clear. It was also an incredible feat of engineering. The building of them and how fast they were built really incredible. Yeah, but look,
twenty years ago EDF was the most powerful utility in the world. They were producing four loat and twenty hour and they were privatized. They reached two hundred billion eurovaluation and twenty years later they are plagued by debt losses. Fully time government intervention, IDIF had to be renationalized. So it's a bit of a fallen angel. It's one way about that, Lauran, It's a French disaster.
We don't want to re litigate the past. We don't want to engage in sterile discussion about whether nuclear is the solution, a solution not a solution. We have to live with. The simple facts is that for the past thirty years, the French new fleet has been the backbone of the open energy system and it's going to continue to be so in the coming decades. So around do you think Europe can rely on a French nuclear fleet come forward?
I have my opinion, but at the end of the day, it's better to have a real expert discussed with us that matter, and our guess this week is Emeric de Vigan and is the former EDF Energy trader and he was in charge of trading the power from the all nuclear fleet. So Emeric know what is talking about. Is now head of Kepler Energy with a leading subscription
based data analytics platform. They'll bring a lot of real time market data and really Emeric knows what's going on in the nuclear fleet, probably even better than edf itself. Well, let's bring him on the show. Emeric, welcome to the show. Thank you for having me. Emic. We've been new to talk about French nuclear So what's your current assessment of the situation right now? The current situation of the French nuclear is a big concern. Was the
French nuclear fleet used to produce round form? What our was? It did produce less than he and our last year. You can use whatever what you want, catastrophe, industrial accidents, but in any case, twenty twenty two was incredibly low, lower than anyone would have ever expected from the French nuclear fleet. So ahead of us, there's more question than answers how much can we produce this year in twenty twenty three? We know what should be above
three hundred tower, which is better but far from being great. What is more of a concern is the target that we are reading in the news for the coming years where some French government officials are saying we should aim for three hundred and sixty t tower, which is in its ap still extremely low and in my opinion, probably not ambitious enough to have abundant and cheap electricity in France. But also across your can I ask you that when you just talk
about it's not ambitious enough. When I look at that number, I sort of think I don't even know how you're going to hit us. So for
me, that's incredibly ambitious. What am I missing? Well, I think that's the big issue we all having Looking at the French earlier performance, we got used to poor performance, and this is why it's very important to look beyond Front and look at the performance of nuclear generation in other countries where the availability factor is close to seventy five eighty eighty five percent, potentially ninety percent, while in Front we hamming for sixty or seventy percent. We should have
much more ambitious targets. Again, we used to produce four hundred ter what hours, okay, and the two reactors that person times are not running anymore, But we were actually not producing four hundred We were producing four hundred and twenty, So clearly producing four hundred ter tower should be feasible. And the reason I'm saying that also is that we know we could do upgrades that some other countries did increasing the power of the reactor, which doesn't require such a
huge amount of work. You have been in charge of trading short term that nuclear fleet when you're at TEDF trading, And what a lot of market participants always complaining is that there is this system called REMIT where every producer is supposed to put forward or announce the plan too are not going to work, And the EDF had the bad reputation of not really abiding to its own short term prediction. So was it a bit of insider trading or how do you analyze
that? Well? First, and I'm being very honest here, there's no insider trading at TEDF. Clearly detect the REMIT regulation very seriously, but it's true and reality. There is an issue with the quality of the REMIT messages that are published by IDF. There's a various explanations for that. The one DF always said that these REMIT messages are not meant to be a forecast of the availability or unavailability of the future. It's a view of when we're going
to do our maintenances. See it's causing in my opinion, two issues. One is the impact on the price. Because of the quality of the REMIT messages, is not easy for traders to get a feel for what the forward availability will be, saying that some companies like Kepler have their own forecast which are a lot more reliable than what IDEF is publishing. The second question it
raises is more in terms of reputation. People, as you think very quickly link the poor quality of these messages to a willingness to manipulate the market, which I think is sad. And also you always wonder how IDIF is not
actually able to correctly forecast the lens of their maintenances. You know, when you look in other industries like the oil business, chemical business, which are not less complex than the nuclear business, any maintenance that is meant to last months last month was on the nuclear reit any maintenance last at least ten or twenty percent longer than initially planned, which is a bit of an issue from
