(Dec 18): Electricite de France SA (EDF) raised its cost estimates for the six nuclear reactors it plans to build in its home country by 8% to €72.8 billion, highlighting the funding challenge faced by the state-owned utility as construction costs continue to rise.
The plan to build the new reactors — alongside swathes of renewables — is part of France’s effort to ensure long-term energy security as some of its existing units near their retirement age. It’s central to the nation’s ambition to be carbon neutral by the middle of the century. But long delays and cost overruns at projects in France and the UK have caused EDF’s debt to balloon, complicating efforts to get new projects underway.
The new forecast — which excludes funding costs and uses 2020 terms — comes as EDF tries to mitigate a surge in the price of everything from labour to raw materials. It compares with a 2020 estimate of €51.7 billion that was revised up €67.4 billion two years ago, or €79.9 billion in 2023 terms. EDF didn’t immediately provide a new estimate in today’s money.
“This is the project of the century,” Xavier Gruz, EDF’s executive director in charge of planning new nuclear, said on a conference call on Thursday. “We’re presenting a programme with increased provisions for risks.”
The French government will assess the new cost estimates in the coming quarter. EDF is targeting the end of 2026 for a final investment decision on its domestic projects, pending approval from European Union competition authorities for a subsidised state loan that would cover about 60% of its construction budget.
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The company has been working with its suppliers and partners — including Chinese nuclear groups — to share know-how and lessons learned, with a view to reducing lead construction time and avoiding the cost overruns that have plagued its projects in France and the UK, said Thierry Le Mouroux, EDF’s executive vice president in charge of project construction.
The reactors’ detailed design is more advanced than when EDF launched its previous projects, and the regulatory backdrop is now stable, which wasn’t the case before, Le Mouroux added.
The new units should benefit from a contract for difference that will secure their revenue for 40 years once operational, Gruz said. The utility, which commissioned its 57th reactor in France last year after a 25-year construction gap, aims to start building the nuclear part of the first of the six new units in March 2029 and complete it by 2038.
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However, the nuclear behemoth faces dwindling profits and cash flows as sluggish domestic economic growth, subdued electricity demand and the addition of solar and wind capacity across Europe have pushed French power prices to five-year lows.
That will strain the utility’s finances as it plans to invest about €25 billion annually in building new plants in France and the UK, maintaining its existing reactors, as well as upgrading the grid to accommodate more renewables.
To keep a lid on its €50 billion net financial debt burden, the company is working to sell part of, or all of its renewable assets in North America and Brazil, and a minority stake in Italian utility Edison SpA.
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