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Flamanville Plant Deals With Serial Glitches

Engineers are struggling to fix eight faulty welds at Flamanville plant that’s supposed to showcase France’s savoir faire in nuclear power. As they consider sending in robots to access hard-to-get-to areas between two containment walls, for Electricite de France it’s just the latest setback in a project that’s running a decade late and almost four times over budget.

The Flamanville plant is now slated to be completed in 2022 at a price tag of $13.8 billion (12.4 billion euros), with the latest glitch costing a whopping 1.5 billion euros. Bemoaning the loss of France’s edge in the sector because of a 15-year gap between the start of construction at the plant and that of the previous reactor, Le Maire has given EDF a month to come up with an action plan to restore the industry’s know-how before the country can determine whether it will build any new atomic plants.

For the world’s largest nuclear power producer, Flamanville is just one of many challenges. Across the channel, delays at two U.K. reactors have upped the cost to as much as $28.9 billion (22.5 billion pounds), 2.9 billion pounds more than previously estimated. EDF also faces mounting costs of maintaining 58 domestic nuclear plants that provide more than 70% of France’s power.

EDF is struggling to cover the 15 billion euros it needs annually to maintain its aging nuclear reactors, build new atomic and renewable projects, upgrade its electricity network and roll out smart meters, even after cutting 1.1 billion euros in cost cuts in the past four years. Profits have been hit not only by falling power prices, but by safety issues that have forced reactors to be shut for several months in France and the U.K. Other clouds on the horizon-the decommissioning of two of its oldest reactors next year and a dozen more by 2035, and the treatment of nuclear waste.

Under a system introduced almost a decade ago to boost competition, rival power suppliers can buy about a quarter of EDF’s nuclear output at 42 euros per megawatt-hour, about 10 euros below current wholesale prices. EDF is asking for the price-unchanged since 2012-to be boosted as deep-pocket rivals including oil and gas producers Total SA and Eni SpA and Engie SA have grabbed almost a quarter of the French power retail market and are making further inroads with discounted offers. For the longer term, the French government is considering ring-fencing EDF’s nuclear operations and listing a minority stake in its distribution and renewable business.

EDF plans to almost double its capacities in hydro, wind and solar power between 2015 and 2030. But the company, which operates about 80% of France’s hydro-electric concessions, may see that share shrink as the EU asks France to open the market to new entrants. The French government, meanwhile, remains cagey about raising the regulated nuclear power price for fear of increasing households’ electricity bills.

 

Source: Bloomberg