EdF in France is in a worse position than BE in the UK.
From a study of the 2009 annual reports of EdF and Areva it appears that at the end of the year, EdF had debts of over Eur 42.5 billion, while Areva had debts of ca. Eur 6.2 billion. Measures have been taken to reduce EdF's net debt, while reducing its revenue potential. Following the asset sales EdF's net indebtedness at 31 December 2010 was Eur 34.4 billion. Areva reduced its net indebtedness to Eur 3.7 billion by the end of 2010.
From a scrutiny of the pages of the IAEA PRIS database for France it can be discerned that thirteen of the statutory 30-year ASN inspections of the fleet were due by 2010, but only two have apparently been performed so it would appear that 11 NPPs are running unlicensed. It may be that some slippage is allowed to take into account previous inspection shutdown periods, or to await a re-fuelling operation, but as the problem is ageing of the components, the aggregate of the inspection schedule should reflect the passing of real time.
The status of the 11 NPPs seems to depend on an exchange of files establishing the level of degradation.
"However, in the field of nuclear installations, ASN considers that EDF needs to improve its forward planning of a certain number of maintenance and component replacement operations. Belated decisions of this nature meant that EDF had to submit files to ASN to justify continued operation in degraded mode. These files were not felt to be acceptable by ASN from the safety standpoint. This type of management is neither efficient nor optimised, be it for ASN with regard to safety and the mobilisation of its resources, or for EDF" *
* From the report on the state of nuclear safety in ASN's 191 Review, April 2011
The ageing of the fleet is progressively exigent. In 2011 some 21 will be 30 years old and due for their 10-year inspections. By 2015 some 37 will be 30 years old. By 2018 of the 58 NPPs, 48 will be more than 30 years old, while 4 of the 48 will be 40 years old and will have to close or be upgraded..
France and click Search
The situation can be described as follows:-
Nuclear generation in France is approaching its nemesis. Of the 58 NPPs, 48 will be 30 years old by 2018, each requiring a 3 months outage for inspection prior to licensing for their last ten years. For their operation to be extended for a further 10 to 20 years thereafter they will have to be upgraded or, if not, replaced with 20 new build EPRs.
Meanwhile it was claimed that EdF's debt has been reduced to Eur 20 billion by the sale of its UK distribution subsidiary and its 45% stake in German power utility Energie Baden-Württemberg AG (EnBW). It has transferred 50% of its shares in RTE, the French national grid to a public fund for the decommissioning of nuclear power plants. With a doubling of its debts in the two years to 2009, EdF's revenue is insufficient to meet its running costs or to fund an upgrading or new build programme. It has been prohibited to raise its tariffs to fund its future by the EC and the French government. Also from 1 July 2011 EdF is now obliged by the EC to sell 25% of its nuclear generation in the European market at a reduced price, which will further reduce its inadequate revenue, after losing the revenue earned from its UK network, from EnBW and from RTE dividends. The lost annual revenue may be ca. Eur 5 billion. Basically although EdF has provisions in its accounts for amortisation of its capital, its net indebtedness negates these and there are no funds for upgrading or for building replacement NPPs. To have provided for its continuaton it would probably have needed to have charged three times its current electricity prices.
Only one of the 20 EPRs needed
(if no upgrading is done) is underway at Flamanville and it is hoped other energy suppliers
will fund another EPR at Penly.
The rapid ageing of nuclear major components and the obsolescence of 40 years' old control systems means that the cost of upgrading rather than new build is difficult to estimate. What is certain is that the order book of Areva, its major supplier of whole plants and major replacement components, is full. There is simply insufficient manufacturing capacity to supply the upgrading components nor whole plants.
Areva has reduced its net debt to Eur 3.7 billion at the
end of 2010, but is yet
to commission the first EPR in Finland. If it encounters similar problems in
China, where it is supplying two EPRs and hopes to sell two more, it will add
enormously to its debt. It is hard to perceive how it will be able to supply
its partner EdF with the new build and upgrade components in time to avoid a
collapse in France's nuclear generation .
So without the government subsidy it is supposed to be denied, it is hard to envisage how EdF will be able to fund its programme in the UK.
In the meantime, nuclear power in France is in financial meltdown, hopefully not of its cores!
