French Nuclear Dynamo Stalls

Source: By DAVID JOLLY and STANLEY REED, New York Times • Posted: Friday, May 8, 2015

PARIS — For decades, France has been a living laboratory for atomic energy, getting nearly three-quarters of its electricity from nuclear power — a higher proportion by far than in any other country.

And France’s nuclear companies have long been seen as leaders in building and safely operating uranium-fueled reactors around the world — including in the United States — and championed by Paris as star exporters and ambassadors of French technological prowess.

But in the last few years, the French dynamo has started to stall. New plants that were meant to showcase the industry’s most advanced technology are years behind schedule and billions of euros over budget. Worse, recently discovered problems at one site have raised new doubts about when, or even if, they will be completed.

Many nations in the developing world, though, see little choice but to adopt nuclear power as the hazards of burning coal become all too evident. If the French industry cedes its global leadership after six decades of building and operating nuclear reactors without major mishap, less seasoned providers from China and Russia would increasingly fill the vacuum.

Alarmed by the French industry’s problems, the Socialist government of President François Hollande is expected soon to announce an industry overhaul. As the majority owner of the country’s two main nuclear companies — the reactor maker Areva and the big utility operator Électricité de France — the government will aim not only to put the companies on a firmer financial footing but to reorganize them in hopes of restoring the French industry’s role-model luster.

On Thursday, Areva took the first of those steps by announcing big cost-cutting plans. The move is likely to trim as many as 6,000 jobs from the company’s global work force of 45,000 — as many of 4,000 of those coming in France.

A helping hand for Areva could come from China, where the French industry has been a player since that country decided in 1983 to build its first nuclear plant under the industrial reforms advocated by Deng Xiaoping.

On Wednesday, China National Nuclear Corporation told reporters in Beijing that it would be interested in making a financial investment in Areva. The French company responded in a statement that same day that “we are happy that CNNC is ready to strengthen its cooperation with Areva.”

CNNC and another company with which Areva and Électricité de France have long worked, China General Nuclear Power Corporation, have previously signed letters of intent to participate in a big project in which the French companies are poised to play a leading role. That project, planned for Hinkley Point, England, has won British government approval as the country’s first new nuclear plant in decades.

But the stumbles elsewhere by Areva and Électricité de France — better known as EDF — have raised troubling questions about the viability and cost of the Hinkley Point plant. And while Prime Minister David Cameron has courted the Chinese, other British officials have raised security questions about involving state-backed Chinese companies.

With the French companies struggling, some nuclear experts see a slippery geopolitical slope.

”The problems with Areva may open the door for Russia and Chinese reactor exports, but Chinese and Russian exporters are plagued by lack of a track record in building and siting their new reactor designs, and little is known about the safety standards of these reactors,” said Antony Froggatt, a nuclear analyst at Chatham House, a London-based research organization.

South Korea, despite rattling the French nuclear industry by winning a $20 billion deal to build reactors in Abu Dhabi in 2009, also suffers from limited international experience, Mr. Froggatt said.

As part of the French government’s overhaul, Areva, the country’s standard-bearer in nuclear reactor design and construction, is expected to cede those parts of the business to its much bigger compatriot company EDF — whose sales last year of nearly 73 billion euros, or $82 billion, dwarfed Areva’s €8.3 billion.

A component of the nuclear reactor being built in Flamanville. Defects, described by the president of the French nuclear regulator as “serious — even very serious,” have delayed construction. CreditCharly Triballeau/Agence France-Presse — Getty Images 

While EDF remains profitable, Areva has been losing a lot of money; in March it reported an annual loss of €4.8 billion — on top of a €500 million loss a year earlier. Its last profitable year was 2010.

The government’s overhaul could leave a scaled-down Areva to focus on the steadier, if less glamorous, tasks of mining and refining uranium, supplying fuel to plant operators and disposing of radioactive waste.

The French prime minister, Manuel Valls, said on Thursday that the government would provide an initial framework of the coming overhaul “before summer.”

