French auditor calls for financing guarantee for future EPR projects

15 July 2020

EDF must ensure the financing and profitability of its proposed EPR2 reactor before starting construction of any plants based on the design in France, the country's state audit office has said. The EPR2 is a simplified version of the EPR design, construction of which has been hit by delays and cost increases in France and Finland.

A cutaway of the EPR2 reactor design (Image: EDF)

The EPR-2 reactor is a pressurised water reactor project developed by EDF and Framatome. It meets the general safety objectives of the third generation of reactors. Its aim is to incorporate design, construction and commissioning experience feedback from the EPR reactor, as well as operating experience from the nuclear reactors currently in service.

In December 2018, unit 1 of the Taishan plant in China's Guangdong province became the first EPR to enter commercial operation. Taishan 2 began commercial operation in September 2019. Construction of the Olkiluoto 3 EPR began in 2005, with completion of the reactor originally scheduled for 2009. However, with various delays and setbacks, fuel loading is now planned for later this year. The loading of fuel into the Flamanville EPR in France, construction of which began in December 2007, is now scheduled for the end of 2022. Two EPR units are also under construction at the Hinkley Point C project in Somerset, UK.

In a report published 9 July, the Cour des Comptes says the rivalries between Areva and EDF "resulted in the hasty launch of the construction sites of the first two EPRs, in Finland and in Flamanville. This insufficient preparation led to underestimating the difficulties and the construction costs, and to overestimating the capacity of the French nuclear sector to face it, at the cost of financial risks for the companies of the sector."

The report says the 3.3 times increase in the construction cost, estimated by EDF at EUR12.4 billion (2015 value), and by at least 3.5 times the commissioning time for the Flamanville EPR compared to initial forecasts, "constitutes a considerable drift". It says this is the result of "unrealistic initial estimates, poor organisation of the project by EDF, a lack of vigilance on the part of the supervisory authorities and a lack of awareness of the loss of technical competence of industrialists in the sector".

The audit office added, "The construction of new EPRs in France cannot in any event be envisaged without clear prior answers on the methods of financing and the role of nuclear power production in the electricity mix of tomorrow."

The report says EDF is no longer in a position to finance the construction of new reactors on its own. The utility, it says, is studying means of financing that either makes the consumer - as in the case of the UK's contract-for-difference for construction of Hinkley Point C - or the taxpayer bear the costs of construction.

"The financial challenges are major, with the cost of construction of three pairs of EPR2 reactors being estimated at EUR46 billion (2018 value)," the Cour des Comptes notes. "Taking into account their duration of construction, production and dismantling, the decision to build or not to build future EPRs will have consequences until the 22nd Century.

The report makes a number of recommendations, including a reconsideration of the concept of architect designer by separating the functions of the contracting authority and the constructor. It also recommends that contracts are incorporated into risk-sharing arrangements of construction between the contractor and the suppliers. The Cour des Comptes says EDF management should ensure a six-monthly review of strategic and risk projects. Those responsible for major projects should have authority over resources, especially engineering, necessary for their realisation, it says. EDF should conduct an exercise to gather the full experience on all EPR units built or under construction in France and abroad, with all of the actors concerned, before the launch of a possible new construction project, it adds.

Researched and written by World Nuclear News