Energy-efficient companies willing to finance part of nuclear future in return for stored electricity (Nicolas de Warren, Uniden)

LA TRIBUNE – In 2022, energy-intensive companies were hit hard by rising electricity prices, with their prices rising from less than 100 euros to 1,000 euros per megawatt hour (MWh) in 2021. What is your assessment of this extraordinary year?

NICHOLAS DE WARREN – For energy-intensive companies, the weight of energy is 10-60% of production costs. In the production of aluminum, chlorine or ammonia, for example, often energy electrical or the cost of gas accounts for 60-80% of variable costs and 60% of production costs. The problem is that there are electricity and gas prices in 2022 exploded. Gas hedging strategies vary according to business models and company preferences. With very high prices of between €150 and €200 per MWh, some buyers were able to split their pre-purchases into lots., for example, try to take advantage of 10 or 15%possible negative opportunities. And for the part that Access doesn’t cover when it comes to electricity rExceptioneelectricity nonucleus hdate (ARENH) At €42 per MWh, buyers had to hedge under very unfavorable conditions at the end of December, but some of them there is assumed the risk of not fully hedging given the very high level of prices. It’s all about the subtle perception and analysis of market micro-signalshowever term hedge is far away is an exact science !

Again, face to face many There is a sharp increase in production costs and a decrease in energy consumption, about 10-15% among producers of electro-intensive chemicals, metals and others sectors. This is a reduction in consumption is also justified by don’t slow down Demand for early 2023. In general, there was a “hot stop” of production, that is, in part, with device activation partial action. It is quite simple to reduce with 20 years 30% production rate for example when there are more complex and exit is expensive absolutely factory WHO operates continuously.

In fact, it was necessary some of them companies choose their responses to inquiries End of 2022, to avoid selling risk be at a loss. LSlowdown of e production Site (p energy intensive more highlighted due to more than in previous yearsdecrease in order books for the beginning of the year pushedant to companies reduce for their shares reduces their needs Turnover capital (BFR).

Finally, there are some manufacturers also replaced in their workshops by gas fuel and especially diesel because it was and that can stay in 2023,cheaper than gas. But this situation is much less common in France than in Germany where industry consumes twice as much gas, not without being strong influence on CO2 emissions Unfortunately.

Do you feel that you have received enough support from the state in this difficult year?

L‘State, after continuous dialogue, has built a targeted system energy– intensive, Approved by Brussels, for partial offset thebear financial losses. For companies whose energy costs are more than 3% of turnoveretc additional costsetc will be compensated up to 70 or 80% by energy ceilings 50 or 150 million euros due to their exposure to international competition. VSand support will be very selective, because takesdr that affected groups having negative earnings before interest, tax, depreciation and amortization (EBITDA) or substantially reduced by at least 40% due to the explosion of their energy costs.

In addition, this support may be necessary, what do we need structurally, price stabilization wholesale of electricity competing with the rest of the world. Due to this regime reform formation of prices in the wholesale market European does It is urgent and important to offer long-term visibility that will allow us to decarbonize our processes by 2050. This reform should be largely completed by 2023 because it is urgent; A European public consultation will start soon and will result in a Commission proposal to be discussed with member states and parliament at the end of March.. This is a major overhaul marketing design provides structural responses to this price crisis. I in this regard, it is necessarily optimistic, and according to experience, it is precisely in times of acute crisis that lasting solutions are developed.

Gas prices have dropped in recent months, will you be able to take advantage?

Gas has a price of course fell sharply in the spot market (price of the day or next day), however energy intensive companies get essentially from their needs in the futures market, quarterly or even annually. gas we will consume in the first semester 2023 therefore it was taken about 120 per megawatt-hour when less than EUR 70 euro today. On the other hand, if the trend is confirmed more for a long time, we can benefit from it.

Couldn’t you have increased your production and consumed more than you were given to get cheaper gas?

It is not the more often production cannot be increased immediately to buy cheap gas on the spot due to technical limitations production which does not allow to stop and go. The rhythms of energy-intensive industrial processes are rigid and their modification requires great anticipation.. It shows impossibility to cope with energy intensive factories very tall price volatility energy as we know it today.

Worried about possible power outages this winter?

Nopebecause at first the situation is relaxed and we could manage anyway possible load shedding, hence temporary power outages, for sites that may – and this is not the case for all – Thanks to the Ecowatt system and with warning ON. A detailed map of industrial areas that can be switched off and not for technical reasons has been drawn up for each department and must be strictly followed by network managers, RTE and Enedis where necessary.

For now, historically, we have winter many so cute We can I hope it won’t be cut this winter. Critical period cold usually late January and comes close to it cap, must Significantly less risk of interruption With a large number of nuclear units returning to production since the very low point last August – and on the announced schedule.

The International Energy Agency (IEA) warns that gas shortages may increase next winter, how do you welcome this news?

France’s gas reserves there is right now has been fulfilled near 85% and theyhethis was it‘in height with 55%year the last one, so we have some under our feet. outsidewill be needed enjoy it results on global gas consumption especially economic recovery is expected in Demon We continue to follow the evolution very closely during the current period our shares spring and Replacement capacity with imported LNG from Russian gas will no longer be delivered. It is too early to draw any conclusions.

What electro-intensive people will need in the long run?

we have Firstly the need for an efficient nuclear fleet, returns to the best global standard operating speed: for the world’s largest installed base, nothing could be more normal. for Our “base load”, our factories consuming renewable solutions – especially large offshore wind farms – may represent an addition that will remain marginal in France for at least the next two decades.. But this share can still increase according to development of this huge offshore wind turbine, as is already the case in Germany.

Businesses the most electrointensive so you have to buy it again long-term electricity contracts based on the nuclear fleet. Contracts at 10, 15 Where 20 years. These are contracts forwould worry single companies or of A consortium like EXELTIUM for example (28 producers connected to EDF from 2010 and until 2034) the only existing these days. The message seems to have been heard by EDF’s new CEO. Some of these contracts may include a contribution to the financing of future “main fair” operations in the following years for certain sections. In the long term, the contracts could cover part of the financing of a future new nuclear tranche in exchange for the stored capacity. of What happened to EXELTIUM Where in 2010Industrialists benefiting from this 25-year agreement There was a He gave an advance of about two billion euros to EDFros for the construction of Flamanville 3. this beingthe entire industry will not be in it ability to do or will definitely not want to do it, however, given EDF’s future financial needs, this may be an option to explore in due course.