Italy's Enel pulls out from French EPR nuclear project.
By Stephen Jewkes and Michel Rose, Nuclear News, December 4, 2012
http://tinyurl.com/bwwwa62
MILAN/PARIS, Dec 4 (Reuters) – French power group EDF received a new blow on Tuesday when Italy’s biggest utility Enel announced its has pulled out from a project to build a next-generation nuclear reactor in northern France.
The French state-owned utility said earlier this week stricter regulation in the wake of Japan‘s Fukushima disaster has forced it to revise up the construction cost of its European Pressurized Reactor built in Flamanville, northern France, to 8.5 billion euros ($11.12 billion).
In 2005, EDF estimated the reactor’s cost at 3.3 billion euros.
Enel said in a statement its decision reflected the uncertain time frame for other nuclear investments in France and a sharp drop in power demand.
A spokeswoman for EDF said Enel would receive about 700 million euros, including interest, to cover expenses the Italian group had already paid in relation to its 12.5 percent stake in the Flamanville 3 project.
Shares in EDF were the biggest losers on France’s CAC 40 index of French blue chips, closing down 2.3 percent, before Enel’s announcement.
“In a way, the last 24 hours have killed French nuclear finally because the cost makes it totally impossible to export and now you have one of the few partners actively withdrawing; it looks really bad,” said UBS analyst Per Lekander.
The group said on Monday the French EPR’s construction would be completed in 2016.
Flamanville 3 is the first nuclear reactor built in France in 15 years and a landmark project for EDF, which hoped to capitalise on three decades of experience to win deals to build nuclear plants in countries such as Britain and India.
“EDF’s UK subsidiary put out a release saying that the cost increase should have no impact on cost estimates for the group’s plans to build EPRs in the UK. However, the news is likely to increase skepticism about costs for nuclear critics in the UK,” Deutsche Bank analyst Martin Brough said in a note on Tuesday.
Repeated delays have also hit the construction of the first EPR reactor, Finland’s Olkiluoto 3, built by French nuclear group Areva and Germany‘s Siemens.
Construction works of two EPRs in China are going as planned, however.
ITALIAN REFERENDUM
France, the world’s most nuclear-reliant country, is now trying to cut the share of its electricity produced by its 58 nuclear reactors to 50 percent from 75 percent by 2025.
President Francois Hollande’s government is due to shut France’s oldest reactor by the end of 2016.
Enel signed a strategic partnership agreement with EDF in 2007 giving it a stake in the EPR nuclear power plant.
The agreement also envisaged at the time the building of five other power plants using the same EPR technology with an option for Enel to buy a 12.5 percent stake in each plant.
Enel said a referendum in 2011 banning the development of nuclear energy in Italy had undermined the strategic importance of the partnership.
The Milan-based utility runs nuclear power plants in Slovakia and in Spain through its subsidiary Endesa. It used to operate four nuclear plants in Italy before a referendum in 1987 following the Chernobyl tragedy stopped nuclear power production.
($1 = 0.7642 euros)
Additional reporting by Muriel Boselli in Paris
and Karolin Schaps in London;
Editing by Helen Massy-Beresford and Marguerita Choy
