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FRANCE’S EDF BUILDS NEW AND PATCHES UP OLD

Nuclear Monitor Issue: 
#681
17/12/2008
Article

(December 17, 2008) In recent announcements to investors and media, the French nuclear giant EdF proved its dedication to a desired nuclear revival by presenting ambitious time tables for commissioning of new EPRs in France, China, the US and the UK. However, costs are ever-rising, a shortage of skilled personnel is close and the existing EdF nuclear fleet is held on life support as long as possible.

(861.) Greenpeace International - Early December 2008, EdF presented the updated construction costs of the EPR (European Pressurised Reactor) being built in Flamanville, France, at an investors meeting in London. Flamanville-3 will be at least 20% more expensive than the original estimate, building costs rising from €3.3 billion in 2005 to €4 billion in 2008 (US$ 5.3 billion). Consequently, the electricity generated in the new nuclear power plant will cost €54/MWh instead of €46/MWh. According to EdF, the causes of the increased costs are higher raw material costs and ‘technical and regulatory evolutions’ – probably code for technical difficulties and regulatory strictness encountered during construction.

Inspections by the French nuclear safety authority ASN confirm that construction problems continue to emerge at Flamanville-3. The ASN inspection on 7 November 2008 gave rise to a ‘notice of serious infraction’ and identified the need for improvement of control and quality management in the welding operations. EdF is urged to take several preventative and corrective measures, to demonstrate to ASN that the final quality of the liner satisfies requirements and to ensure quality management of the subcontractor who is in charge of the liner welds.

 

EPRs worldwide

EdF plans to invest up to €50 billion in new nuclear power plants worldwide by 2020. The company’s own share of investment would have to be between €12-€20 billion, while the rest should be provided from project financing debt, joint venture partners and cash flow generated in new plants. Main target countries are the UK, US, China, Italy and South-Africa (shortly after EdF’s announcement South-Africa’s main utility Eskom announced cancellation of its nuclear plans). Target dates for commissioning are ambitious: despite continuous troubles at Flamanville-3, EdF desperately clings to the target date of 2012 for connection of the new EPR to the grid. Subsequently, the first EPR in China will start up in 2013 (Taishan-1), the first one in the US in 2016 (Calvert Cliff-3, see story: ‘French nuclear invasion of U.S. hits major roadblocks’ in this issue) and the first in the UK in 2017 (two EPRs are planned in Hinkley Point and two in Sizewell).

 

EdF already announced that a second EPR in France would not benefit from a ‘learning curve’ from Flamanville-3. On the contrary, the second EPR would be even more expensive due to a likely increase of component prices and ‘possible site-related costs’. EdF projects a price between €55-€60/MWh for electricity from the second EPR. In an interview EdF’s CEO Pierre Gadonneix said that French electricity prices should continue to rise in order to match the costs of building nuclear power plants. Still, EdF claims that in the US the EPRs will be able to compete in the long run, but ‘federal guarantees and support will still be needed for the first few new nuclear power plants’.

 

Lifetime extension

Crucial for EdF’s investment plans and financial position is probably its intention to extend the existing plants’ operating lives beyond 40 years, possibly even up to 60 years. An estimated investment of €400 million per reactor could result in a multibillion euro windfall – a welcome and possibly crucial financial buffer. Between 2015 and 2020, 18 nuclear power plants in France will reach the age of 40. Continued operation would push back investment costs in new units, and smoothen the flow of commissioning new units – the latter being a ‘true industrial challenge’ according to EdF.

EdF not only faces an industrial challenge, but also the challenge of maintaining its expertise and human resources. About 40% of EdF’s managers ad engineers, experts in generation, engineering and R&D, retire by 2015.

 

Sources: EdF Press Release & Presentation, Investor Day, 4 December 2008 / Platts Nuclear News Flashes, 4 December 2008 / ASN 0945-2008, letter to Director of Development Flamanville 3, 14 November 2008 / Dow Jones Newswires, 9 December 2008 / Financial Times 6 December 2008

Contact: Rianne Teule, Nuclear campaigner Greenpeace International. Ottho Heldringstraat 5, 1066 AZ Amsterdam, The Netherlands

Tel: +31 20 7182229

Email: rianne.teule@greenpeace.org