‘Doomed Technology’: EPR Nuclear Reactor No Longer Competitive
EDF Reactor Design Slated for Calvert Cliffs, Other U.S. Sites is ‘in Crisis,’ Unlikely to Succeed Even With Major Government, Ratepayer Help. “For the governments of countries like the USA and the UK, which have invested little political capital in the French nuclear dream, the sensible course is clear: stop all investment of public money in the doomed EPR technology.”
Even if it is propped up with extensive government subsidies or full cost-recovery from ratepayers, the “Evolutionary Power Reactor” (EPR) – which the French government-controlled utility, Electricite de France (EDF) plans to deliver for the troubled Calvert Cliffs-3 project and other sites in the United States – is “in crisis” to such a severe extent that it is likely to be an economic failure, according to a new report released today by University of Greenwich Professor of Energy Studies Stephen Thomas.
The Thomas report findings have special resonance in the U.S. given EDF’s attempt to salvage the Calvert Cliffs-3 nuclear reactor project, which is considered a leading candidate for U.S. loan guarantees backed by American taxpayers. In addition to Calvert Cliffs-3 in Maryland, the EPR was selected as the reactor design in the U.S. for Bell Bend in Pennsylvania, Nine Mile Point in New York and Callaway in Missouri (latter two applications currently suspended).
Commenting on the new report, Professor Thomas said: “From a business point of view, the right course for EDF and Areva seems clear. They must cut their losses and abandon the EPR now. In the short-term this will require some painful write-offs, for example, of investments in the UK and the USA, but in the long-term, the losses will be much greater if they continue to try to make the EPR work. Areva’s main business is its reactor servicing and fuel activities and these would be little affected by the abandonment of the EPR. EDF already has too much nuclear generating capacity in France, so not ordering more reactors will save it from unnecessary capital expenditure at a time when it acknowledges its debts are too high.”
As for recent moves by EDF in the U.S. market, the Thomas report notes: “While the political wrangling about how much Congress will be prepared to allow the US DOE to offer in loan guarantees, the deteriorating prospective economics for new nuclear reactors and the economic risk they pose to their owners may mean that relatively few loan guarantees are granted. The projects most likely to go ahead are those with the ‘belt and braces’ of Federal loan guarantees and a state regulatory body that commits to allowing the utility to recover its costs from consumers. Calvert Cliffs and Bell Bend would be exposed to the PJM electricity market and therefore could expect no support from the state regulator. If the Calvert Cliffs project does collapse and an existing project, such as Bell Bend cannot be brought in to replace it, it is hard to see how the EPR could survive in the USA.”
The Thomas report draws the following major conclusions:
- Construction has “gone dramatically wrong” at both of the sites in Europe where the EPR is currently being built. As Thomas notes: “The two sites in Europe where EPR is under construction, Olkiluoto and Flamanville, have gone dramatically wrong from the start of construction. It might have been argued that the problems at Olkiluoto were due to the lack of experience of the utility and the inexperience of Areva NP in carrying out the architect engineering. However, the fact that EDF, the most experienced nuclear utility in the world seems to be doing no better at Flamanville suggests the main problems are more related to the build-ability of the design itself than to specific issues at Olkiluoto.”
- The price at which the EPR is being offered is so high that all contests in which the EPR has been bid have either been abandoned (South Africa and Canada) or the contract has gone to a much lower bid from a competitor (UAE). In the report, Thomas explains: “As early as 1995 and again in 1997, there were concerns about the cost of the EPR then expected to be US$2000/kW but when other vendors began to claim they could build plants for US$1000/kW, [Areva] seems to have felt obliged to follow suit. While it did not claim US$1000/kW was possible, it did claim reactors could be built for less than US$1500/kW in 1998 and 2001, less than a quarter of the prices it is now offering a decade later. At US$6000/kW or more, it seems unlikely that EPR will be affordable except where huge public subsidies are offered and/or there is a strong likelihood of full cost recovery from consumers, no matter what the cost is.”
- Potential markets such as the USA, UK and Italy all look problematic. Reactor orders, if placed at all, will be much later than expected. The Thomas report explains: “As the reality of these high costs hits home, it is likely that even markets in which government support for new nuclear orders has been strongest, such as the USA and UK, will find it difficult to support the costs.”
- The process of obtaining safety approval in France, UK and the USA is incomplete and, even if successful, the features needed to achieve regulatory approval may add significantly to costs. The Thomas report points out: “The intuitively plausible notion that a new generation of nuclear reactors, starting without a blank sheet of paper could easily come up with a more rational and cheaper, yet safer design of reactor has been shown to be an illusion by the lengthy and still incomplete process of gaining safety approval. The Finnish and French authorities’ decision to allow construction to start before full generic approval had been given looks particularly ill-judged.”
Professor Thomas said: “From a political point of view, France has invested so much political and financial capital in being the world leader in nuclear technology, such a decision to abandon the design will be politically too painful until it becomes unavoidable. However, for the governments of countries like the USA and the UK, which have invested little political capital in the French nuclear dream, the sensible course is clear: stop all investment of public money in the doomed EPR technology.”
