The new boss of French state-owned energy group EDF faces the same nearly impossible tasks that led to the ousting of his predecessor: satisfying the government’s often contradictory demands for cheap power to help industry and the construction of costly new nuclear reactors.
Bernard Fontana, nominated as chief executive on March 21, is a seasoned industrialist who has run EDF’s engineering arm Framatome for nearly nine years. He will seek to avoid the fate of the previous chief executive Luc Rémont, removed last month after just over two years because of repeated clashes with the state.
On Fontana’s to-do list will be repairing relations with the government, the company’s only shareholder, striking energy supply deals with some of EDF’s biggest industrial clients, while also advancing plans to build six nuclear reactors in just over a decade — a key initiative of French President Emmanuel Macron, which was announced three years ago.
“It is one of the most difficult jobs in France and perhaps the world,” said Roland Lescure, the former industry and energy minister, now a centrist MP from Macron’s party.
The challenges at EDF felled Rémont, who was removed after just over two years following repeated clashes with the state. People familiar with the matter said his abrasive style and desire to run EDF like a private sector company, with a keen eye on profits, angered government decision makers.
“The state simply cannot work with someone with whom the relationship is so stormy,” said one top government official.
Lescure welcomed the arrival of Fontana but did not waste time in turning up the pressure.
“Our message to Fontana is to deliver on all aspects of what is needed. Deliver competitiveness, deliver production, deliver the new nuclear plants,” he told the Financial Times.
Fontana’s main challenge is to balance competing pressures of delivering low rates for power, demanded by government and industry, while generating profits that will help support vast investments required to launch new nuclear reactors.
The company ran over budget and behind time on the completion of Flamanville, a new nuclear reactor in northern France, and faces budget and timing issues with the UK’s Hinkley Point.
It has also faced criticism that it is yet to outline timelines and costings for the project to build the six new nuclear reactors, which were originally due by the end of 2024. Last month, the government pushed back the launch date from 2035 to 2038, although observers have long considered the 2035 target unachievable.
The nuclear project is critical to France as more than 65 per cent of the country’s energy mix comes from this power source and demand for decarbonised electricity will grow as the continent transitions away from fossil fuels.
Refreshing France’s ageing nuclear network will strengthen its energy self-sufficiency. Europe’s reliance on Russian gas saw energy prices surge in the wake of Moscow’s full-scale invasion of Ukraine.
But Fontana will have to satisfy demands from the government that management must offer industry cheap power as it struggles to compete with US and Chinese rivals that benefit from much lower energy prices.
Rémont outlined his own reasons why the government opted not to extend his mandate in a no-holds-barred interview with French newspaper Le Figaro in March. “We have a fundamentally different vision of what EDF should be and the way it should be managed. And this difference of vision grew over recent months, as key choices had to be taken,” he said.
The debate comes down to an existential question of whether EDF should be run as a normal business for profit, as a state arsenal designed to support the country’s industrial ambitions, or as something between these two aims.
Eric Lombard, French finance minister, appeared to agree with Rémont’s assessment of his removal, telling the Senate in March that there were a “certain number of disagreements”.
The ex-Bank of America Merrill Lynch banker, who worked at Schneider Electric before he took charge of EDF in November 2022, aimed to run the group as a business focused on delivering profits and lowering debt in preparation for the launch of the hugely expensive nuclear projects.
He achieved the goal of increasing profits, delivering €36bn in operating profits in 2024 while increasing output of EDF’s nuclear plants after corrosion at some had led to costly maintenance outages in 2022. As well as nuclear reactors, the company operates offshore wind farms, solar farms, biomass and hydro power plants.
Rémont was also relatively popular with the company’s strongly unionised workforce. Alexandre Grillat, head of the CFE energy union that represents managerial workers at the group, noted that there were no major strikes during his tenure.
But his approach was described as “inflexible” towards the government and important companies, according to people familiar with the matter.
Rémont first ran into disagreements with the government in fractious negotiations in 2023 over changes to the way EDF sold its electricity. The sticking points were largely over the price for supplying power.
Rémont and the government finally agreed to adopt a more market-based pricing system for much of its electricity, as well as making plans to secure long-term deals with energy intensive businesses. This new pricing system will take effect at the end of 2025.
But the state had been left “disappointed” with slow progress in reaching the long-term deals, officials said. EDF has said it has signed just two since the 2023 agreement, with many companies saying the terms are unattractive.
In parallel to the long-term contracts, EDF said last month that it would launch a new auction-like process for electricity supplies, including for foreign buyers, in a move that angered the French energy-intensive groups because negotiations for their long-term contracts are yet to be finalised.
Another problem was Rémont’s failure to advance Macron’s plans for the six new nuclear reactors as he disagreed with government over how to finance them.
Under government plans announced last month, EDF would receive a subsidised state loan to cover half the costs of the reactors and guaranteed electricity prices of €100 once they were up and running. Contrary to Rémont’s wishes, this will probably involve EDF funding some upfront costs through debt.
Rémont’s uncompromising streak was on further display at an energy conference in December, in which he told an audience that “investing in France is hellish for regulatory and administrative reasons”.
The comments were “probably right but embarrassing” for a business backed 100 per cent by the state, said one French banker. Another said the comments called into question the “sacred dogma” of Macron, who has tried to make investing easier in France. “He’s not a diplomat,” they added.
Fontana, described as “discreet” and well respected as the head of Framatome by one union official, is set to face senate and parliamentary hearings on April 30 before he is confirmed in the role.
He will be expected to reach power supply agreements with the energy- intensive groups, which were beyond Rémont, by the summer.
The French government’s hope is that Fontana’s engineering experience — he worked at groups such as cement company Holcim and steelmaker ArcelorMittal — will make it easier for him to agree a deal by summer and advance plans for the new reactors.
He is “quite reputed as a good industrialist and will have an awareness of how to advance different work projects”, said a former government aide.
One adviser to the industrial groups negotiating the long-term contracts said businesses were “not welcoming Fontana as much as they are shocked by the brutality of Luc Rémont being fired”, although they remained hopeful of a better deal on power prices.
In short, Fontana’s success will depend on whether he can walk the tightrope of running EDF profitably while delivering the vast capital outlay needed to reboot France’s nuclear sector. This will require a major shift from Rémont’s uncompromising approach.
“If Fontana has taken the job, he’s understood the lesson [from Rémont’s sacking]. If he hasn’t, he’s an idiot,” said another adviser.
