EDF: Nuclear Goals Mean EUR40 Billion

Thursday, December 4, 2008

PARIS - (Dow Jones)- French nuclear utility Electricite de France SA Thursday announced higher costs for a reactor it's building in France and said its ambition to lead a worldwide wave of building new nuclear plants means total capital expenditure of between EUR40 billion and EUR50 billion by 2020.

The net financing requirements for EDF over the same period should be between EUR12 billion and EUR20 billion, EDF said, given the involvement of partners in projects in France, China, the U.S. and possibly the U.K.

EDF, which Wednesday unveiled a new attempt to thwart U.S. billionaire Warren Buffet's planned takeover of its American joint-venture partner for building new reactors, Constellation Energy Group Inc. (CEG), set out a commissioning timetable for new reactors including a first North American reactor in 2016.

The first EDF reactor in China should be ready in 2013 and the first one in the U.K. is expected to be ready in 2017, EDF said.

The reactors EDF plans to build are the Evolutionary Power Reactor, or EPR, designed by French nuclear services group Areva. State-controlled EDF is building the first such unit on the northern coast of France.

That plant, at Flamanville, will be connected to the French power grid in 2012, EDF confirmed.

But the EPR there, already hit by delays, will cost EUR4 billion in 2008 euros, well above the EUR3.3 billion estimate EDF had given in 2005 euros.

The new figure takes account of increased costs and "the impact of technical and regulatory evolutions," EDF said. The new total cost of the electricity to be generated there is EUR54 per megawatt hour, the company said.

While a second EPR reactor in France would face "the likely very high increase in component prices," the "initial benefits of a series effect" may help, EDF said. The French government has said it wants a second EPR, but hasn't yet awarded the project to EDF.

In China, however, where EDF in August entered an agreement to build and operate a pair of nuclear reactors in a joint-venture with China Guangdong Nuclear Power Holding Company, EDF sees lower costs.

"China benefits from a very favorable cost environment compared to European EPRs," EDF said.

The estimated cost of building an EPR in the U.S. is "close to the costs presented for Europe," the company stated.

EDF also stuck to its guns on improving the performance of its current French nuclear fleet of 58 reactors, confirming a target of 85% availability by 2011. The availability rate in 2008 should come close to the 80.2% notched up in 2007, EDF said.

Optimizing planned outages and improvements to the performance of equipment are part of the plan to improve performance, EDF said.

EDF is holding an investor day Thursday in London.

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