EDF Reaps No Gas Windfall in 2016

French power giant EDF reported net 2016 income of €2.9bn, 2.4 times higher than the previous year’s, despite having many nuclear plants offline. 

Italian subsidiary Edison also received no big windfall from arbitration payouts last year, unlike in 2015, and had to write down its upstream assets.

That meant EDF net 2016 income, excluding exceptionals, was 15.3% lower at €4.1bn, as operating earnings (Ebitda) declined by 4.8% in 2016 to €16.4bn, the French group said February 14.

Nuclear generation in France last year was 384 terawatt-hours, a decrease of 32.8 TWh compared to 2015, because of checks on reactors required by France’s nuclear regulator.  As a result, EDF’s thermal power plants doubled output to 11.9 TWh, up 5.1 TWh, due to higher demand in particular for its gas-fired plants in both France and the UK. 

EDF's Bouchain power plant, opened last year, entered the record books as the world's most efficient combined cycle CCGT power plant.

In Italy, there was a 50% drop in Ebitda, in part due to a windfall of compensation paid out in 2015 following a €1bn arbitration payout by Eni to Edison over its Libyan gas contract in 2015, and partly because of a generally less favourable Italian gas market in 2016. EDF did however benefit from a 10.5% increase in French gas customer accounts, compared to 2015, as it made inroads into incumbent Engie’s market share.

EDF also acknowledged a beneficial impact from a revised price formula negotiated with Qatar’s RasGas in June 2016.

EDF also said the first commercial contract delivered by RasGas to EDF’s new Dunkirk LNG import terminal occurred on January 23 this year. The contract was negotiated by wholly-owned EDF Trading. The terminal imported its first commissioning cargoes last year but commercial operations there began only this January 1.

Edison on February 13 meanwhile reported a €389mn loss for 2016 (2015: €980mn loss). It said the 2016 loss was due to the impairment of upstream assets and volatility of commodities and currency hedges.

In autumn 2016 EDF and its Chinese partner took the final investment decision to develop a new 3.2 GW UK nuclear complex at Hinkley Point, costing £18bn but expected to cost UK consumers £30bn, and the UK cleared the project to begin construction.

Mark Smedley