UK new build
An Infrastructure Planning Commission (IPC)
and its successor is expected to approve the new nuclear build in principle,
leaving only local issues to public inquiries. The coalition government has
resolutely rejected any state subsidy for nuclear, but this is under challenge
by the nuclear lobby. EdF has made the curious statement that it needs no
subsidy, but would be content with a “guaranteed”, “robust” or
“floor” price for carbon.
The working of a “floor” price in
auctions of carbon allowances under the EU Emissions Trading System is obscure. Trading
consists of matching buyers and sellers between members of one of Europe’s
climate exchanges. Presumably if the “floor” price failed to find a buyer,
there would be “no sale” and the allowances would have to be offered at
However, the introduction of a "floor" price for carbon will simply add to the new build costs, before any enhanced revenue from raised market prices can be earned. Its advocacy is nonsensical. Every component in a new build will be more expensive as it will be made with the benefit of fossil fuels, making a capital intensive pursuit more intensive. RWE has already stated that a high carbon price will not suffice in order to fund its new build. However, the run down of nuclear power in Germany may mean the end of the RWE/E.On joint venture for new build in the UK.
DECC has announced a "market reform" consisting of a further three "incentives" for the UK new build. There are to be "Contract for Difference Feed-in-Tariffs" (CfD/FiTs) for nuclear generation and "capacity" grants for the provision of low carbon generation at peak times. Emission standards will be applied to nuclear's fossil fuel competitors. It is admitted that the costs of the FiTs and capacity grants will accrue to the consumer, while the exaction of emission standards will close coal-fired stations.
The four "incentives" (or "subsidies") will only benefit a nuclear developer once the station has been commissioned and in revenue. So a potential investor will be unimpressed by them, especially as extended construction times delay the payback.
Meanwhile the outage from March to September of Sizewell B due to the leaking pressuriser reduced BE's revenue in 2010. Part of the debt in France is due to the purchase of BE, which must now be much regretted, ameliorated somewhat by the purchase of 20% of BE’s equity by Centrica. It appears that the cost of the provision of the dry casks and the associated "mausoleum" (in which they will be stored) to allow generation to proceed after 2015 when Sizewell B's spent fuel pond will be full, will be met from a nuclear liabilities fund.
The taxpayer has picked up the bill for BE's decommissioning and waste management and as it is "too big to fail" it will most likely be re-nationalised and EdF and Centrica will have to write off their investment.
The poor economics of nuclear power have been masked by its
state ownership and its political pricing structure.
An analysis of nuclear power in the UK since
its inception in 1956 up to the closure of Sizewell B in 2035, taking into
account development and prospective decommissioning and waste management
expenditure, shows that for every £1 the consumer paid and will pay, the
taxpayer has and will pay an additional £2.
An analysis of nuclear power in the UK since its inception in 1956 up to the closure of Sizewell B in 2035, taking into account development and prospective decommissioning and waste management expenditure, shows that for every £1 the consumer paid and will pay, the taxpayer has and will pay an additional £2.
State ownership in the UK and in
France has hidden the uneconomic nature of nuclear power. In order to
allow the UK new build without "subsidy", DECC has augmented the
carbon "floor" price with "feed-in-tariffs" paid by
electricity wholesalers, peak capacity grants and the exaction of emissions
performance standards (EPSs) which will force coal-fired stations to close. The
consequent raising of tariffs will in theory assist in evaluating the cash flow
of a new nuclear project and support an investment,
In order to allow the UK new build without "subsidy", DECC has augmented the carbon "floor" price with "feed-in-tariffs" paid by electricity wholesalers, peak capacity grants and the exaction of emissions performance standards (EPSs) which will force coal-fired stations to close. The consequent raising of tariffs will in theory assist in evaluating the cash flow of a new nuclear project and support an investment,
But these incentives will not apply until a new station has been commissioned and if it is delayed as the EPRs in Finland and France have been, the bank loans will have to be rolled over at great expense to the client. The review of the Fukushima incident in Japan is expected to cause further delays and additional expenditure. Without the guarantees of the French or UK governments, prohibited by EC competition rules, the finance for the UK new build is unlikely to be arranged.
John Busby 29 July 2010
(Revised 6 June 2011)
(Revised 6 June 2011)