a reputation point of view. Can I ask you just so I perfectly understand this IDIOF comes out with a protection and says we're going to produce x amount of power. Tell me what happens if they don't produce that amount of power? A mott of the financial implications for media. There's two things here. IDEOF rounds two kinds of forecasts. One is a direct forecast that they used to issue as a listed company saying we would produce three hundred and fifty hour
of electricity with our nuclear fleet this year. In my opinion, they used to take this this target pretty seriously. They used to revisit it through the year, but it used to be quite accurate. That's one thing. The other thing is everything that falls under this REMIT regulation where they simply forecast the unavailability of the units unplanned or planted, so they have to publish everything. If they don't publish an outage and an availability, then they could get fined
by the regulator. But that's not really the issue. The real question is this REMIT regulation inside the trading market, manipulation, etc. The real question is why IDIF is not able to produce more because this is what costs money, because it's some power they can't sell or the market, or worse that they have to buy back on the market because most of the nuclear generation is sold forward, so whenever something unplanned happens and IDIOF has to replace this power
with some volumes coming from the wholesale markets exactly. And that's where I'm coming from. The whole thing is that. So if what you've got is unplanned outages, then what ends up happening is IDIF has a loss because you've sold the power forward at a certain price and then you have to buy a back delivery. Right, That's what happened. So then what I don't understand is
why it's so difficult to go and sort out maintenance within IDF. And again, if I look across the rest of the world, I don't see this number one and number two. We're living in a let's call it a renewables world where every day got the wind changing, the sun changing, and we're doing predictions on a real time basis, and m I sort of getting it right. But we can't do this in nuclear in French nuclears. I explain this to me, I just I can't get my head around it. Yeah,
we'd agree with what you're saying. We've got to realize that it's an industry with a lot of Nurcia, and until twenty nineteen hotel prices were on what fifty years permega what tower, So maybe at that time it was not that costly to have low availability or you know, do not produce as much as possible. So maybe at that time they haven't done the investments into you know, improving the weathery're running the maintenances. Now there's those explanations which I
have to give here. Whenever you speak to people at DF they tell you that the regulator is extremely firm or tough, not sure about the right word there. So whenever they're running maintenances, it's not only tendard maintenances that they're running, but they're also upgrading a lot of the systems at the unit, which explains why the maintenances lasts longer than expected. You know, they love to say that it's basically bringing generation three nuclear to generation four nuclear what they're
doing during the maintenances. So I guess that explains a little bit why all this takes a lot longer than in any other country. But in any case, I think it's only now with this energic csis that we have seen in the last two years that we start realizing how costly this can be, which is a bit frustrating. Now, it's not really a secret that EDF has
been always lookwarm about a pure liberalization of the energy market. And although they like it very much, you know in country like the UK where they could gain market share through liberalization, in France the new that liberalization was only a way to lose market share in a certain way because they started at one dred percent. And so my interpretation is that they've tried a lot of tricks in the book and you'll tell me if they are a perpetrator or victim, but
they end up with that weird market mechanism called the arene. So can you explain a bit what it is? And at the end, why is this price not fixed by the market but by some bureaucrats or the assembly. Yeah, and it is this mechanism where has to sell one hundred tower of nuclear generation to its competitors, competitors on the retail business, not on the generation business of course. So every year there's an auction where the retailers can order
this nuclear generation at forty two year euros. There are rules on how much they can buy depends on how much their portfolio NEEDSTA. I won't go into all the details there. The issue with this mechanism, in my opinion, is not really the price. I know that now that prices are one hundred
and fifty euros permegaba tower we seek forty two looks incredibly low. But honestly, two or three years ago, it seems to me that if you was happy with this forty two euros, or would have been incredibly happy with forty six or fourteen auros per mega whatever. So I don't think it miles away from what it costs ID have to produce this nuclear electricity. The biggo trube
with the AREND is the optionality. The retailers can buy this electricity when the market price is above this forty two euros permegaba tower, and can also decide to not buy when prices are below this level, which is what happened in twenty fifteen and twenty sixteen, if I'm not mistaken. So it's mechanism that
