Copyright © BusinessAMBE 2023
Over the next 10 years, French energy giant
In the news:
- This should be enough to repay investments and ensure a return of about 7 percent.
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Specifically, according to Lazard's calculations, this means that
Engie could make a profit of about883 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 from840 million euros (at a low market price of60 euros per megawatt hour) to978 million euros (at a high market price of100 euros per MWh), based on a guaranteed price of81 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.
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At low prices, the deal with
Engie could cost the government1.8 billion euros over 10 years, while at high prices the government could gain more than1.8 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.
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At low prices, the deal with
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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)
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