Macron to prop up EDF with over €2bn after imposing price cap on energy firm
The French government will pump €2.1bn (£1.7bn) of public funds into struggling energy giant EDF – buying up the majority of a €2.5bn share sale.
This follows French President Emmanuel Macron ordering the supplier to sell power below market prices to mitigate the deepening energy crisis across Europe this winter.
The state currently holds an 84 per cent stake in EDF, and the president told the company it could only increase prices by four per cent this year, in an effort to shield households from soaring energy bills.
The decision battered its balance sheet and resulted in the firm’s value declining by 20 per cent.
The government intervention comes ahead of the presidential election in April, in which President Macron is expected to run.
He has pledged to protect the company and has unveiled plans to build new nuclear reactors over the coming decades – constructed and operated by EDF.
The energy giant is also battling with a drop in nuclear output, as it carries out maintenance on its portfolio ageing reactors.
EDF enjoyed an 11 per cent rise in earnings before interest, tax, depreciation and amortisation last year, but its outlook for 2022 is considerably gloomier.
It has announced the combination of price caps and lower nuclear output means profits would tumble by €11bn in 2022 – more than wiping out the benefit of higher prices.
The company also revealed it will sell a further €3bn of assets over the next two years in a bid to replenish its balance sheet.
As well as its plants in France, EDF owns the UK’s nuclear fleet and several UK gas-fired power stations.
It is also building the new Hinkley Point C nuclear power plant in Somerset, and has an 11 per cent share in of the UK domestic electricity market and roughly nine per cent in the gas market.