EDF Is Ordered to Produce Nuclear Industry Action Plan

(Bloomberg) -- Electricite de France SA was given one month to present an action plan to restore faith in the French nuclear industry after a series of damaging delays, cost overruns and technical failings.

EDF is reeling from setbacks that have wiped more than a third from its share price in the past 12 months. Its flagship Flamanville reactor project in France is years behind schedule and way over budget, with signs that a similar project in the U.K. is also running into trouble. Revelations about substandard manufacturing of equipment at existing plants have further tarnished its reputation.

“It’s a failure for the entire French nuclear industry,” Finance Minister Bruno Le Maire said Monday at a briefing in Paris after receiving a report on the troubled Flamanville project.

While grappling with all these issues, the state-controlled utility is also trying to convince the government to give the go-ahead for new reactors to replace some of its aging plants. France won’t make a decision before the Flamanville facility is commissioned, Ecology Minister Elisabeth Borne reiterated at the briefing.

Le Maire instructed EDF to improve its management of large projects, better coordinate with suppliers and regulators, and work with the industry to enhance training, especially for welders. That follows the company’s recent admission that the plant being built at Flamanville -- and marred by delays and cost overruns -- will be postponed further to fix welds.

“Once the action plan has been presented to the EDF board and agreed by the state, a review of its implementation will have to be made at the end of 2020,” Le Maire said. EDF will have to consider a further reorganization of teams working at the site, and ensure that it studies all feedback from the project as it constructs two similar plants at Hinkley Point in the U.K., he said.

The minister based his recommendations on a 33-page report by former PSA Group chief Jean-Martin Folz. It said the Flamanville project had “unrealistic” targets and its viability was undermined by a lull in nuclear construction at the turn of the century that led to a loss of expertise in the industry.

Budget Blowout

The budget for the new Flamanville plant has more than tripled since construction started in 2007. Repeated setbacks there have forced EDF to sell assets to curb debt and cast doubt on the future of nuclear in France, which currently gets more than 70% of its electricity from atomic reactors.

EDF has underestimated the complexity of the so-called European Pressurized Reactor -- the model it’s building at Flamanville -- according to Folz. It started building the EPR without a detailed design and appropriate project management, while the setup of engineering teams was complicated and relationships with suppliers were unsatisfactory, he said in the report.

“The French nuclear industry is going through a difficult moment,” Jean-Bernard Levy, chief executive officer of EDF, said on Monday. “We will redouble efforts” to rebuild France’s nuclear expertise, he said.

The new Flamanville plant won’t be commissioned before the end of 2022, a decade later than initially planned, and will cost 12.4 billion euros ($13.8 billion). EDF has also had to raise its estimate of the two reactors it’s building in the U.K. to as much as 22.5 billion pounds ($28.9 billion).

By contrast, EDF and its Chinese partner CGN Power Co. recently completed two reactors in Taishan for a total of 95 billion yuan ($13.4 billion), Folz wrote in the report.

To contact the reporters on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net;William Horobin in Paris at whorobin@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Helen Robertson

©2019 Bloomberg L.P.