The Italian and French governments have paved the way for a long-term relationship in the energy field through the signing of a co-operation agreement between Enel and EDF. The new accord brings an end to recent disagreements between the two countries sparked by EDF’s 2001 takeover of Edison.
The agreement follows on from a memorandum of understanding signed in May 2005 and gives Enel access to the French electricity market as well as the latest generation of European Pressurised water Reactor (EPR) technology. EDF in return will have the opportunity to take part in projects as well as draw energy generated by Enel’s new power plants in Europe and the Mediterranean basin.
The agreement will see Enel take a 12.5 per cent stake in the first new generation EPR nuclear plant at Flamanville, France. The Italian group also has the option for a stake in five subsequent EPR plants as well as a 30-40 per cent stake in EDF’s new fleet of combined cycle power plants in France.
Enel CEO Fulvio Conti commented: “Today is an important date in strengthening co-operation between our two groups, that will contribute to the development of a more open, competitive European energy market. For Enel in particular, this means to gain access to the most advanced nuclear technology available today and to lay the foundations for establishing a significant presence in France.”
In 2001 EDF’s takeover of Italy’s Edison was rendered almost pointless when the Italian government put a two per cent cap on EDF’s voting rights. In 2006 The French government blocked Enel’s attempt to gain control of Suez when it decided to merge the French utility with Gaz de france.
Construction of the 1600 MW Flamanville plant is expected to cost EUR3.6 billion. Enel’s investment will give it expertise in nuclear technology as well as the right to use EPR technology by participating in the plant design and construction phases as well as the subsequent operational phase. A programme to train Enel personnel in current and EPR nuclear technology is also being established.
The agreement also gives Enel immediate access to virtual baseload capacity: as an advance on the EPR capacity generated by the Flamanville power plant, Enel will gain access to 600 MW commencing in 2008, with progressive increases up to a total of 1,200 MW in 2012. Starting in 2012, this virtual capacity will be progressively replaced by the capacity from EPR power plants as they gradually enter service. This power will mainly be sold by Enel to final customers in France.
Once the first EPR power plant is completed in France – scheduled for 2012 – Enel will provide EDF access to Enel’s nuclear capacity in Europe or, if not available, to capacity with similar characteristics.
EDF has also agreed to grant Enel an option (exercisable by September 2008) for a 30-40 per cent stake (a capacity of between 400 and 550 MW) in construction and operation of two new mid-merit power projects EDF is currently developing in France, which are expected to become operational between 2010 and 2012.
From the moment the option is exercised, the agreement gives Enel access to virtual mid-merit capacity of the same volume it will receive once the power plants enter service.
Under the terms of the agreement, Enel will in turn grant EDF an option allowing the French company to gain access to analogous capacity in projects that Enel will pursue in Europe and the Mediterranean basin.
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