France’s EDF Takes $29 Billion Hit Over Shutdown of Nuclear Reactors

EDF has shut down 12 of its 56 nuclear reactors because of corrosion discovered on pipes that cool the reactor cores. The company, the world’s largest operator of nuclear plants, is scrambling to replace pipes and restart the reactors for this winter, when Europe’s power supplies are expected to come under further stress because of Moscow’s decision to cut deliveries of natural gas to the continent.

The expected hit of 29 billion euros, equivalent to $29 billion, comes on top of more than €10 billion in losses that the company is expected to book because of France’s decision to cap retail electricity prices this year. Both the reactor outages and the price cap have forced EDF to buy power on Europe’s wholesale market, where prices have soared, and sell it to retail customers at much lower prices, booking huge losses.

EDF’s troubles have exacerbated the energy crisis facing Europe as the continent struggles to replace Russian supplies amid the war in Ukraine. The company, which is 84% owned by the French government, plays a crucial role in the region’s energy security; its fleet of reactors generate low-carbon electricity that is normally exported to neighboring countries, stabilizing electricity prices across Western Europe. That situation changed dramatically in the first half of this year, when France swung from being Europe’s largest net exporter of electricity to a net importer.

EDF posted a €5.3 billion loss in the first half of the year. Executives said its losses would balloon in the second half because of the impact of buying replacement power in the wholesale market.

More than 20 of EDF’s reactors are currently offline. Those include the 12 shut because of corrosion problems and other reactors for which the company brought forward maintenance to ensure that they are available this winter. EDF is also running some reactors at reduced rates to conserve uranium fuel.

The corrosion problem was first uncovered last fall when a technician was inspecting pipes on one of the reactors at the Civaux plant, France’s newest nuclear-power station, a person familiar with the matter said. The technician discovered stress corrosion on pipes where water circulates under high pressure, in a section of piping where corrosion wasn’t thought to be a significant threat. Officials investigated other reactors with a similar design and found the same problem.

The government of French President

Emmanuel Macron

this summer said the state would buy the remaining 16% of the company it doesn’t already own at a cost of €9.7 billion. The company is central to France’s climate-change and energy-security plans. Mr. Macron has proposed building up to 14 new reactors in the coming decades, a project that is expected to cost tens of billions of euros.

In contrast to EDF, Rosneft Oil Co. said profits rose in the first half of the year, as rising crude prices helped Russia’s state-backed energy giant and biggest taxpayer to shrug off mounting restrictions on exports.

Net income rose 13% from a year earlier to 432 billion rubles, equivalent to $7 billion, Rosneft said. Fossil-fuel production rose 1.5% to the equivalent of 4.85 million barrels of oil a day.

The rise in profits and output marks a remarkable recovery for Rosneft. Russia’s oil industry plunged into crisis in the early weeks of the war, when buyers in Europe, the U.S., Japan and South Korea shunned its fuel.

“Rosneft was under an unprecedented pressure,” Chief Executive

Igor Sechin,

an ally of President

Vladimir Putin

for three decades, said.

Prices for Russian crude tanked. Output began to drop, leading traders to forecast a lasting loss of capacity in the most important sector of Russia’s economy.

It proved to be a blip.

New buyers in India, China and Turkey stepped in, enabling exports and production to pick up. A surge in oil prices globally meant that Russia has earned more for its crude than in 2021, even though it traded at a hefty discount.

—Joe Wallace in London contributed to this article.

Write to Matthew Dalton at [email protected]

EDF has shut down 12 of its 56 nuclear reactors because of corrosion discovered on pipes that cool the reactor cores. The company, the world’s largest operator of nuclear plants, is scrambling to replace pipes and restart the reactors for this winter, when Europe’s power supplies are expected to come under further stress because of Moscow’s decision to cut deliveries of natural gas to the continent.

The expected hit of 29 billion euros, equivalent to $29 billion, comes on top of more than €10 billion in losses that the company is expected to book because of France’s decision to cap retail electricity prices this year. Both the reactor outages and the price cap have forced EDF to buy power on Europe’s wholesale market, where prices have soared, and sell it to retail customers at much lower prices, booking huge losses.

EDF’s troubles have exacerbated the energy crisis facing Europe as the continent struggles to replace Russian supplies amid the war in Ukraine. The company, which is 84% owned by the French government, plays a crucial role in the region’s energy security; its fleet of reactors generate low-carbon electricity that is normally exported to neighboring countries, stabilizing electricity prices across Western Europe. That situation changed dramatically in the first half of this year, when France swung from being Europe’s largest net exporter of electricity to a net importer.

EDF posted a €5.3 billion loss in the first half of the year. Executives said its losses would balloon in the second half because of the impact of buying replacement power in the wholesale market.

More than 20 of EDF’s reactors are currently offline. Those include the 12 shut because of corrosion problems and other reactors for which the company brought forward maintenance to ensure that they are available this winter. EDF is also running some reactors at reduced rates to conserve uranium fuel.

The corrosion problem was first uncovered last fall when a technician was inspecting pipes on one of the reactors at the Civaux plant, France’s newest nuclear-power station, a person familiar with the matter said. The technician discovered stress corrosion on pipes where water circulates under high pressure, in a section of piping where corrosion wasn’t thought to be a significant threat. Officials investigated other reactors with a similar design and found the same problem.

The government of French President

Emmanuel Macron

this summer said the state would buy the remaining 16% of the company it doesn’t already own at a cost of €9.7 billion. The company is central to France’s climate-change and energy-security plans. Mr. Macron has proposed building up to 14 new reactors in the coming decades, a project that is expected to cost tens of billions of euros.

In contrast to EDF, Rosneft Oil Co. said profits rose in the first half of the year, as rising crude prices helped Russia’s state-backed energy giant and biggest taxpayer to shrug off mounting restrictions on exports.

Net income rose 13% from a year earlier to 432 billion rubles, equivalent to $7 billion, Rosneft said. Fossil-fuel production rose 1.5% to the equivalent of 4.85 million barrels of oil a day.

The rise in profits and output marks a remarkable recovery for Rosneft. Russia’s oil industry plunged into crisis in the early weeks of the war, when buyers in Europe, the U.S., Japan and South Korea shunned its fuel.

“Rosneft was under an unprecedented pressure,” Chief Executive

Igor Sechin,

an ally of President

Vladimir Putin

for three decades, said.

Prices for Russian crude tanked. Output began to drop, leading traders to forecast a lasting loss of capacity in the most important sector of Russia’s economy.

It proved to be a blip.

New buyers in India, China and Turkey stepped in, enabling exports and production to pick up. A surge in oil prices globally meant that Russia has earned more for its crude than in 2021, even though it traded at a hefty discount.

—Joe Wallace in London contributed to this article.

Write to Matthew Dalton at [email protected]