Bloomberg News

EDF Jumps on Report Backing 60-Year Atomic Reactors: Paris Mover

February 13, 2012

Feb. 13 (Bloomberg) -- Electricite de France SA rose after a government-commissioned report said the country should extend the operating life of Europe’s largest network of nuclear- reactors to six decades.

EDF jumped as much as 4.3 percent, the steepest intraday advance since Nov. 30, and traded at 18.49 euros as of 3:08 p.m. in Paris. The shares have dropped about 40 percent since last year’s nuclear accident at Fukushima in Japan.

The report advocates extending the lives of nuclear reactors, all 58 of which are owned by EDF, to ensure the cheapest possible power prices in 2030. Debate over the future of EDF’s nuclear plants divides President Nicolas Sarkozy from his Socialist Party rival Francois Hollande. Sarkozy is seeking re-election amid weak poll ratings by pledging to guide the economy through the euro-region crisis.

“Sarkozy has previously expressed support for nuclear and it will clearly be a key policy difference between him and Hollande in the run up to the elections,” Nomura analyst Martin Young said in an e-mail. “If price matters to the French, then this would be a logical step to take.”

A pull-back from nuclear power would mean higher electricity costs for consumers, more carbon emissions and a greater need for investment in new sources of energy, according to the study, headed by Jacques Percebois, an economics professor at the University of Montpellier, and former International Energy Agency Executive Director Claude Mandil.

Safety Regulators

France should only close reactors for technical reasons defined by safety regulators, the report said.

“It would be a waste,” Mandil said of any move to shut reactors for “administrative” reasons if they could continue to operate safely. “We aren’t more pro-nuclear than anti- nuclear. We tried to be objective. What we are against is wastage of energy, money and expertise.”

The findings run counter to Hollande’s policy of reducing France’s dependence on atomic power and halting EDF’s oldest nuclear plant at Fessenheim because of concern it may be vulnerable to earthquakes. Sarkozy backs atomic power and has promised to keep Fessenheim running.

EDF’s reactors provide about three quarters of France’s power output. The state-controlled company is developing a new- generation 1,650-megawatt EPR model at Flamanville, in Normandy at a cost of about 6 billion euros. The existing generators are on average 25 years old with the first models undergoing safety inspections for their operating lives to be extended to 40 years.

Second EPR

France should push ahead with building a second EPR at Penly, also in Normandy, and EDF should start preparing to invest in maintenance and safety at existing plants to keep them operating, Industry Minister Eric Besson said today at a press conference after the report.

The study examined four scenarios for French energy policy, including investing to prolong EDF’s fleet to 60 years at a cost of 55 billion euros in the next 15 years and then “massive” spending from 2030 for new plants. Power production prices would be 52 euros to 59 euros a megawatt-hour in 2030.

The case for replacing the existing fleet after 40 years with EPRs would require 10 billion to 12 billion euros of annual investment from 2020 to 2030 to build two a year and would result in the cost of power production of 60 euros to 73 euros a megawatt-hour. “Getting to this rate of construction seems hard to achieve,” the report concluded.

‘Gradual’ Retreat

The “gradual” retreat from atomic energy by replacing one out of every two reactors reaching the age of 40 years with an EPR would bring France’s dependence on nuclear power to 40 percent to 60 percent by 2030 and power production costs to 69 euros to 79 euros a megawatt-hour, according to the report.

Closing all reactors after 40 years and replacing them with renewable and fossil fuel generators would push power production prices to 80 euros to 102 euros a megawatt-hour depending on the energy mix, raise emissions and cost 100 billion euros through 2030, the report said.

“Prolonging the lives of nuclear reactors would be the least regrettable solution,” the study concluded.

EDF and the atomic safety watchdog known as the Autorite de Surete Nucleaire are in talks on measures needed for reactors to operate for 60 years. At present, EDF generators undergo safety checks every 10 years.

EDF has long said that investment needed to permit the reactors to last beyond 40 years would be more cost-effective if they would also allow operations to continue to 60 years. The ASN has said it would keep the current system of inspections every decade.

“An implicit decision” has already been made to extend the lives of existing reactors because there’s not enough time to develop replacement reactors such as EPRs or other forms of energy, the country’s state auditor concluded in a report last month.

The Socialist Party’s retreat from nuclear power is part of a rising movement against nuclear power since the Fukushima disaster. After protests in Germany, Chancellor Angela Merkel decided to phase out atomic power and has already closed eight reactors. Switzerland and Italy have scrapped plans to build reactors.

--Editor: Stephen Cunningham, Will Kennedy.

To contact the reporters on this story: Kari Lundgren in London at klundgren2@bloomberg.net; Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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