is far from being perfect. Again, mainly with its optionality. I don't think IDEF is really a victim of the price, because also let's not forget that this electriested that is purchased at forty two euros Permegaba tower is sold back to back to the end user, so the money doesn't go into retailers pocket. This forty two euros benefits the French end user who determines the forty one or the forty six. Or there must be a guy or three guys in
a room and say it's forty one or it's forty six. So who are those guys? Honestly, I can't tell you. I think it's exactly what you're saying. It's a few guys in a room. There's this very funny video that you can find on the internet. While the head of the French regulator said, well, you know, this discussion is not very scientific. At the end it's forty two because it's not forty three. And that's really
what he declared in the parliament. That way of fixing a price. It is very reminiscent of what happened on the Uzbek cotton price fixing between the Uzbek cotton producer back in the early fifties and the Soviet textile consumer and they could not find the correct price of cotton and there was no market mechanism. And at the end, it's Joseph studying in person what to determine the price of the usbek cotton. I mean, why, why can't they have a normal
functioning market or is it really the nature of nuclear? How do you see that? I don't think it's the nature of nuclear because I think in a lot of other countries like the US or Finland, the operators are able to give their costs, their cash costs. The issue in front, in my opinion, is that we love to see different costs on nuclear. You have the cash cost, you have the accounting costs, you know, taking into account the future investment that are needed to expend the lifespan of the station.
So you know, we'd love to make things complicated so that they're not transparent. And that's clearly the issue because you see what it's leading us today where you have on the one end the regulator that leaked the documents saying one of the costs of producing a new charactistic sixty one years Permegawa tower. If says no, it's seventy eight euros, and would even love from what I have
to get more, you know, ninety yuros Permegawa tower. So we are really struggling with this lack of transparency because there's no proper formula to calculate discussed. Which is I agree with you, which is watching edible when you think about it? Because the nuclear nation infants is a monopoly. Can I switch the team and just I have a question relation to last year, because you'll
know the answer to this. So if I understand what happened last year, what you had was we obviously had power shortages in Europe at the beginning of sort of this year and at the end of last year. And I've said a large part of the reasons because the French fleet was out, but we also saw was the Germans switching on the coal plants. I suppose My question is did the Germans switch on those call plants because they were supplying power into
France? Was that the reason they did this? Or was it because they because they were switching off their own nuclear plants? Right? And just curiosity, but it just love to hear your thoughts. It's a very good question. First, if you allow me to correct you. Last year, we had fears of power shortage on the market which didn't materialize for various reasons. One is the weather, but I'm not really buying into this. I think weather was average it was not super warm. It was not super cold.
The main reason for not having power shortage is the fact that the demand was completely destructed, you know, we're not using the term demand destruction, and that saved the power supply demand balance. But also on coming back to your question, font was able to import a lot of power from its neighbors to upset for the seeing one hundred. Our nuclear generation was important, power from Spain, from Italy, but also from Germany and also, if you said,
from the cold stations running in Germany. Generally speaking, Germany is able to cope with the shut down up its nuclear fleet. I'm not saying there won't be press on the grade around there, but it shouldn't last very long. So yes, last year France was imparting massively from Germany, even in the summer, which is super unusual. It's quite usual to see if fronts
imparting from Germany in the winter, but not in the summer. How do you look at the upcoming winter, Well depends from which angle you see it. From a pure supply demand point of view, it's looking a lot better because the nucleard generation has improved. And you know it was solo last year that we're talking about twenty five percent better than last year, probably ten gig what's more, which is huge, but also because the demand is still very
low, which is not such a good news. Saying that, I mean the demand is low because some companies counterfold the high price of electricity, which is bad. But the positive is that it's also low because the residential clients have changed their behavior, and also with seeing some industries investing in energy saving and energy efficiency, which is quite positive, but rays is questioned. But the future, you know, will demand eventually pick up? And if demand
doesn't pick up, how much nuclear do win it in the future. I recently, in the light of having more intermedtency on the system and now the French nuclear said that they can manage intermedtency by modulating the production. Is it for real or is it arming the plants as I see somewhere. So what's your take on the flexibility of the nuclear fleet. Yes, it's a very good question, and you've already partially answered it. The nuclear stations are flexible.
