EdF, Enel part company

05 December 2012

Italian power company Enel is to terminate its participation in EdF's French EPR projects including its 12.5% stake in Flamanville 3, citing economic considerations and Italian policy on nuclear energy as reasons behind its decision.

EdF has agreed to pay the Italian company €613 million ($801 million), plus interest, in reimbursements for prepaid expenses related to Flamanville 3. The French company will retake full rights in the Flamanville 3 project, including all revenues from the plant's future output, after Enel's withdrawal from the agreement comes into full effect on 19 December.

In exercising its exit right, Enel is terminating a strategic partnership agreement signed by the two companies in November 2007, just as construction was beginning on France's first EPR. At the time, Flamanville 3 was expected to start up in 2012. The project has suffered from cost over-runs and delays which, compounded by a "significant drop" in power demand and uncertainty over the timeframe for future French projects, have led to Enel's decision. The announcement comes the day after EdF revealed a further increase in calculated costs for Flamanville 3 of €2 billion ($2.6 billion).

In addition, Enel said in its statement, the outcome of a June 2011 Italian referendum to oppose the development of nuclear power in Italy served to further diminish the "strategic relevance" of its partnership with the French company. Prior to the referendum, held months after the Fukushima accident in Japan, Italy had been gearing up to resume a nuclear program abandoned in the wake of the 1986 Chernobyl accident.

As well as withdrawing from participation in Flamanville 3, Enel is also relinquishing its rights to a similar level of interest in five future French EPRs. The termination of the agreement also cancels the supply of electricity by EdF to Enel under so-called anticipated capacity contracts which should have seen Enel supplied with 1200 MWe from 2012. These will be phased out gradually over the next two years. Knowledge transfer agreements between EdF and Enel are also terminated.

Despite Italy's 2011 decision not to pursue new nuclear, Enel remains active internationally in nuclear projects. It has interests in Slovakia's Slovenske Electrarne and Endesa of Spain, which has equity in most of Spain's nuclear reactors. It has also been seen as a likely potential investor in Russia's Baltic nuclear power plant at Kaliningrad after a 2010 agreement signed with Russian company Inter RAO UES.

Despite its decision to withdraw from the EPR projects, Enel said it intended to continue to operate in the French market through its presence in renewables, gas and power trading activities.

Researched and written
by World Nuclear News

Filed under: France, New build, Contracts, Italy