Hollande Draws French Industry Ire as Nuclear Edge Fades via Bloomberg

French industrial groups are up in arms as their once-celebrated nuclear-energy edge evaporates.

After decades when their factories churned out everything from steel, glass and chemicals with one of the cheapest power prices in Europe thanks to the country’s 58 nuclear reactors, French companies’ competitive advantage is being whittled away as the U.S. embrace of shale gas cuts energy prices there and as Germany gives businesses fiscal breaks on electricity costs.

Electricite de France SA’s nuclear reactors, which make France the most reliant on atomic power in the world, will need billions of euros of upgrades just as more costly renewable power is being deployed. Both threaten to push electricity prices as President Francois Hollande struggles to make French industry — with more jobs losses than any other European country in the past decade — more competitive in the face of an economic slump and a trade deficit that’s near its record high.

“French energy used to be competitive,” said Emmanuel Rodriguez, head of energy for the French unit of ArcelorMittal, the world’s biggest steelmaker, which also has operations in Germany. “This model is crumbling. Germany is now better than us whereas a decade ago they were much more expensive.”

French power prices for big industrial users are projected to average as much as 25 percent higher next year than in Germany, according to Uniden, a lobby whose members consume 70 percent of electricity used by industry in France.

Survival Mode

Large French factories will pay about 46 euros ($62) a megawatt hour compared with about 36 euros in Germany, the lobby estimates. The figures include rebates and exemptions such as compensation for carbon emissions, power transport and deals to shut production during peak demand periods like cold snaps.

“We are in survival mode,” said Jean-Paul Aghetti, a Uniden director. “Our competitiveness is at stake. It’s now a myth that French electricity is the most competitive in Europe.”

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French Debate

Meanwhile in France, last year’s presidential campaign exposed a schism between the main political parties on the future of nuclear energy. Hollande pledged to lower dependence over the next decade while boosting investment in renewable energies like wind and solar power, which produce more expensive power and rely heavily on subsidies.

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Businesses advocate nuclear power — opposed by environmentalists pushing for a complete phase-out — saying it offers stable output. The country’s biggest business lobby, Medef, is also asking the government to review its ban on shale exploration.