They can up and down pretty much as you want. Obviously, they can go from zero to full capacity from one hour to the next. But I would say that generally flexible, and yes, they can cope with the intermittency or renewable as well as they were dealing with the intermittency or the shape of the French demand, because you know, let's not forget the French demand is probably the most volatile in the world because there's a lot of electrical leading
in the country. So yes, they can do it technically. But what's interesting in the latest development is that it seemed that eventually IDF or experts started admitting that it was arming potentially arming the units, which is interesting. When you speak to people working with large devices in other industries, they all say, yeah, of course, there's no way rumping a nuclear units up and down several times a week or sometimes several times a dad doesn't have any impact
on the aging of the units. So yes, the French nuclear can deal with it like any other nuclear station could actually, but this comes at the cost. That's a bit of a more tricky question. But I'm always wondering, because IDF is vertically integrated, how much do they report on the generation division versus the retail division, and how much cost is transferred from one to another, because if you look at, for instance, another integrated company we
have in Europe, which is NL. This is clear financial distinction between the retail operation, the transmission operation, that generation operation. Do we have some cliity on that or is it all a bit fuzzy? I think that interesting that what we've seen in idfarly financial results last year is that a lot of what has been lost on the generation side was made back by the trading harm
of IF trading. Wow, So how do you explain that? It's a natural edge and it's the reason why most of the utilities have a trading ham because just very simple. When you're a tailor, you have to edge at any price to have enough power to supply your part folio. So you can't
take any risk, while the treading harm can take some risk. And you've seen what happened last year when the power for delivery twenty twenty three twenty treaded up to what five hundred yuos Permegawa tower even ire for a few days and then we're delivering way under So not buying everything at that price was the right decision. Very good. Vertical integration is back in the game, Americ.
Maybe just to end this, we talked a little bit about the future and how you see the role of nuclear in this clean electricity world going forward, in particular the role of French nuclear in European context. You'rered percent correct. You have to look at Europe when you think it's the role of French nuclear. We've seen it in the last two years where friends turn from export of electisty to an import, which has an impact, not can effect on power
prices across Europe. So the question for the future is in fact more on the demand that on the supply site, will there be enough demands to justify as much nuclear than we have today in the fure mix potentially more. That's a very important question because one could say that at the moment, with demand levels as they are, we probably don't need as much nuclear doneration than we have now. Again, because nuclear is great when it runs baseload, because
then it's economically super interesting and obviously it's low carbon technology. But if all of a sudden you have to rump your units down several times a day, several times a week, then it starts being a lot more expensive. And the question hearing the discussion that happens these days between idf CEO and the government,
is nuclear electricity competitive at ninety or PERMGABA tower. I think it's a big question mark and it probably is a no because I'm not sure it's competitive against all the waste produce electricity in Europe, but also or maybe it's not competitive against priso inexist on other continents. Wow. But on the other hand, what's the price of energy security, what's the price of national pride, what's the price of keeping those jobs? Yeah, sometimes there are other factors
than the pure market forces in an energy policy and national security. What national security when you need to import your uranium from what Nizier, Kazakhstan, I'm not really sure about that. Well, now I'm coming from it. At the end of the day, France has nuclear weapons. They also have nuclear submarines and guess what they need to be. You know that knowledge needs to be kept in France. So there's a crossobs, aalization that takes place as
well, So it's not just commercially buying and selling power, right. Yeah, But it's an interesting one because I was actually super surprised and I heard about TDF complaining about the loss of skill with people retiring, because I thought, you know, it's such a big company, they could probably have anticipated that a little bit. But also, as you said, we have nuclear
weapons, we have nuclear submarines, we have nuclear flight carriers. So I was and I'm still surprised by the loss of workforce, educated workforce in the nuclear field. I find it very surprising that it's happening now. Okay, Emeric, thanks for this anyway, So those assets are here, They're not going to disappear overnight, and let's just hope they continue to be used in a more thoughtful way in relation to the power production and the zero carbon production
