By Francois de Beaupuy
Electricite de France SA’s ability to build new nuclear plants at an acceptable cost and within a reasonable time frame remains in doubt despite the French industry’s efforts to avoid past mistakes.
A new report from France’s nuclear auditor has cast new doubts over the industry’s future, as the state-controlled utility has been asked by President Emmanuel Macron to prepare proposals to build new reactors domestically, while also seeking new funding for projects in the U.K.
“There is still uncertainty on the ability of the French nuclear industry, despite its current strong efforts, to build new nuclear reactors within a time frame and costs that remain acceptable,” Pierre Moscovici, the head of France’s Court of Accounts, said Thursday in Paris as he presented the report.
EDF is seeking to convince the French government to support construction of six new units of a streamlined version of the European Pressurised Reactor, at an estimated cost of 46 billion euros ($52 billion), to replace part of its aging fleet. The company is also seeking funding to build two new reactors in the U.K., which is expected to cost 20 billion pounds ($25 billion).
In France, construction costs for EDF’s nuclear power reactor at its Flamanville site have more than tripled to 12.4 billion euros amid errors and delays. On top of that, the project will cost another 6.7 billion euros, according to the report. That includes 4.2 billion euros in EDF’s interest payments to fund the project during the construction period, and various pre-commissioning expenses such as spare parts and nuclear fuel.
EDF, which had 41 billion euros in net debt at the end of last year, doesn’t have the cash to fund new nuclear projects on its own, Moscovici said. A form of public guarantee — or a so-called regulated-asset-base funding in which the taxpayer is liable for some construction risks — will be needed to launch new facilities. They will also have to be cost-competitive, he said.
The French government plans to shut 12 of EDF’s 56 nuclear plants by 2035 as it seeks to expand the use of renewable energy.
As most of EDF’s French nuclear plants will reach 60 years of age before 2045, and given the time it takes to build new ones, the government will have to decide soon whether to commit to constructing new reactors, Moscovici said.
©2020 Bloomberg L.P.