French AREVA between Nuclear Renaissance Hype and Homegrown Financial Doom

By Mycle Schneider

Here are some key facts about AREVA and its construction problems in Finland, as per James Kanter's , "In Finland, Nuclear Renaissance Runs Into Trouble",http://www.nytimes.com/2009/05/29/business/energy-environment/29nuke.html?_r=2)

1) One could have added to Mr. Kanter's article:

- The cost overrun officially admitted standing at over 50% of the fixed price budget does not include the €2.4 billion ($3.4 billion) damage compensation claim the client TVO has filed with an international arbitration court. The fact that AREVA in return claims €1 billion ($1.4 billion) is hardly more than a desperate move advised by their international lawyers in order to limit damage. AREVA signed a fixed price contract and knows they will have to pay in the end.
- AREVA is a company majority owned by the French state. If AREVA carries out a contract at a loss covered by the French state this could be against European Union competition rules. Nobody knows yet how much this will cost yet...
- The Finnish EPR was scheduled to generate power now, not in three years or later, and it was part of the Finnish strategy to achieve its Kyoto Protocol engagements. The official cost overrun does not include costs that have to be covered by Finland in order to substitute for "clean power" or compensate for emissions (CDM).

2. In 2008, the first time in civil nuclear history, no new nuclear reactor was connected to the grid, while three units were shut down. The installed nuclear capacity declined by about 1,600 MW, the size of the EPR in Finland that has been in the pipeline for 10 years ever since the Environmental Impact Assessment was submitted. In the EU, in 2008 for the first time more wind power capacity started up than even natural gas plants. Nuclear power with 145 reactors in operation, has been in decline since the historical maximum of 177 units was attained 20 years ago.
- The IAEA lists 45 units as "under construction", but eleven of them have been listed there for over 20 years. Indeed, the figure is better than the 26 units listed five years ago, the lowest level since the beginning of the nuclear age in the 1950s. However, the peak was reached 30 years ago with 233 units under construction simultaneously.
- It is not enough to start up building sites, it is crucial to finish them. Over 250 nuclear orders have been cancelled over the years, more than half of them in the US.
- The CEO of the most powerful US nuclear utility Exelon just announced that he would "cancel or delay" his new build plan for Victoria, Texas, because it was not preselected by DOE for loan guarantees. John Rowe had warned before: "we can't do it without the federal subsidy".

3. AREVA lost 62% of its share value between June 2008 and end of March 2009, significantly more than the CAC40 (the French Dow Jones) and has a hard time to recover since.
- In January 2009 AREVA NP lost its partner company Siemens. The German electronics giant was simply sick of paying for the Finnish EPR technical, economic and PR disaster. Having no say in company strategy in spite of its 34% share holding and being kept out of key markets that have gone to competitor Alsthom, AREVA's CEO "Atomic Anne" Lauvergeon was perceived by German executives as the "Queen you can't argue with". After years of background battles, Siemens simply dropped AREVA. Now the cash-stripped company has to find an additional €2 billion ($2.8 billion) to buy back the Siemens shares.
- And the Flamanville-3 EPR is actually not doing much better. After one year construction it was already 20% beyond budget. Quality-control issues have plagued the site since day One. The latest episode: On 26 May 2009 the French Safety Authorities announced that it had refused two of three heavy forgings for a pressurizer fabricated by an AREVA subcontractor because it was below technical specifications.

Mycle Schneider, International Consultant on Energy and Nuclear Policy, Paris
Co-Editor of "International Perspectives on Energy Policy and the Role of Nuclear Power", MultiScience Publishing, May 2009
Author of "Nuclear France Abroad - History, Status and Prospects of French Nuclear Activities in Foreign Countries ", commissioned by the Center for International Governance Innovation, Canada, May 2009 (http://www.npec-web.org/Frameset.asp?PageType=Single&PDFFile=Schneider%2...)
- Mycle Schneider