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French nuclear power at crossroads

Author : Alan Franck, Editor, Hazardex

25 April 2016

Nuclear energy is the primary source of energy in France, generating 77% of the country’s electricity, the largest share of any country in the world. This situation is due to the French government deciding in 1974, just after the first oil shock, to rapidly expand the country's nuclear power capacity, harnessing the country’s engineering expertise and enabling it to bypass its relative lack of native energy resources.

As a result of the 1974 decision, France now claims a substantial level of energy independence and amongst the lowest cost electricity in Europe. It also has an extremely low level of CO2 emissions per capita from electricity generation, since over 90% of its electricity is from nuclear or hydro sources.

But storm clouds are gathering. The country’s existing nuclear power plants are rapidly ageing and their replacements are plagued by technical difficulties, worsening the already poor financial situation of companies in the nuclear sector.

The French Government has also decreed that the country should reduce its dependence on nuclear power and increase the share of renewables in the country’s energy mix. In 2015, the National Assembly voted that by 2025 only 50% of electricity should be nuclear-generated.

The nuclear present

The country has 58 nuclear reactors at 19 sites, all operated by Electricité de France (EdF), which is 85% owned by the French state.

Following the retirement of a first generation of gas-cooled reactors, the second generation currently in operation are based on a pressurised water reactor design initially developed by Westinghouse, but heavily adapted by the French nuclear industry to suit the country’s needs.

A first tranche of 34 900 megawatt (MW) reactors first came into service between 1978 and 1984, a second tranche of 20 rated at 1,300 MW between 1985 and 1992, and a third tranche of four 1,450 MW reactors were commissioned in 2000 and 2002.

In February 2012, President Sarkozy’s Government decided to extend the life of existing nuclear reactors beyond 40 years, following a Court of Audit decision that this was the best option as new nuclear capacity or other forms of energy would be more costly and would take too long to bring into service.

The average age of EdF’s fleet of 58 reactors was 30 years in 2015. The country’s Nuclear Safety Authority (ASN) has approved the safety case for 40-year operations subject to individual inspection and approvals at each of the reactors, a process that is now underway.

In July 2010, EdF said that it was assessing the prospect of 60-year lifetimes for all its existing reactors. This would involve replacement of all steam generators and other refurbishment, costing €400-600 million per unit to take them beyond 40 years. EdF has already replaced the steam generators at 22 of its reactors and is currently replacing the rest at a rate of three units per year.

EdF estimated the cost of maintaining the existing fleet for the period 2011 to 2025 at €55 billion, including the costs of upgrading safety after the 2011 Fukushima Daiichi reactor meltdowns in Japan caused nuclear operators worldwide, including in France, to stress test all operational reactors for possible weaknesses.

Public support for nuclear took a knock after the events in Japan, but seems to have recovered.

An opinion poll by Ifop in May 2013 found 36% supported the use of nuclear energy in France, up from 33% in November 2011, while the proportion expressing opposition fell 3% to 14%. Some 34% were undecided and 16% said they had no opinion on the subject.

End-of-life estimates have also risen, with EdF having set aside €20.9bn for decommissioning at the end of 2012, although many experts consider this to be far too low a figure for the total likely costs.

France is in the early stages of developing a deep burial repository for nuclear waste and the estimated cost of this rose from €20bn in 2005 to €35bn in 2010, but some of these costs will be defrayed over longer periods as the dismantling of the current 58 reactors is currently planned to take place between 2035 and 2057.

An alternative future

In October 2014, the Loi de Transition Energétique pour la Croissance Verte (Energy Transition for Green Growth law) was put before parliament, inspired by the German Energiewende changeover to green energy. This was approved in July 2015 and stipulates that nuclear should only supply 50% of the country’s energy by 2025.

The bill also sets long-term targets to reduce greenhouse gas emissions by 40% by 2030 compared with 1990 levels, and by 75% by 2050; to halve final energy consumption by 2050 compared with 2012 levels; to reduce fossil fuel consumption by 30% by 2030 relative to 2012; and to increase the share of renewables in final energy consumption to 32% by 2030.

This reduction in the amount of power provided by nuclear from 77% to 50% should primarily be covered by wind and solar, according to the stated policy of the current Government under President François Hollande.

To meet the cap, France would have to shut down 1,650 MW of nuclear capacity by the end of 2016 to offset a capacity increase from a new nuclear plant, EdF’s Flamanville 3 in Normandy, earlier scheduled to come online by 2016, but now likely in 2017.

