European Pressurized Reactors − a negative learning curve on steroids
The French European Pressurized Reactor (a.k.a. Evolutionary Power Reactor) was the first Generation III design to win orders, first in Finland in 2003 (Olkiluoto 3 − the first reactor order in Western Europe in 15 years), France in 2006 (Flamanville) and China in 2007 (two EPRs at Taishan).
Since then, EPRs have faced one problem after another. All three EPR construction projects have suffered cost blowouts or delays or both.
Since the contract was signed in 2003 for a new EPR in Finland, the estimated cost has risen from €3.2 billion (US$3.6b) to €8.5 billion (US$9.5b). Areva has already made provision for a €2.7 billion (US$3.0b) writedown on the project, with further losses expected.1 French and Finnish utilities have been locked in legal battles over the cost overruns for several years.1,2 The project is nine years behind schedule − the start-up date has been pushed back from 2009 to 2018.3
The estimated cost of the Flamanville EPR in France has increased from €3.3 billion (US$3.7b) to at least €9 billion (US$10.1b).4,5 The first concrete was poured in 2007 and commercial operation was expected in 2012, but that timeframe has been pushed back to 2017 (with further delays likely).6
The British Daily Mail characterised the Flamanville EPR project as one "beset by financial mismanagement with rocketing costs, the deaths of workers, an appalling inability to meet construction deadlines, industrial chaos, and huge environmental concerns", and notes that "it continues to be plagued by delays, soaring costs, and litigation in both the criminal and civil courts."7
The two EPRs under construction in China are 13–15 months behind schedule.8
Since the Fukushima disaster, a number of countries that might have considered EPRs pulled back from earlier interest in new reactors − the Netherlands, Sweden, and Switzerland, among others.8 In 2012, new-build tender processes in Finland and the Czech Republic rejected the EPR.
In the US, a total of seven EPRs were planned at six sites.9 Four EPR construction licence applications were submitted to the Nuclear Regulatory Commission (NRC) − Unistar's Nine Mile Point (New York), Ameren's Callaway (Missouri), PPL's Bell Bend (Pennsylvania) and Constellation's Calvert Cliffs (Maryland). All of those applications have been abandoned or suspended. In February 2015, Areva asked the NRC to suspend work on EPR design certification until further notice.10
EPRs were considered at various sites in Canada − including Alberta and Darlington, Ontario − but those plans were shelved and a generic licensing process by the Canadian Nuclear Safety Commission was terminated.11
In 2009, Italian utility Enel and EDF planned to build four EPRs but that plan was scrapped after Italy's June 2011 referendum which rejected nuclear power. In 2012, Enel pulled out of the Flamanville EPR project.12
The United Arab Emirates chose South Korean reactor technology over EPRs. Reflecting on that decision, former EDF head Francois Roussely concluded that while the EPR is "one of the best" third-generation designs, the complexity of the design is a "handicap". Likewise, Cambridge University nuclear engineer Tony Roulstone said in an October 2014 lecture that the EPR design is very safe but extraordinarily difficult to build − he described it as "unconstructable".13
According to the US NRC, EPRs have four sets of active safety systems, each capable of cooling the reactor on its own, and other safety features including a double-walled containment and a "core catcher" for holding melted reactor core materials after a severe accident.14 But the safety of some EPR design choices has been questioned by the French government's Institute for Radiological Protection and Nuclear Safety15, and the EPR licensing process in the UK has been criticised.16
Pressure vessel problems
On 7 April 2015, the French Nuclear Safety Authority (ASN) announced that fabrication defects had been found in the reactor pressure vessel of the Flamanville EPR. Tests revealed areas with high carbon concentration resulting in "lower than expected mechanical toughness values".17,18
Pierre-Franck Chevet, head of ASN, said: "It is a serious fault, even a very serious fault, because it involves a crucial part of the nuclear reactor."19
The results of further tests are expected by October 2015. In one scenario, ASN will not require any remedial action and there will be minimal consequences for Areva. But if remedial action is required, it could be extremely expensive and problematic for Areva, all the more so because the pressure vessel has already been installed in the Flamanville EPR. Asked what would happen if tests were negative, Chevet said: "Either EDF abandons the project or it takes out the vessel and starts building a new one ... this would be a very heavy operation in terms of cost and delay."20
