France begins nuclear bailout
“ast week, the French government announced plans to inject cash into Areva, the firm that constructs nuclear plants in the country. It is a desperate attempt to ward off the inevitable: bankruptcy.
The French nuclear power sector has always been a top priority for government officials ever since the practically forgotten (and failed) Messmer Plan of the early 1970s. With few orders for nuclear reactors on the books and tremendous cost overruns for the EPR plant under construction in Flamanville, Areva now faces a financially dismal future.
As a result, the French government is officially (press release in French) looking into “reorganizing the French nuclear industry” with a strategic partnership between Areva and EDF, the former state power monopolist. The deal would not make the order books look better by ramping up international demand. Instead, it would absorb losses by spreading them across the merged new company – and eventually transferring them (at least in part) into tax budgets. The deal would at least settle a dispute over whether EDF or Areva should cover cost overruns for the ERP reactor under construction in Flamanville.”
Also covered by Bloomberg
France’s Nuclear Decline Exposed as Areva Confronts Cash Crunch
” (Bloomberg) — For decades France’s nuclear industry was seen as a source of economic strength, providing cheap power for factories, high-tech exports and tens of thousands of well-paid jobs. Today, it’s looking more like a liability.
Electricite de France SA, the world’s largest nuclear operator, must spend $63 billion over the next decade to keep the country’s aging fleet of 58 reactors running safely. More urgently, nuclear engineer Areva SA, touted as an export champion for a new atomic age, has lost billions from a project in Finland and investments in African uranium mines, raising the prospect of a state bailout.
As renewable energy prices continue to fall, the future of nuclear is looking increasingly uncertain. A big advantage that renewables have is the ability to finance and build small increments. No need for mega financing of a mega plant with the specter of mega cost overruns. As a matter of fact, a little digging reveals that, solar in particular, is more likely to come in under budget than over budget. |
