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Over the next 10 years, French energy giant Engie is expected to maintain profits of similar magnitude, about 900 million euros, as a result of the extension of Belgium's nuclear plants. This is regardless of the level of electricity prices. This was calculated by investment bank Lazard.

In the news: Engie will receive a guaranteed price of 81 euros per megawatt-hour for power from the two extended nuclear reactors Doel 4 and Tihange 3, we read in The Standard.

  • This should be enough to repay investments and ensure a return of about 7 percent.
  • Specifically, according to Lazard's calculations, this means that Engie could make a profit of about 883 million euros over the 10-year extension period.
  • The profit for Engie remains in the same order of magnitude regardless of actual market prices. The amount ranges from 840 million euros (at a low market price of 60 euros per megawatt hour) to 978 million euros (at a high market price of 100 euros per MWh), based on a guaranteed price of 81 euros.
  • About half of this profit is due to the enforced return of 7 percent, while the rest comes from compensation as a nuclear operator.
    • Engie is in fact entitled to a certain margin depending on the operation of the nuclear plants. The highest margin is 16.5 percent, if the reactors are not shut down unscheduled more than 10 percent of the time.

Guaranteed price is higher than expected

Zoomed out: Revenue for the government varies widely.

  • The "contract for difference" agreed with the government prevents Engie's profits from exploding at higher prices or plummeting at lower prices.
  • The situation is different for the government: the final financial result varies widely depending on future prices.
    • At low prices, the deal with Engie could cost the government 1.8 billion euros over 10 years, while at high prices the government could gain more than 1.8 billion euros.
    • According to estimates, the expected market price would be in between, and the cost to the government would not fall as much in the end.
  • By the way, the guaranteed price for Engie is slightly higher than expected. This is because the company needs time to restart the extended reactors. From 2025 to 2028, those reactors shut down 226 days a year and bring in nothing. The guaranteed price compensates for that.

(evb)

© The Content Exchange, source News