Electrical Equipment / Components & Telecoms

According to foreign media reports, on July 6, local time, French Prime Minister Elisabeth Borne announced that France plans to fully nationalize EDF, saying that this move can ensure France’s energy security at a time of energy crisis in Europe. It is also necessary to realize the energy transition.

Borne told parliament on the same day that "the state intends to hold 100% of EDF" and that this change "will allow EDF to enhance its ability to implement essential large-scale projects in the shortest possible time in order to meet the our future energy" supply. Borne said nationalization would allow the government to take full control of electricity production while defending its own energy sovereign independence. But Borne did not specify how full nationalization would be achieved.

At present, the French government holds 83.88% of the shares of EDF, private and institutional holdings 15.03%, and employees hold 1.06% of the shares. Reuters estimates that the French government will need about 5 billion euros to acquire the remaining stake in the company.

EDF is one of the largest public power companies in Europe, operating in France, the United Kingdom and other countries. According to Reuters, the company mainly develops nuclear power, but in recent years, the progress of new nuclear power plant projects in Britain and France has been slow, delayed again and again, and the budget has been severely overrun.

EDF is suffering billions of euros in losses as Europe suffers from the energy crisis, as the French government caps retail electricity prices, preventing the company from passing on the increased costs to consumers.

And while the crisis in Ukraine has sent electricity prices soaring in European countries, EDF is also grappling with unexpected corrosion in the cooling systems of its nuclear reactors, which has forced the temporary shutdown of 12 of its 56 reactors. French officials are investigating the source of the problem, but they say it is unlikely that the problem will be resolved before European power demand peaks in winter.

High costs, coupled with the outage of some nuclear power plants, mean that EDF can only buy large quantities of electricity in the wholesale market, where electricity prices are soaring, and sell it at significantly below cost. This has put enormous pressure on EDF's finances.

EDF is facing a huge debt load after years of cash outflows. In February, multiple credit-rating firms downgraded EDF and warned that further downgrades are possible, according to Bloomberg News. S&P Global Ratings said in May that EDF's debt could rise to 100 billion euros by 2023, from about 74 billion euros last year, due to forecast losses this year and next.