EDF, one of the largest electricity producers in the world, has embarked on a “2030” strategy focused on renewable energy and customer solutions in addition to its large nuclear business. According to CEO Jean-Bernard Lévy, “EDF’s future lies in a generation mix that combines nuclear and renewable energies.” Lévy says EDF will tackle the problems with its EPR nuclear reactor design by introducing a “New Model” EPR that will be cheaper. He also says that centralised grids are here to stay.
Jean-Bernard Lévy, who became the Chief of Électricité de France (EFD), France’s state-owned electricity company, in 2014, has had some turbulent years behind him. Electricity prices in the European market have plunged, and EDF has run into major delays and cost overruns with its new third-generation EPR nuclear reactors in Finland and France. Despite these troubles, Lévy remains upbeat. He believes in the future of the EPR: EDF, which acquired nuclear reactor producer Areva last year, is planning to launch a “New Model” EPR which Lévy says is cheaper and can be built more quickly. At the same time, the company is investing heavily into renewable energies and customer-oriented activities, as part of its CAP2030 Strategy. In the US, EDF is already a partner to firms such as Google, Microsoft and Procter & Gamble.
How would you describe the strategy of EDF in the post-Paris energy landscape? You have something called the CAP2030 Strategy. Can you explain what this is about?
COP21 showed that low-carbon electricity is one of the key solutions for combating global warming. With its generation mix combining nuclear and renewable energies, EDF is already demonstrating that it is possible to be a major global electricity generator yet emit very little CO2. As part of the CAP 2030 strategy that I have launched, EDF will continue its development of low carbon emitting energy production whilst at the same time retaining a nuclear base and speeding up the development of renewable energies. Another priority for CAP 2030 is to support customers and communities in their energy transition. I am convinced that we will still have a centralised and secure system in the future but it will be supplemented by a more intermittent and local decentralised system, in which customers will take charge of their consumption. In readiness for this, we must press on with research into electricity storage and smart electricity systems, by capitalising, in particular, on digital technology.
How will EDF’s energy mix evolve? How will it change from now? How big will renewable energy become?
It is my firm belief that EDF’s future lies in a generation mix that combines nuclear and renewable energies. We are already the leading generator of renewable electricity in Europe and our goal by 2030 is to double our installed capacity worldwide, increasing from 28 to 50 GW. In recent years, we have been investing as much in renewables as in new nuclear projects. Nuclear offers us great flexibility and a very high level of availability, and renewable energies complement this perfectly as we are able to adjust our nuclear generation effectively in order to facilitate their development.
“I would remind readers that eight of the world’s strongest economies have chosen nuclear as part of their generation mix”
Companies like Eon and RWE have split up – they have one business focusing on renewables, grids and retail, and one business focusing on centralised thermal and nuclear generation. Do you see this as a model for EDF or for other utilities around the world?
Of course this trend is closely watched by the whole sector, in order to assess how these companies develop, to what extent shareholders could benefit and how it influences the market. As regards EDF, the group’s strength offers us resilience in difficult market conditions and we intend to retain our integrated model by combining regulated activities with activities subject to market prices. We are in fact the only major energy supplier in Europe to have consistently shown a profit over the past ten years.
EDF has traditionally been one of the world’s leading nuclear energy companies. France has put a limit on nuclear expansion domestically. Does this make export of your technology crucial to future growth?
The aim of our reorganisation of the French nuclear subsidiary, with the takeover of Areva NP, is primarily to improve the effectiveness of our export offers. In the future, EDF will have full and sole responsibility for the design of reactors. Our responsibility over the long term is to be in possession of a competitive nuclear fleet and the very best skills, not only for the renewal of the French fleet but also to meet the needs of other interested countries. I would remind readers that eight of the world’s strongest economies have chosen nuclear as part of their generation mix.
You are encountering a lot of problems with the EPR technology in Finland and France (Flamanville). Is the EPR the future of French nuclear technology? If it doesn’t catch on, what will be the effect?
Without question, EPR is a technology of the future, combining performance, safety and predictability. We should not confuse the difficulties inherent in a large project such as Flamanville – due in large part to the fact that it is a pilot power plant – with the considerable benefits offered by EPR technology which is at the cutting edge of 3rd generation reactors. The EPR plant will be a key element in our strategy for renewal of the nuclear fleet in France by 2020 and beyond. On the strength of our experience in the construction of the first EPRs, we will be better placed to launch the “New Model” EPR. The NM EPR which we are working on with Areva will be a reactor offering the same characteristics as today’s EPR but it will be cheaper to build with optimised construction times and costs.
How do you see nuclear power evolve globally?
Positively. The nuclear industry is expanding rapidly throughout the world; 68 reactors are currently under construction (a third of them in China). In fact, nuclear energy offers many advantages: prices are stable and it is not impacted by market volatility, as in the fossil energies market for example. Nuclear also contributes to the energy independence of those countries that espouse it. Nuclear is an advantage for energy transition, as this energy does not emit CO2 and it complements perfectly the development of intermittent renewable energies.
“The New Model EPR will be a reactor offering the same characteristics as today’s EPR but it will be cheaper to build with optimised construction times and costs”
How important will the non-European market be to EDF in future?
Our CAP 2030 strategy outside of Europe has been rolled out over the last two years at a very sustained pace. Our objective is to boost the international development of the Group, by delivering low-carbon offers and solutions: nuclear- and renewable-generated electricity, tailored and innovative energy services. Beyond our domestic markets (France, Great Britain, Italy and Belgium), we have accelerated our expansion into high-growth countries. We have undertaken wind power projects in China and India. At the same time, we also want to support energy transition on the African continent, with low-carbon projects such as the Nachtigal Dam in Cameroon which we are developing with the Cameroon government and the World Bank. Furthermore, in the United States for example, we are already one of the sector’s leading operators and partner to major American firms such as Google, Microsoft and P&G. So EDF’s international development is well under way and I intend to continue this momentum in the coming months and years.
How is your business model developing in retail?
EDF has to adapt constantly to the major changes seen in the electricity sector: price volatility in the wholesale electricity market, institutional and regulatory changes, but also the new expectations of customers and communities in terms of energy. In order to retain its leading position, EDF places customers front and centre by delivering increasingly innovative offers that are consistent with new electricity uses, such as the Mon Soleil & Moi self-sufficiency programme. In this way, EDF is supporting businesses and local authorities by adapting to their needs, in particular in the areas of energy services and digital technology. For domestic customers, EDF is innovating by offering them digital solutions to help them optimise their consumption and make savings, like the e.quilibre digital dashboard for example.
With regard to energy policies, what are you expecting of policymakers? In Europe, with its high degree of variable renewables, the integration of renewable energy in the electricity system is an important issue. How can this best be done? Do we need capacity markets to serve as backup?
In Europe we need an incentivising, powerful and predictable economic signal, in the form of a CO2 price corridor for example, as suggested by the French government. The aim is to move towards a fundamental shift in favour of the lowest carbon energies. At the same time, we have to take measures to secure the electricity supply of Member States, especially against the backdrop of a continuously rising share for renewables, which is in itself a highly positive development. Unfortunately, energy markets today are depressed and they provide no incentive to maintain or install generation capacity, or to invest in demand management. There is an urgent need for the effective operation of these markets to be restored by means of the capacity markets which have become indispensable in order to guarantee security of supply.
This interview took place before the decision by the UK government and EDF to continue with the Hinkley Point C project in the UK. It was first published in World Energy Focus 2016, a magazine produced by Energy Post for the World Energy Congress in Istanbul.