UK nuclear group to pick new build design early 2011
One of the utility groups building new nuclear power stations in Britain said it would announce their choice of reactor design for their first plant early next year, instead of late this year as previously expected.
The Horizon joint venture, which unites German energy rivals RWE and EON, plans to build six gigawatts of new nuclear power capacity in Britain by 2025.
‘We’re in the final formal stage of the precurement process, receiving final bids and evaluating those, it’s in time with our targets,’ a spokesman for Horizon said.
The group will choose either Westinghouse’s 1,100 megawatt (MW) AP1000 reactor design or the competing 1,600 MW European Pressurised Water Reactor (EPR) developed by French company Areva.
Horizon has bought sites shortlisted by the British government for building new nuclear plants at Wylfa on Anglesey in Wales and Oldbury-on-Severn in Gloucestershire.
‘The assumption is it would make sense to have the same technology for both plants but we’re not ruling out two different technologies,’ the spokesman said.
Horizon’s first nuclear reactor at Wylfa is expected to be operational by 2020.
This will either be one of three AP1000 reactors or one of two EPRs, the spokesman said.
French utility EDF plans to start its first new British nuclear plant in 2018 and will use Areva’s EPR design.
Two EPRs are currently under construction in Europe, one at Olkiluoto in Finland and one at Flamanville in France. Both have experienced several years of delay and billions of euros in cost overruns.
China Builds Nuclear Reactor for 40% Less Than Cost in France, Areva Says
Areva SA said the EPR nuclear reactor costs 3 billion euros ($4 billion) to build in China, 40 percent less than the price tag Electricite de France SA has put on building one in Normandy. Chinese nuclear builders’ grasp of the technology is “very worrying” for European companies, Areva Chief Executive Officer Anne Lauvergeon told a hearing at the French Senate today in Paris. She also said Chinese companies are more efficient.
The third-generation reactor designed by Areva is being built in France, Finland and China at varying budgets and construction schedules. Once considered key to the success of France’s atomic exports, the design has been criticized as too big and costly after the country lost to a Korean group for a $20 billion order in the United Arab Emirates last year.
“The EPR isn’t more expensive than the competition for the same product,” Lauvergeon told senators today. “All of the lessons learned in Finland are being integrated into construction at Taishan. We are simplifying and improving.”
Talks on developing two more of the reactors in China in addition to two already under construction are “near completion,” Lauvergeon said. Areva is also in the final stages of negotiating the sale of two EPRs in India, plus a nuclear fuel contract, she said.
Ahead of Schedule
State-run EDF has a 30 percent stake in Taishan Nuclear Power Joint Venture Co. to develop and operate two 1,700- megawatt EPRs with China Guangdong Nuclear Power Group. Areva, also run by the government, is supplying components.
Construction of Taishan 1 began in November 2009 while Taishan 2 started in April. The reactors are expected to start at the end of 2013 and 2014, according to EDF.
The EPR being developed in Finland will take 86 months to complete due to the country’s “very demanding regulator and a complicated” client, Lauvergeon said. The Flamanville reactor in Normandy will take 71 months while Taishan 1 and 2 are targeting 46 months, she said.
Taishan 1 is on schedule and Taishan 2 is ahead, according to Lauvergeon.
Progress at Taishan is being kept six months behind Flamanville deliberately in order to benefits from experience, the head of France’s nuclear safety watchdog Andre-Claude Lacoste said last week.
EDF has repeatedly raised its cost estimate for Flamanville, France’s first EPR, with the latest estimate at about 5 billion euros, up from 3.3 billion in 2005.
Areva has already booked 2.6 billion euros of provisions for the EPR it’s developing in Finland, initially estimated to cost 3 billion euros.
China prepares to export reactors
Starting from French reactors imported in the 1980s, Chinese engineers have developed their own large reactor systems to the point that exports appear possible from 2013.
Zhang Shanming, president of China Guangdong Nuclear Power Corporation (CGNPC), revealed the company’s future export potential to delegates at the China International Nuclear Symposium, organised in Beijing this week by the World Nuclear Association and China Nuclear Energy Association.
Having imported two 900 MWe pressurized water reactors for the Daya Bay nuclear power plant, CGNPC engineers embarked on a development program that led to the CPR-1000 design. The first of these began operation at Ling Ao Phase II in September, while 16 are under construction and many more planned. A domestic supply chain has been built up with each project and now only about ten percent of components need to be imported.
By 2013, Zhang said, a further design evolution will clear certain areas of intellectual property retained by Areva, resulting in a Generation III design called the ACPR-1000 that CGNPC could market in other countries.
The current CPR-1000 design sits roughly between today’s mainstream Generation II reactors and the latest Generation III units, with digital instrumentation and control systems and a design life of 60 years. Standard construction time is 52 months, and the unit cost for Chinese units so far has been under CNY 10,000 ($1500) per kilowatt.