Saturday, July 31, 2010

Areva under pressure

New delays reported at Flamanville. EDF seeks an equity position. The NRC has questions about digital instruments & controls for the EPR.

Pressure cooker

Areva’s engineers and executives may feel like they’re working inside a pressure cooker this month. Bloomberg and AFP wire services indicate the French government is calling for “urgent measures” to stem the tide of red ink flowing from a cost overrun for the Flamanville 1,650 MW EPR reactor of one billion euros ($1.3 billion).

The new cost estimate for the reactor is now reported to be [E]5 billion ($6.5 billion or about $4,000/Kw).

There is also a reported schedule delay from 2013 to 2015 for start-up of the new reactor.

This week former Electricite de France (EDF) CEO Francois Roussely published a report on the future of the French nuclear industry which said new reactors will have a better chance of success if they are smaller than the EPR. He also called for the EPR’s design to be “optimized” to make it easier to build the reactor. (Nuclear Engineering Int’l has a July 30 translation of the report)

Francois RousselyRoussley (left) sounded an alarm about cost overruns at the Finnish and French reactor projects.

“The credibility of both the EPR and the ability of the French nuclear industry to successfully build new reactors have been seriously undermined by difficulties at Finland’s Okliluoto site and Flamanville.”

The WSJ reported that Areva said in a statement it is applying lessons learned from its first two EPRs to two more it is building in China. The firm said it is reducing the engineering hours needed to complete the nuclear steam supply system for the Taishan 1 and 2 reactors.

EDF and Areva partnerships

UPI reported July 28 that French Finance Minister Christine Lagarde (right) called for a strategic partnership between Areva and EDF. One possible expression of the relationship will be for EDF to take an equity stake in Areva. Lagrande told UPI such a deal would be a good way for the two state-owned firms to work together especially in generating export income.

Christine Lagrarde“There must be a strategic partnership between Areva and EDF. It is necessary for exports. Our two big nuclear champions must get along.”

Roussley’s report was commissioned following the loss of Areva’s bid for the UAE’s $20 billion reactor program to South Korea. The current CEO of EDF Henri Prolio has a charge from French President Sarkozy to get the nation back to a strong position in terms of global market share for export of nuclear reactors.

anne-lauvergeon This political influence has reportedly not set will with Areva CEO Anne Lauvergeon (left) who has resisted having EDF take an equity stake in the company. The WSJ said she may now bow to the inevitable sometime this Fall assuming EDF has the cash to make the buy.

The Wall Street Street Journal reported July 28 that EDF’s ability to invest in Areva could be constrained by its large debt. The WSJ also reported EDF’s profits fell by 47% in the first half of 2010.

Two other potential investors are Japan’s Mitsubishi and the sovereign wealth fund of the Arab state of Qatar.

Instruments get NRC review

The New York Times reported July 30 that the U.S. Nuclear Regulatory Commission (NRC), which is conducting a design certification review of the EPR reactor, sent a letter to Areva raising questions about digital instrumentation and control systems. The NRC reportedly said it has concerns about the complexity of the computer systems.

According to the NRC’s Information Report to the agency’s five commissioners for July 2, 2010, the digital instrumentation and control issue isn’t being raised solely by U.S. regulators.

“On June 22-25, 2010, the [NRC] staff participated in a Multinational Design Evaluation Program (MDEP) meeting in Paris, France. The subject of this meeting was the common position papers which had been previously drafted and distributed to the MDEP members. Digital Instrumentation and Control issues regarding the AREVA Teleperm XS safety-related protection systems being proposed for the Evolutionary Power Reactors and for plant safety system retrofit designs were also discussed during the meetings. In attendance were representatives from the regulatory agencies of France (ASN/IRSN), Finland (STUK), Japan (NISA), Korea, Russia, and Canada.”

ball in court A July 22 letter ML101940253 from NRC’s Matthews to Areva cautions the reactor vendor that its proposed responses about the digital controls “may not meet NRC regulations for independence” between safety and non-safety systems.

The ball is now in Areva’s court to respond to the regulatory agency and to keep the reactor’s design review on schedule for completion by the end of 2011. Areva has said it plans to break ground for construction of a new US EPR at Constellation’s Calvert Cliffs III project in 2012. Ironically, that project involves a 49% stake in Constellation by EDF.

Prior coverage on this blog

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