EDF's trial electricity contracts auction for 2027-28 makes slow start

By Benjamin Mallet

PARIS (Reuters) - A trial EDF launched last month for a new wholesale model of auctioning electricity to be delivered in 2027 and 2028 has so far met little success, with just one contract sealed amid uncertainty over future regulation of French nuclear power, data from the state-owned power group showed on Tuesday.

EDF launched the trial on Sept. 27 in a bid to get better visibility on its revenues, targeting the sale of power to competitors like oil major TotalEnergies, gas company Engie and traders.

If the current auction trial fails, however, it would weaken the position of EDF CEO Luc Remont who promotes long-term contracts as the basis for the group's economic model after 2025.

According to EDF data as of Oct. 3, the 10 auctions organised so far resulted in only one contract clinched on Sept. 28 for electricity to be delivered in 2028 at a price of 86 euros per megawatt hour (MWh).

This price corresponds to the level EDF was aiming for, having previously said it targeted a little under 100 euros per MWH.

It is well above the 42 euros per MWH regulated price at which the ARENH mechanism, which is due to end on Dec 31. 2025, forces EDF to sell part of its nuclear power to alternative suppliers.

EDF would not elaborate on the reasons for the weak start of the trial.

"It is a lengthy process. We had offers everyday, which is rather encouraging," an EDF spokesperson said.

For Nicolas Goldberg, associate director at Colombus Consulting: "The market seems rather attentist", lacking visibility ahead of the end of ARENH.

As France is trying to obtain European rules that are more favorable to the nuclear power sector through a reform of the electricity market, President Emmanuel Macron said last month his government would "take back control" of electricity prices by year-end.

This would be achieved via a French energy law, to act on the fact that gas prices have inflated electricity prices in Europe, and in particular in France, amid the Ukraine war.

But to draft new legislation, the government must agree with EDF on a level of electricity prices that satisfies the group and also protects its customers, as well on the power volumes that would be still be regulated by the state.

Last year, EDF's finances were hit hard when an unprecedented number of its reactors had to be taken offline for repairs and it had to buy electricity on the market at record high prices in the wake of Russia's invasion of Ukraine.

It also suffered as a result of a government decision to cap the increase in electricity prices to protect households from soaring inflation.

(Reporting by Benjamin Mallet, Writing by Dominique Vidalon; Editing by Marguerita Choy)