Left: CEZ is planning to build a new unit at Dukovany NPP


More support needed Leyre named Italy alongside France as having the potential to build nuclear. In the Nordic area, Sweden and Finland are both exploring the potential for building more nuclear capacity. But Leyre also said that more support was needed: “What seems clear is that we are unlikely to see new nuclear without any form of state support because of the amount of upfront capex to be deployed and what that means in terms of costs for this technology in the context of rising cost of debt”. He also noted the risk of long delays in plant construction. Celine Cherubin, vice president at Moody’s Infrastructure


Finance Group highlighted the Czech experience, where utility CEZ is developing a large new nuclear plant project to be sited at Dukovany. She said, “the context is that government will provide 100 per cent of the financing … being that financing costs are a major part of the price of nuclear electricity and state support will reduce the bill. CEZ will sell the output through a long term power purchase agreement that is still under discussion with the government, but it will provide them with some visibility”. Cherubin noted one advantage that new nuclear may


have over other low carbon generation, which is that it will use the same sites where nuclear plants are already operating, or have done in the past. That means that the sites already have large grid connections. That contrasts with the need to permit and build long transmission lines to bring renewable energy – especially offshore wind, see as the largest tranche of renewables – to areas of demand. Moody’s assessment of the German market, for example, said “Since onshore and offshore renewables are concentrated in northern Germany, transmission lines need to be built to ship electricity to the load centres in the centre and south of the country. This will require large capital spending by Germany’s four transmissions system operators (TSOs),” and “permitting processes are slow.”


In the Nordic market, commissioning of Olkiluoto 3 in


Finland has “boosted electricity supply/demand dynamics” but Finnish power prices spiked after the reactor suffered an unexpected shutdown.


Outlook for nuclear in Europe Moody’s said, “Increasing market tightness could contribute to more volatility in power prices as countries will be vulnerable to unexpected shutdowns or longer period where renewable energy cannot meet demand”. However, the positive mood around nuclear was undoubtedly boosted by the fact that France was exporting electricity again in 2023, after net importing in 2022 for the first time since 1980, as its nuclear units returned to service. Moody’s said French power exports “could become


more structural again”, provided French nuclear availability continued to increase and the country delivered on renewables plans. It said forward power prices for France and its neighbours signalled “increasing confidence over future French nuclear output”. EDF could benefit from higher cash flows if domestic


price reforms floated in a November consultation are taken forward, Moody’s said. The new framework would replace the ARENH regulated tariffs that end in 2025. Moody’s said many details are yet to be determined, but “If implemented as planned, the new system would allow EDF to generate higher operating cash flow from its French nuclear fleet than under the ARENH mechanism, as long as wholesale prices remain above the ARENH price level of €42/MWh”. Nonetheless, the framework includes an asymmetric price risk for the company, because it would have “a progressive clawback on EDF’s existing French nuclear reactors’ revenues in case of high wholesale prices, while not providing any support in case of low wholesale prices.” It suggested EDF’s plan for medium and long term contracts with customers would provide “a degree of revenue stability.” ■


Above: Commissioning of Olkiluoto 3 in Finland has boosted electricity supply/demand dynamics Source: TVO www.neimagazine.com | January 2024 | 33


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