Nuclear Reactors 375 - AREVA and the French Nuclear Industry Have Serious Problems
The French company AREVA is selling its new European Pressurize Reactor (EPR) technology to other nations. Unfortunately, AREVA has been having serious financial and technical difficulties. They are behind schedule and over budget on projects in France. The forge that creates the pressure vessels for their reactors was recently found to have put to much carbon into the smelting and some of their pressure vessels are too brittle to be used. Now the French owned utility, EDF is planning on buying a share of AREVA to help bring financial solvency to the reactor maker but the sale is being blocked by lawsuits with its first customer.
The first customer for the new reactor is Finland's TVO. AREVA is building the first new reactor in Western Europe in decades at Olkiluoto. Unfortunately, the project budget is way over original estimates and almost a decade behind schedule. The new reactor was supposed to begin generating electricity in 2009 but the latest estimate for the start of operation is 2018.
AREAVA and TVO are involve in legal disputes over billions of dollars. AREVA and Siemens, a former joint partner, are suing TVO for about four billion dollars. TVO is counter suing them for about three billion dollars. The litigants have been negotiating in the hopes of crafting a deal that will allow the planned sale of the stake in AREVA to EDF. If the parties in the law suits can separate the liability for the Olkiluoto reactor project from the rest of AREVA's finances, then the sale of AREVA to EDF could proceed.
The recent collapse of those talks caused the TVO CEO to say that he was worried about the future of the French nuclear industry. He said that politics and the AREVA restructuring were interfering with reaching an agreement between TVO and AREVA. He also said that there could be no deal on the lawsuits or the AREVA/EDF sale until an agreement was reached for the completion of the Olkiluoto project.
AREVA's second international customer is Britain. They have contracted with Britain to build two EPRs at the Hinkley Point C power station. But AREVA was unable to raise sufficient funds to cover its share of the costs of manufacture and installation. They had to appeal to the Chinese for funding. One of the pressure vessels made for the Hinkley Point C project had to be rejected. AREVA has had to repeatedly delay signing the final contracts for the Hinkley Point C project.
The Prime Minister of France has made the sale of nuclear technology to other nation a major part of his plans of the future of France's economy. The big question now is just how committed is he? In order for the necessary restructuring of AREVA and the EDV sale to proceed, peace will have to be made with Finland over the completion of Olkiluoto and Britain over the Hinkley Point C project. The problem with the pressure vessels will have to be addressed to restore confidence in French quality control of nuclear components. Right now, the French nuclear industry is in serious trouble.