One possibility would be for EDF, already the world’s largest operator of nuclear plants, to take over the enormous financial, technical and engineering challenges entailed in building 21st-century atomic power plants. But it is unclear whether the reorganization could salvage France’s nuclear leadership or merely stop Areva’s financial free fall.

What went wrong?

The Fukushima disaster has undoubtedly undermined support for atomic power. And the rise of cheaper renewable energy, like solar and wind power, has hurt the business case for investing in huge nuclear plants.

A big part of the problem, though, appears to be a bet the French nuclear establishment made more than a decade ago on a new generation of reactors. The French promised that those power plants — based on a technology called E.P.R., for European pressurized reactor — would be the safest and most powerful commercial reactors ever built.

The Finnish plant, for example, was initially estimated to cost about €3 billion and scheduled to open in 2009. It now is not expected to open until 2018 at the earliest, at perhaps three times the originally projected cost. Areva has already recognized €4.5 billion in losses from overruns on the project.

More bad news came recently. On April 7, the French nuclear regulator, the Autorité de Sûreté Nucléaire, announced that imperfections had been discovered in the steel that Areva used to make the top and bottom caps of the main reactor vessel at the plant under construction in Flamanville.

Pierre-Franck Chevet, president of the nuclear regulator, has described the defects as “serious — even very serious.”

The reactor vessel is a crucial part of an atomic plant — the housing meant to contain the extreme heat, pressure and radiation produced by the nuclear fission that occurs inside. The steel used for key parts of the Flamanville vessel was made at the Areva forge in Le Creusot, France. An analysis by the company found an unacceptably high level of carbon –— impurities that could threaten the steel’s structural integrity.

The same forge and process were used to make the same reactor parts supplied by Areva for a plant under construction in Taishan, China, by a partnership of China General Nuclear Power Group and EDF. (The steel parts used in Finland were forged in Japan, and a spokeswoman for the Finnish operator, TVO, said they met the relevant specifications.)

EDF, which declined to comment for this article, contested the regulator’s assertion in a statement on April 20.

“The manufacturing processes used on Flamanville 3 reactor vessel are compliant with the mechanical requirements implemented and validated for the French nuclear reactor program,” EDF said in a statement.

The companies have said they are planning new tests to show that the equipment at the Flamanville plant conforms to standards.

The energy minister, Ségolène Royal, has said that the tests should be finished by October, although there is no clarity on when the regulator’s analysis will be completed.

In the worst case, experts say, the vessels in Flamanville and Taishan might have to be dismantled and reforged, at a cost potentially totaling hundreds of millions of euros and creating additional major construction delays. Some experts say it might make more economic sense to simply to abandon the projects.

The French nuclear industry is not alone in its struggles. The remaining longtime nuclear industry leaders, including the Japanese giant Toshiba — which now owns the American maker Westinghouse — are also encountering high costs and other problems with their latest-generation reactor designs.

For instance, Southern Company, an American utility building a plant with a new type of Westinghouse reactor near Augusta, Ga., said earlier this year that the installation might be delayed for 18 months, adding $720 million to costs.

The problems have left an opening for other providers. China currently has the largest domestic nuclear power construction program and 22 reactors in operation. But the Chinese industry is only beginning to break into the export market, with a plant under construction in Pakistan and a deal under discussion in Argentina.

Russia has a long list of potential international projects including plants in India, Turkey and Finland. Analysts say, though, that the Western economic sanctions imposed on Moscow over Ukraine have cast doubts on Russian nuclear exports, in part because they would need to be supported with loans that the Kremlin may no longer be able to afford.

But the French industry now has a serious credibility problem, in the view of Yves Marignac, an independent energy analyst and a frequent critic of France’s nuclear policy. The unanswered questions, he said, include why Areva and EDF installed the possibly defective pieces in the reactor pit and began the welding and wiring even before testing was completed.

“The fact that it was detected so late means that either EDF or Areva overlooked the risk of this kind of problem, which would reflect badly on their competence, or they were trying to create a fait accompli before it was detected,” Mr. Marignac said.

“There’s a safety issue,’’ he said, “and maybe an even stronger trust iss