EDF Pushes for Better Terms to Save French Offshore Wind Project
(Bloomberg) -- Electricite de France SA is in talks with the French government to secure better terms for a wind project off Normandy as rising costs threaten to thwart the development.
The state-owned firm has already committed almost €100 million ($116 million) to the Centre Manche 1 project, people familiar with the matter said, citing an internal company review. Proceeding with the development in its current form would be unprofitable, they said.
EDF’s struggles reflect industry-wide challenges that are threatening a key pillar of Europe’s energy transition. France, like many other countries, wants to build more offshore wind, but soaring equipment and borrowing costs have made already-expensive projects even harder to deliver.
Construction on Centre Manche 1 is currently scheduled to start in 2028, but EDF may decide to abandon the project if it can’t secure improved terms, the people said, asking not to be identified discussing private information.
Representatives for EDF and the French Finance Ministry declined to comment.
The company was awarded the wind-farm lease in 2023 in partnership with Maple Power — a venture owned by Enbridge Inc. and the Canada Pension Plan Investment Board. Enbridge also declined to comment, while CPPIB and Maple Power didn’t immediately respond to requests for comment.
News website GreenUnivers first reported EDF’s efforts to seek better terms.
Guaranteed Prices
When the government awarded the tender to build the 1-gigawatt wind farm 2 1/2 years ago, it pegged the required investment at about €2 billion. The consortium was granted the right to sell power at a guaranteed price of €44.90 a megawatt-hour, plus adjustments for inflation.
That compares with a guaranteed price of €66 a megawatt-hour granted to TotalEnergies SE and RWE AG last month to build a 1.5-gigawatt wind farm next to EDF’s project at an estimated cost of €4.5 billion. RWE actually plans to exit that development and EDF may seek to join it in a bid to profit from synergies, a person with knowledge of the matter said.
EDF’s struggle may create a dilemma for the government. Assuming it’s legally possible, providing better terms for Centre Manche 1 would create a precedent that might trigger attempts to revise awards from other wind auctions.
On the other hand, forcing the utility to invest in an unprofitable project would add to EDF’s large debt burden just as it plans tens of billions of euros of investments in new nuclear plants and grid upgrades.
Canceling the wind park would undermine President Emmanuel Macron’s target to have 18 gigawatts of wind farms at sea by 2035. The country currently has 7.8 gigawatts of offshore wind in operation, construction or development.
Dropping the project may also create a headache for the French grid operator, which last year made a €4.5 billion order for substations and other transmission equipment — in part to equip Centre Manche 1.
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