The UK division of the French energy behemoth EDF has reported a return to profitability in 2022 due to its ability to sell electricity at a higher price. 

The efficient operation of EDF’s nuclear electricity generators contributed to the company’s achievement of a profit of £1.12 billion in 2022, compared to a loss of £21 million the previous year.

Despite an overall positive result, EDF’s UK consumer energy supplier incurred over £200 million in annual losses. EDF attributed the increase to the cost of procuring energy for customers, which exceeded the energy price cap. 

The Energy Price Guarantee caps a household’s average annual electricity and gas costs at £2,500. EDF, which supplies gas and electricity to approximately five million British households, is owned by the French government to the extent of 84% and will shortly be nationalised.

EDF operates five nuclear power facilities and numerous wind farms in the United Kingdom. Unlike generators that rely on gas to produce electricity, EDF benefited from higher wholesale electricity prices in 2022, resulting in a substantial increase in revenue without a corresponding increase in expenses. 

Due to competition laws, businesses cannot discount their energy sales to customers.

The company invested over £2.6 billion in its UK nuclear, renewable energy, and customer businesses in 2022. In addition, EDF announced plans to invest an additional £13 billion over the next three years, primarily at Hinkley Point C, the nuclear power station currently under construction in Somerset and scheduled to open in 2027. It will invest approximately £2 billion in its nuclear fleet and renewable energy initiatives.

£4.44 billion was EDF’s underlying loss for 2022 due to “the decline in nuclear output” and “the encounter of exceptional regulatory measures to limit price increases.” The latter refers to a price limit imposed by the French government on consumer prices, which caused EDF to sell electricity for less than it paid. 

This cost the group £8.2 billion over the year, effectively offsetting the £8.7 billion earned by “passing on market price increases to customers.”

Consider EDF’s performance in the context of the British energy market. Along with Centrica, E.ON, Npower, ScottishPower, and SSE, it is one of the “Big Six” energy suppliers. The company’s investment in Hinkley Point C, a significant nuclear power plant, is an industry-changing decision.