In Flamanville, EDF sees the end of a site littered with traps, Company News

Benjamin Mallett

FLAMENVILLE, Manche, June 16 (Reuters) – At the site of an EDF project to build an EPR nuclear reactor in Normandy, a banner hung on the roof of a building near a crane and a pond under construction sets the course with a note of optimism: “The last straight to the start of Flamanville 3 is completely safe , completely safe.”

While the EPR is due to start producing electricity on the grid at the end of 2023, the public electrician and the French state, its 84% ​​shareholder, hope that no new difficulties will prevent a good start of the reactor, which is already more than a decade late and billions of additional expenses.

“Today I feel the effervescence that begins to appear on the ground along with people who see the last line. We are in the final sprint and every week we feel this positive tension that is growing,” says Alain Morvan, who has led the project since the beginning of 2020.

“Everyone is waiting for the completion of the EPR (..). I think it is good for the French industry and good for EDF that we are completing this project, which has run into difficulties,” he also told Reuters on Tuesday during a press conference. visit.

Nestled at the foot of a granite cliff overlooking the English Channel, at the end of a Norman bocage littered with power pylons, the EPR Flamanville 3 project was to be a showcase for the renaissance of French nuclear power with a model of a safer, more powerful and durable reactor that would allow the renewal of an aging fleet and enter new international markets.

Instead, he has become a symbol of the serious difficulties that EDF is trying to remedy, and which did not prevent Emmanuel Macron from announcing in February a program to build six EPR 2 reactors in France, estimated at 52 billion euros. how easier and cheaper to build – with the possibility of eight additional reactors.

DON’T “MISS ANYTHING”

The announcement came two weeks before the Russian invasion of Ukraine, which exacerbated the crisis and energy surge in Europe.

Thus, the head of state, subsequently re-elected in April, asked EDF to play an important role in reducing the country’s CO2 emissions and ensuring its security of supply by extending the operation of existing nuclear power plants as much as possible, which provided 69% of the country’s electricity generation in 2021.

EPR Flamanville, which will be able to produce at full capacity the annual amount of electricity needed for a city like Paris, was estimated at three billion euros and was due to start in 2012 when the project was announced in 2004.

But problems with skills, organization, site monitoring and the quality of workmanship of individual parts in an environment of increased safety requirements led to multiple delays and drifts in the project budget.

According to the latest information provided by EDF, Flamanville 3’s construction cost is now estimated at 12.7 billion euros in January, and its fuel loading, one of the last stages before power generation, should take place in the second quarter of 2018. 2023.

Welding repairs represent the latest major challenge on the project to date, with about 800 people mobilized today out of a total of about 3,000 workers on site. Of the 122 defective welds, 60% have been repaired, so about fifty remain to be repaired.

“I have a weakness to believe that we have analyzed the situation enough so that there are no more surprises. It is important that we finish without leaving anything behind, with maximum quality and on time,” said Alain Morvan.

NEIGHBORS LOOK

The project is being studied by France’s European neighbors. Particularly in the UK, where EDF is building two EPR power plants at Hinckley Point (also late and more expensive than expected), as well as in cross-border countries such as Italy and Germany, which depend on the export of electricity from the “Hexagon”.

EDF is facing structural financing difficulties, which has prompted the government to consider a full re-nationalization of the group, which will be reorganized after the first attempt was put on hold last summer. According to sources interviewed by Reuters, the operation could have gone through a buyout of shares held by minority shareholders.

The group is also suffering from the unavailability of about half of its historic fleet of nuclear power plants, in particular due to corrosion problems at some reactors, which caused it to revise its production forecasts downward several times. The impact on its earnings before interest, taxes, depreciation and amortization (Ebitda) is estimated to be around 18.5 billion euros this year.

EDF also has to deal with the government’s decision to force it to sell more nuclear power at low prices to its competitors in order to limit the rise in electricity prices, a measure that risks being extended into 2023 and whose impact on 2022 Ebitda has been reached for its part. about 10 billion euros.

Although the group had to put through a €3.16bn capital increase in early spring, to which the state subscribed for around €2.7bn, French Economy and Finance Minister Bruno Le Maire said on Tuesday about a possible nationalization that “all options are on the table.”

“General opinion about EDF is improving thanks to a number of positive signals and comments from the French authorities about the growing potential for nationalization,” said Nicolas Boutors, analyst at AlphaValue.

“Minority buyouts at a significant premium to present value are once again attracting speculative interest from investors after they dumped shares due to operational and regulatory issues.” (Together with Valentin Baldassari in Gdańsk and Silvia Aloisi; edited by Sophie Luet)