in Europe. Yeah, yeah, I don't know what to conclude, your heart, what do you want to conclude? I think we could say that it's good because at least we can have these discussions now, which wasn't the case a few years ago. And we all think Claire is a great tool to reach the Nezier target. We also strongly believe that it can be very competitively speaking, let's make sure that happens in the coming years. Absolutely, Amic, thank you so much for coming on the show. Yes, thank
you very much. It was a pleasure, great discussion. Thank you very much for coming on the show. Jeah, before you say anything, I want to point out that Emeric is a sailor and it's from Brittany, which is the region I come from, and I've been sailing a lot, so I have a lot of respect for him. Number two, we just add a fascinating conversation and so different from anything we read from the nuclear lovers or the nuclear aitors. I agree totally with Youie, I have a question for
la Ron. I was quite I was quite tech. I still can't come to terms us, which was his explanation of the fact that you know, EDI Effort come out almost on a quarterly basis with predictions of how much power they're going to produce every year, and they constantly missed them, which costs them a lot of money, and that they then on a monthly basis are
coming out with maintenance and planned and unplanned of the nuclear plants. And the thing that I just scratched my head was how can they get this so wrong? I suppose what I concluded that from listening to his explanation was there's just serious cultural issues within that ADF business. I mean, that's the that's the only thing I can conclude after but it really really did strike me that they're and but let's be clear. That's why they went bankrupt, that's why they
were nationalized because again they got their maintenance wrong. I mean, so explain it to me please, I just okay, you pointed the right problem. It's in one word, flippancy. Flippancy Okay, that's okay, that's a good word. That's a good word. Okay. In a in a transition world that's moving decentralized, that's moving digitized, epitomized the old world centralized, analog, a bloatd bureaucracy. And the thing is they're all bureaucats, so
there's no downside. Nobody's gonna be fired, there's no upside. They never get a bonus, especially now that they are not under stock exchange anymore. So they have literally zero motivation to do good or to do bad. They have zero motivation to innovate. And for thirty years, because they had built this absolute engineering marvel, there was swimming in cash, cash by the way, that the government you know, immediately took so they don't care, that's
what I think. Okay, So can I follow one from that? In assent? Well, then, how do you see the future of that French nuclear flat? How do you see it now? It's going to tag along. But let's be clear, even the politics have tried to reform in DF, they've tried to split it, they tried to put some more market common sense in their thinking, and IDF has resisted any type of change. There are a lot of good quality people, so ultimately they're going to fix their
current fleet. But let's face it, they don't have the money to build new nuclear plans, especially if the price tag of each new unit is twenty billion. They don't have the money and the government won't let them increase the prices. So I don't know. Nobody has managed to reform DF. It is what it is. I'm so taken back by what you're saying. I really am, And I'm not disagreeing with you anyway, right because again I just go back to it the brilliance of what IDIF did fifty years ago,
which is to begin that whole process of building this nuclear fleet out. And as I said, they were the kings of the world, kings and nuclear kings of the power generation. And then and as you said, the bureaucracts struck over and the rest is history. It is tough to change, tough to change, tough to change, we end up this bit or sweet episode. Even decision makers can find a solution, so we're not going to find
it anywhere. Just to say that it is, in my opinion, has stupid to be one hundred percent pro nuclear as it is to be one hundred percent anti nuclear. But what is for sure is that there is no place for private capital in nuclear. It is a government game and it really depends how governments are motivated over the long term to invest in nuclear. But I would say ninety nine percent of our listeners will agree with exactly that statement.
There's no role for private capital than in nuclear. Yeah, that's a jard In two weeks time, we'll have a bit more joyfull episode with an entrepreneur and batteries, so we're going to talk about the future, not that, but we think Jim is very talented. Man. It was crazy. It was great, absolutely great to have more, really brilliant and we thank our partner Expo and Joab I took to you. In two weeks time, look
forward to it. Thank you for listening to Redefining Energy. Don't forget to read the show and subscribe on Apple, podcast, Spotify, or the platform of your choice.