Roula Khalaf, Editor of the Financial Times, has taken the opportunity to highlight significant stories of the week through her curated newsletter. One of the most pressing issues she addressed is the recent appointment of Bernard Fontana as the new chief executive of EDF, the French state-owned energy giant, who now faces monumental challenges that have plagued his predecessor.

Fontana, who was nominated on March 21, brings nearly a decade of experience from leading EDF’s engineering division, Framatome. His appointment comes on the heels of the abrupt removal of Luc Rémont, who was ousted after just over two years in a role marked by tumultuous relations with the French government. The complexity of the position lies in balancing the government’s conflicting demands for affordable energy to support industry while simultaneously advancing the costly construction of new nuclear reactors.

Roland Lescure, a former industry and energy minister and current centrist MP from President Emmanuel Macron’s party, stated, “It is one of the most difficult jobs in France and perhaps the world.” Lescure’s comments underscore the daunting nature of the responsibilities that Fontana must now shoulder. His immediate tasks will revolve around repairing the fractured relationship with the government, EDF's sole shareholder, while also negotiating energy supply agreements with the company's largest industrial clients. Additionally, Fontana must accelerate plans to construct six new nuclear reactors, a cornerstone initiative of Macron’s energy strategy that was first unveiled three years ago.

The backdrop of Fontana’s challenges includes the fallout from Rémont’s tenure, which was marred by his confrontational style and a vision for EDF that clashed with governmental preferences. Insiders disclosed that Rémont’s approach to managing EDF like a private enterprise focused on profitability alienated government officials, leading to his eventual removal. “The state simply cannot work with someone with whom the relationship is so stormy,” remarked a senior government official.

In light of these issues, Lescure expressed cautious optimism regarding Fontana’s leadership. However, he was quick to set high expectations, emphasizing the need for Fontana to excel in delivering affordable energy prices and completing the new nuclear facilities. “Our message to Fontana is to deliver on all aspects of what is needed. Deliver competitiveness, deliver production, deliver the new nuclear plants,” he asserted during an interview with the Financial Times.

A pivotal challenge for Fontana will be to balance the government’s demands for low energy prices with the imperative to generate profits that will fund the considerable investments necessary for the nuclear expansion. Past experiences have shown that EDF has struggled with budget overruns and delays, notably with the Flamanville reactor project in northern France and the Hinkley Point development in the UK. The government recently extended the timeline for the six new reactors from a target of 2035 to 2038, a decision that many analysts feel is still overly optimistic.

France relies heavily on nuclear energy, with over 65% of its energy mix sourced from nuclear power. This dependence has made the modernization of the country's aging nuclear infrastructure critical as Europe collectively moves away from fossil fuels. The need for decarbonized electricity is expected to intensify, especially in the wake of energy price spikes caused by geopolitical tensions, particularly due to the ongoing conflict in Ukraine.

Fontana’s managerial acumen will be tested as he is expected to appease governmental demands while ensuring that industries receive the affordable power they need to compete against counterparts in the US and China, where energy costs are significantly lower.

Rémont himself offered insights into the reasons for his removal in an interview with Le Figaro, where he outlined a fundamental divergence in vision regarding EDF's operational strategy. He stressed that this growing divide became evident as critical decisions loomed in the company’s future. Eric Lombard, the French finance minister, seemed to support Rémont's claims, acknowledging in a Senate session that there were “a certain number of disagreements” that contributed to the leadership change.

Rémont, who had taken the helm of EDF in November 2022 following a background in finance and energy, focused on enhancing profitability and reducing debt to prepare for the costly nuclear projects ahead. Under his leadership, EDF managed to generate €36 billion in operating profits in 2024 and improved the output of its nuclear plants, which had previously suffered from extensive downtime due to maintenance issues.

Despite these achievements, Rémont’s rigid approach toward the government and other key stakeholders ultimately led to friction. Tensions escalated during negotiations over the pricing structure for electricity sales, which were complicated by the demands for longer-term supply contracts with energy-intensive industries. Although a new pricing strategy was agreed upon, the slow progress in securing these contracts left government officials frustrated.

In a bid to address these issues, the government has proposed that EDF receive a subsidized state loan to cover half of the costs associated with the new reactor projects, along with a guaranteed price of €100 per unit of electricity once operational. This funding model contrasts with Rémont’s preferred strategy, which would have involved a more traditional approach to financing.

Looking ahead, Fontana will be required to navigate the complex landscape created by his predecessor's contentious exit and the high expectations from the government and the public. He is scheduled to undergo Senate and parliamentary hearings on April 30 before officially stepping into his role as CEO. Fontana’s engineering expertise, gained through a career that includes stints at prestigious companies such as Holcim and ArcelorMittal, is believed to equip him with the tools necessary to drive the negotiations and projects forward.

However, insiders indicate that while the industrial groups are not entirely welcoming of Fontana, they are nonetheless hopeful that his approach will yield more favorable outcomes regarding energy prices. Ultimately, Fontana's success will hinge on his ability to effectively balance the dual objectives of profitability and extensive capital investment required to rejuvenate France’s nuclear sector. “If Fontana has taken the job, he’s understood the lesson [from Rémont’s sacking]. If he hasn’t, he’s an idiot,” remarked a close advisor, emphasizing the high stakes surrounding his new position.