Two 900 MW reactors in Fessenheim (in northeastern France on the border with Germany), operating since 1977, are now slated for closure to make the room for Flamanville, despite the ASN approving a ten-year licence extension in July 2011 subject to refurbishment operations which have now taken place.  

Map of French nuclear power stations
Map of French nuclear power stations

The French environment minister, Ségolène Royal, said in early March that the process to shut down the country’s oldest nuclear power plant would begin in 2016 and be complete in 2017. One estimate by the French parliament in 2014 put the cost of closing Fessenheim at €5bn, as well as having a “direct impact” on 2,000 jobs.

To meet the rest of its new obligations, France could have to close up to 22 other reactors to meet the 50% cap by 2025, which would be an expensive and controversial move.

The French Nuclear Energy Society, an industry group, estimates that the law could ultimately cost €40bn, with some analysts predicting that as a consequence of the closures France would have to fall back on fossil fuels to make up for the power generation gap, as has happened in Germany.

Quoted in the Financial Times, François Lévêque of the Ecole des Mines in Paris and author of The Economics and Uncertainties of Nuclear Power, said meeting the 50% target by 2025 would likely be hugely expensive, and that shutting down profitable and safe reactors was just “money down the drain”.

If the law is followed through it would entail a complete change of focus for the nuclear industry in France from maintaining and expanding capacity, the default since 1974, to closure, demolition and a big expansion in waste management operations.

Clouds on the horizon

This comes at a time when the sector in France is facing wider restructuring as the Government attempts to streamline and strengthen the country’s nuclear engineering branch.

Reactor builder Areva has run up massive losses in recent years, with €4.8bn in 2014 alone. In Finland, the new EPR reactor being built by Areva at Olkiliuoto is nine years behind schedule and its original budget has doubled, with financial responsibility now the subject of a bitter legal conflict between Areva and TVO, the Finnish utility.

Worse, fundamental problems with the EPR reactor pressure vessel installed at Olkiliuoto, Flamanville 3 and potentially in future at Hinkley Point C in the UK, could open Areva to even larger liabilities.

As a result, the Government has decreed that EdF should take a stake of at least 75% in the troubled reactor builder at a time when it is itself under serious financial stress.

EdF, with an annual turnover of €70bn, already has debts of €37.5bn and has been forced to consider a programme of asset sales to reduce this burden. It is also grappling with a collapse in power prices in France, huge cost overruns on the Flamanville C project, €5bn on a smart meter rollout and the need to raise €55bn to upgrade its existing nuclear plants.

The Financial Director brought in to manage this situation, Thomas Piquemal, had been preparing the asset sale programme to improve EdF’s financial position prior to it taking on any significant new liabilities.

But pressure from the French and UK Governments for EdF to commit to yet another very expensive project, the proposed €24bn nuclear power station at Hinkley Point C in southern England, was too much. Piquemal resigned in early March, apparently concerned that going ahead with the controversial UK project could jeopardise EdF’s very existence.

Jean-Bernard Lévy, chairman and chief executive of EdF, said that he regretted the "hastiness" of Piquemal's departure. The company's board is now expected to finalise in the second quarter of 2016 how (and if) it will fund the project after postponing the decision a number of times.

Conclusion

According to a study commissioned by the national environmental agency (ADEME), a complete phase-out of nuclear power and switch to 100% renewable energy should be possible - and economically viable - by 2050. Indeed, the difficulties at Flamanville show that a renewal of the French nuclear fleet is likely to be an expensive and risky option at a time when renewable costs are declining and improved power storage technology is likely to reduce the necessity of having so many large capacity power stations permanently on hand to provide base load into the national grid.

But the process of making the transition is fraught with difficulty and the premature retirement of second-generation nuclear plants that are both safe and cheap to run is likely to bring instability and expense to a part of the French economy, electricity generation, which has long been seen as a great success.

Another problem is heavy-handed meddling by the French Government in the sector, not least the pressure it is putting on EdF to provide finance and support for a number of risky projects at a time when the group’s resources are stretched to the limit.

EdF is not averse to a non-nuclear future – it has operated some of the most efficient hydro-electric stations in Europe for over a century - and after a slow start, is rapidly embracing solar, wind and other renewable technologies. But it will need exceptional discipline and focus to navigate the transition over the next few years at a time of rapidly changing technological and economic realities.


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