Areva lands world's biggest ever nuclear power order

26 November 2007

France's national nuclear champion Areva will build two power reactors at Taishan, China and undertake a feasibility study for a used nuclear fuel reprocessing plant as part of an Eur8 billion deal ($12 billion).

Areva are also to provide "all the materials and services required to operate" the forthcoming 1600 MWe EPR units, to be sited at Taishan, 100 km southwest of Guangzhou and 150 km west of Hong Kong in Guangdong province. Areva did not disclose the period the agreement covers, although it is normal for vendors of nuclear power plants to provide at least the first load of nuclear fuel.

The deal was signed today as French President Nicholas Sarkozy made a state visit to China. In all, Eur30 billion ($45 billion) in scientific and industrial contracts between the two countries were signed. Areva CEO Anne Lauvergon told journalists the nuclear deal was the biggest ever in the industry.

The power plant deal was made between Areva and China Guangdong Nuclear Power Company (CGNPC) after an extremely protracted tendering process. In 2004 CGNPC requested all makers of advanced Generation-III pressurized water reactors to offer bids for the construction of four units as part of China's Tenth Economic Plan. After many months that contract was split in two, with Westinghouse chosen for two units, and Areva for the other two, with the steam turbines and generators for each to be contracted separately from other firms.

Both deals were long in negotiation, with knowledge and technology transfer high on the agenda. Compared to Areva's deal, Westinghouse's proceeded more quickly and that company is now set to build two pairs of AP1000 units at Sanmen and Haiyang. Mitsubishi Heavy Industries is to provide the steam turbines and generators for those units. AP1000 is expected to become a standard design for widespread use in China and it is likely similar arrangements exist for EPR.

France's national electricity generator, Electricite de France (EdF), also has an involvement in the new nuclear plant deal. It will take a 30% stake in a joint venture company established with CGNPC to own and operate the two units.
This arrangement is similar to theUnistar Nuclear Energy (UNE) arrangement whereby EdF will participatein a fleet of standardised Areva EPR units in North America. EdF will also organise the finance of purchase and plant construction.

Today also saw an agreement signed between China and France to cooperate in the back end of the nuclear fuel cycle: the handling of highly-radioactive used nuclear fuel, its potential reprocessing and subsequent recycling of fuel materials as well as the final disposal of waste. The first step of cooperation is to be a joint feasibility study conducted by Areva and China National Nuclear Company into the possibilities for reprocessing of used nuclear fuel in China. Areva already carry out this service in France. There is also a joint venture arrangement between the firms concerning zirconium, an alloy of which is used in nuclear fuel assemblies.

Another deal between CGNPC and Areva would see the Chinese power generator take a 35% stake in Uramin, which Areva bought earlier this year.

Further information

Electricite de France

WNA's Nuclear Power in China information paper

WNN: Chinese contract for Mitsubishi Heavy Industries
WNN: Unistar Nuclear Energy ties Electricte de France to Northj America
WNN: Areva completes acquisition of UraMin
WNN: Westinghouse signs Chinese contracts, buy into PBMR