Broken government promises, multibillion-euro delays and a key national champion rescued from the brink of failure: it has been a torrid year for the proud French nuclear industry.
Problems came to a head in August when Areva, the designer and builder of nuclear reactors around the world, was forced to strike a multibillion-euro rescue package deal with rival group EDF and the French government.
It had been hit by foreign competition, the downturn in global nuclear demand following the 2011 Fukushima disaster and cost overruns. It had not sold a new reactor since 2007.
It urgently needed to be put back on a “sound footing” to keep nuclear a “strength for our country,” said Manuel Valls, French prime minister, before the deal to sell much of the company to EDF.
The French nuclear sector is one of the biggest and most advanced in the world thanks to its 58 reactors, producing 75 per cent of the country’s electricity, built following the 1973 oil shock.
It has been pioneering a third-generation reactor technology, called the European Pressurised Reactor (EPR), which with a hefty 1,700MW output is being touted as a revolution in nuclear power.
The country is also a torchbearer for nuclear power as part of the European energy mix when many countries have retrenched following Fukushima.
“There’s no doubt the global nuclear industry, including in France, is challenged and it is asking itself some profound questions since Fukushima,” says Jean-Marc Ollagnier, chief executive of Accenture’s resources operating group.
But for French nuclear the past five years have been a tale of technical problems and cost overruns that brought Areva to its knees and called into question the country’s ability to deliver on next generation technology.
In Finland, the Areva-built Olkiluoto 3 reactor, the first EPR to be commissioned, is 10 years behind schedule and €5bn over budget. It is expected to start up in 2018.
In September EDF announced delays for the EPR reactor in Flamanville, Normandy: initially expected to cost €3bn and start operations in 2012, it will not start until 2018 at a cost of €10.5bn.
Flamanville and OL3 are early attempts in a new technology. EDF says the next EPR to be started at Hinkley Point in the UK will go smoothly due to valuable lessons learnt. Two EPR’s in China, where there is greater expertise in large civil projects, appear to be on track for the 2017 launch.
The final problem came in April when the French nuclear regulator discovered flawed steel in EDF’s reactor in Flamanville, prompting EDF to carry out tests.
“I have reviewed the Flamanville EPR project in detail, and I am absolutely confident it will be a success,” says Jean-Bernard Lévy, chief executive of EDF.
“It is a priority for EDF and of critical importance for the French nuclear industry and its success internationally,” he says.
France should make sure it can be involved in supplying the enormous Chinese nuclear market
These construction problems highlight the complexity of the EPR projects, and have led some to question if there is demand for these larger reactors, given their cost and size. The questions come at the same time as internal political ones, as France attempts to reduce its reliance on nuclear power.
President François Hollande, due to a deal struck between the anti-nuclear Green party and his ruling pro-nuclear Socialist party, has promised to reduce nuclear in the French energy mix from 75 to 50 per cent by 2025.
This could lead to power plant closures, which presents a conundrum. It is not clear what will replace them and as existing nuclear is by far the cheapest energy source it could mean higher energy bills.
“The cost of achieving the 50 per cent target in 2025 is likely to be huge,” says François Lévêque, economic professor at l’Ecole des Mines in Paris and author of The Economics and Uncertainties of Nuclear Power. “It could mean shutting down a dozen profitable and safe reactors which is just throwing money out the window,” he says.
Even if no plants are shut down for political reasons in the lead-up to 2025 there are still decisions to be made, all of which are likely to be expensive.
The grand carénage, increasing the life expectancy of the 30-year-old plants from their current 40 years to 50 years, is expected to cost EDF around €55bn, should it ever win political approval.
Closing one nuclear plant has already proved difficult. Decommissioning Fessenheim, France’s oldest reactor on the German border, was promised by the government to happen by 2016. This year it was delayed until Flamanville comes online in 2018, leaving the government accused of breaking its promises.
Whatever the political decisions, the coming years will be hard for the French nuclear industry. It will have to win projects abroad. There are potential plants in South Africa, Brazil, UAE and Poland. But the big hope is China, which wants to have 58,000MW of nuclear by 2020.
“France should make sure it can be involved in supplying this enormous Chinese nuclear market. It’s critical for growth,” says Mr Ollagnier, adding that in the end nuclear is “still the only available source of carbon-free baseload power that’s scalable”.
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