At the site of France’s first new nuclear reactor in more than 20 years, robots are fixing faulty welding as developer EDF races to open the plant after a decade of delays that have damaged its reputation.
It faces a challenge of a different order of magnitude: a construction program to build six more, as the French government, which owns 84 percent of the business, plans to take full control.
The full nationalization of EDF, which was announced earlier this month, comes as a series of pressures on the group’s finances. In theory this would provide it with some relief from the glare of public markets.
So far, however, the state procurement has raised more questions than it has answered, including how the government thinks it can do a better job of solving the long-standing industrial problems that EDF’s projects suffer from, some of them fundamentally lacking. of experienced welders.
“It is not because the government will now be 100 percent that it will suddenly take three years less to build the reactor,” said a person close to the company.
“Now we are in symbolic territory with this nationalization. It doesn’t solve any of the main problems we know the group is facing – does it allow EDF to strengthen the skills it needs?” Cécile Maisonneuve, senior adviser at the Energy and Climate Center in France, thanked IFRI. “Any industrial or regulatory issues with its capital was not attached to the structure.”
As Europe seeks to move away from dependence on Russian gas and grapples with rising energy prices, problems at 56 of EDF’s existing reactors in France have caused shutdowns and pushed its power output to multi-decade lows.
Instead, it has had to go to the expensive wholesale market for supplies and it is expected to all but wipe out its core profits this year. Ratings agencies have warned that this will push EDF’s debt beyond last year’s €43bn, and it is likely to need a second capital injection soon – as recently as April.
At the same time, political battles have made EDF’s listed status increasingly untenable. It was made to pay for an annual electricity price cap announced in January to protect consumers from the spiraling market, amid clashes between the state and EDF managers and angering minority shareholders.
The Flamanville 3 reactor on the north coast of France is emblematic of some of the technical problems faced by EDF and its contractors. Construction began in 2007, with a target completion date of 2012, due to begin loading fuel the following year. The budget is now almost four times the initial €3.3bn estimate.
The setbacks include regulators finding flaws in some pipe welding final standards. To address this, EDF commissioned purpose-built robots to work inside the pipes, rather than removing the entire piping system, which was already enclosed in thick concrete walls.
Keeping EDF on track is important for energy security not only in France but more broadly. Other European nations have long relied on its exported nuclear power, and its declining output comes at the worst possible time as the bloc braces for a possible total cut of Russian gas.
“France has traditionally been a source of cheap nuclear power for its neighbors but now it needs help and it will cause problems for Italy, Switzerland and the UK this winter,” said Phil Hewitt, director of energy consultancy EnAppSys.
The UK is also a major manufacturing customer. EDF is building its only new nuclear power plant – Hinkley Point C, a project that has been plagued by cost overruns and delays. All but one of Britain’s remaining nuclear power stations are due to close by the end of the decade.
But its home country is particularly dependent. France outpaces its European neighbors in wind and solar energy, and is more focused on nuclear as a source of energy.
It accounts for more than 60 per cent of the country’s energy production and in February the government announced plans for at least six next-generation, EDF-built European Pressurized Reactors (EPRs) – a €50bn program that needs to be financed. with debt.
Privately, French officials have criticized EDF and said it has managed some operational problems, although preventive checks and reactor shutdowns were demanded by the regulator.
“EDF’s production cuts are not acceptable. It cannot go on like this,” a government official said, adding that full state ownership could help speed up decision-making with new projects.
“It allows us to gain time, a few weeks or months here and there. It adds up,” they said.
Some of EDF’s problems are not of its own making. Over the years, successive governments have pushed it into costly strategic decisions, including the bailout of ailing reactor designer Areva.
It also suffered a setback in government orders when the world cooled down on nuclear power after the Fukushima disaster in 2011.
The energy crisis caused by Russia’s invasion of Ukraine has revived interest in the industry, but even in France, with its long construction history and large fleet, it has been more than 20 years since the last new reactor came online — at East Siveux. Site in 1999. Engineers and other skilled workers have left the field to build careers in finance or other industries.
“In that gap between Sivaux and Flamanville, we lost our knowledge of how to operate large projects and our industrial capabilities,” said Alain Morvan, the latest manager brought in to finish the project during a site visit in June.
In light of the EPR build, EDF is now recruiting more nuclear experts, and Morvan said there are lessons from Flamanville that can be applied elsewhere.
The company was also pushing for a new regulatory framework for how nuclear power is sold, and for changes to a system that forces it to sell its output to local competitors at a fixed price, which outgoing CEO Jean-Bernard Levy called “poison for the group’s finances”.
The French government has yet to say how and when the regulation will change, and some reforms will need approval from Brussels.
It has also said little about how it might reshape the company – which also has a large renewable energy portfolio and distribution business – when it takes full control, which is expected through a tender offer of around €7bn in October or November.
EDF declined to comment further on the group’s nationalization or plans.
Full state control would eliminate at least one very visible problem: After its shares peaked in 2007, in 2005, one of Europe’s largest IPOs, EDF’s stock fell by close to 90 percent.
A banker who has worked with EDF said: “The original sin was to privatize the nuclear power group.”
In an internal memo to employees in July, reported by the Financial Times, Levy said it was too difficult to tackle future projects as a listed company.
“If delisting doesn’t solve all of our regulatory, industrial and financial problems, and especially the volume of our debt, it allows us to start looking for solutions.”
Additional reporting by Leila Abboud