nuclear-news

AREVA in trouble, and who will buy their nuclear reactors?

French nuclear energy Under pressure France wants to export nuclear reactors. Who will buy them? The Economist Dec 17th 2011 | PARIS On December 12th Areva, France’s
state-owned nuclear champion, said it would take a €2.4 billion ($3.1 billion) charge against profits. This will give the firm its first ever operating loss, of perhaps €1.6 billion for 2011.

That hurts. Areva is the world’s only one-stop nuclear shop, selling everything from uranium to fuel recycling. Much of the charge came from a slump
in the value of UraMin, a uranium-mining firm bought for a giddy price
in 2007, when nuclear power was surging. The price of uranium, which
fuels reactors, tumbled afterwards (see chart).

Before Fukushima, Areva’s managers went on a hiring binge, expecting
rapid growth in sales to rich and emerging markets alike. Now the firm
will cut costs and investment, fire workers and sell assets.

In Europe, Areva’s most profitable market, people are newly nervous
about nuclear power. Germany, Switzerland and Belgium have all opted
to abandon it. Lower natural-gas prices have made it less competitive.
And serious carbon curbs, which would boost a business that emits
virtually no carbon dioxide, are nowhere in sight. Nicolas Sarkozy,
France’s president, has reaffirmed the country’s commitment to nuclear
power. But François Hollande, his Socialist rival in the presidential
election next spring, says that if elected he would reduce nuclear’s
share of the national energy mix from 75% to 50% by 2025. That would
mean shutting roughly 24 reactors.

Mr Hollande would be unlikely to shut more than a couple of reactors
during a first term. Still, even that, together with a freeze on new
building, would signal that France no longer believes in nuclear
power, says Francis Sorin of SFEN, a nuclear-research group. That
would make it harder for French firms to sell reactors overseas. Even
before Fukushima, France’s EPR plans had hit snags. Projects in France
and Finland were (and remain) over-budget and behind schedule. And the
EPR’s steep price was deterring customers. Abu Dhabi opted last year
to buy cheaper South Korean reactors.
Some say that Fukushima proved the value of paying extra for safer
reactors, such as the EPR. But others argue that the Japanese accident
highlighted the need for fully passive safety systems—ie, ones that
need no external power—which the EPR does not have.

The biggest customers for nuclear power in the coming years will be
developing countries, for which price is crucial. The International
Atomic Energy Agency now predicts that nuclear capacity in western
Europe could fall by as much as a third by 2030. (Before Fukushima, it
said it would expand.) Capacity in Asia, by contrast, will more than
double.

Areva may face trouble at home, too. Last month La Tribune, a
newspaper, said that Electricité de France (EDF), Areva’s biggest
customer, was preparing to dump the EPR ….
A new Franco-Chinese reactor could strain relations between EDF and
Areva, which have in the past fought bitterly. Both wish to lead the
French nuclear export drive. Areva is already marketing a smaller
reactor, the ATMEA-1. It wants a new Franco-Chinese reactor to be
based on its ATMEA design. The two firms are also trying to redesign
the EPR to make it far cheaper.

Politics will make all of this harder. Hardly anyone wants to invest
in EDF until it becomes clear whether Mr Hollande’s plan will be
implemented, says Per Lekander, an analyst at UBS, a bank, in Paris.
Britain’s government, meanwhile, is expected soon to make a final
decision on whether to build four
EPRs….http://www.economist.com/node/21541833

December 16, 2011 - Posted by Christina Macpherson | business and costs, France