- Normandy EPR takes twice as long as planned, budget triples
- New delay increases `media and political pressure' in U.K.
Ballooning costs and a further postponement in the start up of an Electricite de France SA nuclear plant in Normandy will increase the pressure on already delayed plans to build two facilities using the same technology at Hinkley Point in the U.K.
The startup of the atomic generator being built at Flamanville on the French side of the English Channel has been pushed back to the end of 2018, 11 years after construction began, and costs have more than tripled to 10.5 billion euros ($11.7 billion), the state-run utility said Thursday. The latest overrun came after the French regulator ordered tests earlier this year on possible weaknesses in the structure of the reactor vessel.
“There is clearly increased risk to the Hinkley Point C project,” RBC Capital Markets analyst Martin Young wrote in a note to clients on Thursday. “No visibility was given on potential cost uplifts, although the possibility of a revised timetable was alluded to.”
EDF is still working toward the final decision on a plan for two of the reactor models, known as EPRs, at Hinkley Point in the English county of Somerset. Another two plants are proposed for a site at Sizewell in Suffolk, underpinning a U.K. government plan to lower carbon dioxide emissions by replacing aging power plants reliant on fossil fuels.
EDF Chief Executive Officer Jean-Bernard Levy sought to reassure investors and customers about the future of the EPR, saying the utility and supplier Areva SA were designing a new model that would be quicker and cheaper to build. The new model won’t be ready in time for the U.K., he said.
EDF and the U.K. government unveiled in October 2013 the plan to build the two Hinkley Point reactors over 10 years at a cost of about 16 billion pounds ($24.4 billion). The European Commission put the total cost including financing at 24.5 billion pounds. At the time, EDF executives said lessons learned from Flamanville, Finland and China meant the U.K. project would go more smoothly, making cost and delay estimates more realistic.
The plant’s commissioning date will be updated after the final investment decision is made, Levy said. While not specifying how long it will take to build the plant, he said the anticipated construction period hasn’t changed.
EDF and its Chinese partners’ final decision on investing in Hinkley Point is “extremely advanced,” according to Levy. Other partners could come on board at a later date while Areva will no longer be an investor, as was initially planned.
The U.K. government and EDF are “continuing to work together to finalize the project,” the Department of Energy & Climate Change said in an e-mailed statement. “The deal must represent value for money and is subject to approval by ministers.”
“This delay is very bad news for the U.K., as energy capacity is very stretched at present,” Kevin Coyne, national energy officer for the Unite labor union, said in an e-mailed statement on Friday. “Business and domestic consumers face the very real prospect of power cuts and the lights going out in the years to come, if the final investment decision on Hinkley Point -- the first new U.K. nuclear power plant in decades -- is not made very soon.”
Construction of the reactor in Flamanville began in December 2007, with the date for completion repeatedly pushed back from an initial target of 2012. The budget has increased from an original estimate of 3.3 billion euros. EDF is developing the same model in China while Areva is building one in Finland, which is also years overdue and billions of euros over budget.
Flamanville “will be late and will cost more than predicted but it remains the answer” to EDF’s goals, Levy said at a news conference in Paris Thursday. Completing the reactor “is within our reach and is an absolute priority” and the company is “confident” the project will be a success after testing of the vessel core is completed in 2016, he said.
“French technological leadership in nuclear will be increasingly questioned,” and additional delay puts “media and political pressure” on plans for the U.K., Sanford C Bernstein analyst Cosma Panzacchi wrote in a note. The current agreement with EDF for Hinkley Point “locks the country into adopting a so-far very troubled and very costly and soon to be abandoned EPR design.”
Billed as safe enough to withstand an airplane crash, the EPR reactor is at the heart of EDF and Areva’s hopes for a revival in French exports of reactor technology. A report ordered by former President Nicolas Sarkozy and published in 2010 found the plant’s complexity was “a handicap” that had “seriously undermined” the credibility of the nation’s nuclear industry.