In Flamanville, EDF sees the end of a site littered with pitfalls, company news

Benjamin Mallett

FLAMANVILLE, Manche, 16 June (Reuters) – At the site of the Normandy EPR nuclear reactor project, a banner stretched out at the top of the building near the tap and water under construction sets the course with a touch of optimism. : “The last direct line to start Flamanville 3 in complete safety, in complete safety.”

Although EPR is set to start generating electricity at the end of 2023, the state-owned electrician and the French state, 84% of which share, hope that no new difficulties will prevent a good start of the reactor, which is more than a decade late and billions in additional costs.

“Today I feel the energy that is beginning to appear on earth with people who see the last straight line. We are in the final sprint, and every week we feel this positive tension, which is growing, “said Alain Morvan, who was the leader. project from the beginning of 2020.

“Everyone is waiting for the EPR to be completed (…). I think it is good for the French industry and good for EDF that we are finishing this project, which is facing difficulties,” he told Reuters in the press on Tuesday. visit.

Located at the foot of a granite cliff overlooking the English Channel, at the end of the Normandy boot zone dotted with power poles, the EPR Flamanville 3 project was to showcase a resurgence of French nuclear power thanks to a safer, more powerful and more durable reactor that will renew and age. to new international markets.

Instead, it has become a symbol of the serious difficulties that EDF is trying to rectify that have prevented Emmanuel Macron from announcing a € 52 billion construction program in France in February. Six EPR 2 reactors – presented as simpler and cheaper to build – with the possibility of eight additional reactors.

DON’T MISS ANYTHING

The announcement came two weeks before Russia’s invasion of Ukraine, which exacerbated the crisis and energy surge in Europe.

Thus, the head of state, later re-elected in April, asked EDF to play an important role in reducing CO2 emissions in the country and in its security of supply, also maximizing the operation of existing nuclear power plants, which provided 69% of electricity production in 2021.

The Flamanville EPR, which will be able to generate at full capacity the annual amount of electricity needed for a city like Paris, was estimated at three billion euros and was due to launch in 2012, when the project was announced in 2004.

However, problems with the qualification, organization, monitoring of the facility and the quality of manufacturing of individual parts, in the context of increased safety requirements, have led to repeated delays and depreciation of the project budget.

According to the latest information provided by EDF, the construction of Flamanville 3 is now estimated at 12.7 billion euros in January, and the loading of its fuel, one of the last stages before electricity generation, should take place in the second quarter. 2023.

Repairing welding work is the last major challenge of the project to date, and today mobilizes nearly 800 people with a total of about 3,000 workers present on site. Of the 122 faulty welds, 60% have been repaired, leaving about fifty to be repaired.

“I have a weakness to believe that we have analyzed the situation enough so that there are no more surprises. It is important that we finish, leaving nothing aside, as high quality and on time as possible, “said Alain Morvan.

Neighbors are watching

The project is being scrutinized by France’s European neighbors. In particular, in the UK, where EDF is building two EPRs at Hinckley Point – also late and more expensive than expected – and in cross-border countries such as Italy and Germany, which rely on exports of electricity from the Hexagon.

EDF is facing structural funding difficulties, prompting the government to consider a complete renationalization of the group, which will be deeply reorganized after the first attempt was suspended last summer. According to sources interviewed by Reuters, the transaction may be through the repurchase of shares owned by minority shareholders.

The group also suffers from the unavailability of about half of its historic nuclear fleet, in particular due to corrosion problems at certain reactors, which has forced it to revise its production forecasts several times downwards. The impact on its earnings before interest, taxes, depreciation (Ebitda) this year is estimated at about 18.5 billion euros.

EDF is also dealing with the government’s decision to force it to sell more nuclear energy at lower prices to its competitors in order to limit rising electricity prices, a measure that risks being extended to 2023 and its impact on its 2022 Ebitda. about 10 billion euros.

Although the group had to increase its capital by 3.16 billion euros in early spring, to which the state signed up to about 2.7 billion, French Economy and Finance Minister Bruno Le Mer said on Tuesday about possible nationalization that “all options are on the table.”

“The general view of EDF is improving thanks to a series of positive signals and comments from the French authorities about the growing potential of nationalization,” said Nicolas Butors, an analyst at AlphaValue.

“Morning buyouts with a significant increase in current value are once again attracting speculative interest from investors after they dropped shares due to operational and regulatory problems.” (With Valentin Baldassari in Gdansk and Sylvia Alois; edited by Sophie Louet)