Finland Rejection Deals Blow to Areva’s Nuclear Export Ambitions
By Geert De Clercq
French nuclear group Areva’s exclusion from a Finnish nuclear tender is another blow to the reputation of its EPR reactor and raises questions about France’s ambitious nuclear export plans.
Finnish nuclear consortium Fennovoima said on Monday it had selected Toshiba as sole candidate to build a large nuclear reactor, dropping Areva.
Hours later, the Czech competition regulator ruled that utility CEZ had not broken public procurement law by excluding Areva from a contract last year.
That decision leaves Toshiba’s U.S. unit Westinghouse vying with a consortium led by Russia’s Atomstroyexport, and Areva with another key European contract slipping through its fingers.
Earlier this month Teollisuuden Voima – another Finnish utility, for which Areva is building its first European Pressurized Reactor (EPR) – announced further construction delays. The many delays and cost overruns have led to open conflict between Areva and Teollisuuden Voima.
Even where Areva is not the main contractor, the EPR has had a bad press.
Just weeks ago British utility Centrica pulled out of plans to build EPRs in Britain with French utility EDF , and in December Italy’s Enel pulled out from the construction of an EPR in Flamanville, northern France.
From a cash flow perspective, these disappointments are not life-threatening for Areva, a diversified group which owns uranium mines, enriches uranium, builds and maintains nuclear reactors and manages nuclear waste.
Reactor sales and services generated sales of 3.45 billion in 2012, just over a third of its 9.34 billion euro total revenue, and most of the division’s sales come from maintenance to its installed base of more than 100 reactors, nearly a quarter of the world’s total.
Between 2009 and 2011 nuclear newbuild revenue ranged between 741 and 876 million euros per year.
But if Areva wants to maintain its lucrative reactor maintenance business, it needs to sell reactors, and it has not sold a new one since 2007, when it sold two EPRs to China Guangdong Nuclear Power Corporation in Taishan.
“Areva’s uranium mining and enrichment services are real cash-cows, but in terms of credibility, commercial perspective and long-term viability, Areva needs to sell reactors,” said Pierre Boucheny at Kepler Capital Markets.
“With every defeat, things become more difficult.”
Areva CEO Luc Oursel says he still aims to sell 10 EPRs by the end of 2016, but doubts are growing.
“What if Areva were dreaming?”, French online financial daily La Tribune headlined last month.
Areva is hoping to sell two more reactors in China, two in India, two in Britain, one in Jordan, and even another one to Finland’s TVO.
It also hopes for a share of a mega contract in Saudi Arabia, which is considering building the equivalent of 10 EPR reactors. The French government is lobbying intensively on Areva’s behalf.
But the parliamentary faction of France’s green party – part of President Francois Hollande’s socialist-green coalition government – said on Monday it will demand the creation of a parliament committee to investigate the troubles with the EPR.
“The failure of the EPR on export markets is patently obvious: the United States, Great Britain, the Emirates, and now Finland,” said green party MP Denis Baupin.
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