My last three posts were about the Russian state owned nuclear technology company Rosatom and their issues with participation in the nuclear technology market. Today I am going to discuss some difficulties that France's nuclear technology company Areva is having. Areva is one of the major nuclear reactor construction companies in the world and the only such company in Europe.
The Hinkley Point C project in Great Britain is the current high profile project for Areva and its cost is about twenty six billion dollars. The project calls for the construction of two reactors based on the European Pressurized Reactors (EPR) design. The two reactors to be built in Somerset area of southwest England will be the first reactors to be constructed in many years in Great Britain. The project was approved by the British government and a fixed purchase price for the electricity from the reactors was guaranteed. Although there was a problem with the legality of state price guarantees in the European Union, the European Commission eventually ruled in favor of the project. Austria was not satisfied with the ruling of the Commission and intends to challenge it in court.
Despite the approval of the various governing agencies and the guaranteed price, investors have been slow to put money into the project. Although companies from Kuwait, Qatar, Saudi Arabia, and Great Britain have been mentioned as potential investors, none of them have invested yet. China's National Nuclear Corporation has been also been suggested as an investor but their involvement was contingent on China being granted ownership of a new nuclear power plant at the Bradwell site in Essex in the southeast part of England. National security concerns have been raised in England over granting China access to the national power grid.
Another reason for investor reluctance, is based on the requirement that Areva has to come up with at least ten percent of the total cost of the project. In the fall of 2014, Areva admitted that it was having problems raising the ten percent share and might not be able to satisfy that requirement.
Areva's current financial problems are a result of its involvement in another reactor construction project in Finland at the Olkiluoto site. Areva lost about five and a half billion dollars on the Olkiluoto project in 2014. The project was originally scheduled for 2009 but was recently pushed out to 2019.
Areva has announced that it is planning on investing around a billion dollars in a turn-around plan. To raise that money, they may have to lay off as many as one thousand people and sell some of the company's assets. EDF, the French national energy utility is expect to assist in the recovery plan.
India is working on a deal with Areva for an EPR in Jaitapur and Areva has ambitions to sell EPR reactors to Saudi Arabia and other Arab countries. The cost overruns and schedule delays in Finland and on domestic reactor projects in France will not be good selling points for such exports.
Soon the French government will have to contract for the decommissioning of French reactors reaching the end of their life spans. The estimated cost of decommissioning is over three hundred billion dollars. It is probable that this cost (which could easily rise) will reduce the money available to assist Areva in its ambitions to export the EPR technology.