In a worst-case scenario for Areva, the pressure vessel problem would kill the Flamanville reactor project. A former senior nuclear safety official told Le Parisien: "If the weakness of the steel is proved, I don't hold out much hope for the survival of the [Flamanville] EPR project."19
Actually there are even worse scenarios for Areva − the latest problems could hasten the demise of EPR projects altogether, and might even tip Areva into bankruptcy. Areva posted a €4.83 billion (US$5.4b) loss for 2014 and is negotiating a rescue package with the French government. Areva's CEO Philippe Knoche said in response to the 2014 financial loss: "The scale of the net loss for 2014 illustrates the two-fold challenge confronting Areva: continuing stagnation of the nuclear operations, lack of competitiveness and difficulties in managing the risks inherent in large projects. The group understands how serious the situation is."21
Energy specialist Thomas Olivier Leautier from the Toulouse School of Economics said: "Areva's financial situation is critical, the EPR is as crucial to them as the iPhone was to Apple. Their failure in Finland and now the problem in Flamanville could prove fatal."21
French environmental minister Ségolène Royal congratulated ASN on its speedy reaction to the pressure vessel problem.4 Others are asking why the problem was not discovered before the vessel was installed. It is believed the problem involved an inaccurate material inspection device used between 2009 and 2014.22
ASN's Pierre-Franck Chevet acknowledged that "mistakes had been made". He said: "It is more than 15 years since the last nuclear power stations were constructed in France. The expertise in some trades has not been sufficiently passed on from one generation to the next."19
Chevet said the two planned EPRs planned for Hinkley Point in the UK could be affected as identical safety casings have already been manufactured for those reactors using the same manufacturing techniques.19
The two EPRs under construction in China might also be affected since the pressure vessels for those reactors were forged by Areva subsidiary Creusot Forge, as was the Flamanville vessel.23 China will not load fuel at the Taishan EPRs until safety issues have been resolved, China's environment ministry said.24
A senior manager of a Chinese nuclear company, speaking anonymously to the South China Morning Post, said: "The people responsible for this need to be sacked. It shouldn't have happened. All materials must be checked thoroughly before use − that's a basic requirement. The urgent task is to launch a quality inspection in Taishan as soon as possible. Each batch of materials varies slightly. We will cross our fingers and pray for the best."25
It is unlikely that the EPR under construction in Finland is at risk of a defective pressure vessel, as the vessel was forged by Japan Steel Works. Nevertheless, the Finnish Radiation and Nuclear Safety Authority (STUK) has instructed energy utility TVO carry out new tests of the durability of the pressure vessel.26
A future for EPRs?
An immediate priority for Areva is to keep the UK Hinkley Point EPR project moving ahead. That project faces a legal challenge under EU regulations against the massive subsidies being offered by the UK government. Areva also has to sort out unresolved issues with its Chinese project partners. And it needs to find additional partners to cover capital costs.
Ironically, Areva itself may not have the resources for its expected 10% stake in Hinkley Point. Chief executive Philippe Knoche recently declined to
commit to the 10% figure, and the head of Areva's reactors and services division said: "Our current financial situation obviously will make things more difficult."
Bloomberg noted in an April 16 article that Areva's EPR export ambitions are now in "tatters". Bloomberg quoted former World Nuclear Association executive Steve Kidd, who said "everyone was laughing" at Areva's projections for EPR sales. Kidd blames the EPR saga in part on the French government's 80% ownership of Areva: "Everyone in the know could tell the chickens were going to come home to roost. I don't think that would have happened in a private business."5
According to trade union sources, Philippe Knoche said in February that the utility was likely to sell only about a dozen EPRs in the years up to 2030, down from 25 predicted previously.27
If Areva is to secure a dozen orders by 2030, it will need further orders from China − which seems increasingly unlikely. Steve Thomas from Greenwich University says reactors built by Areva and Westinghouse "are just too expensive for the Chinese."5
Philippe Knoche says Areva will emphasise growth in China, which he described as the "new frontier" of global nuclear power.10 The two EPRs under construction at Taishan will likely be completed (unless the pressure vessel problem becomes a major obstacle). It is doubtful whether two additional EPRs planned for the same site will proceed, and still more doubtful that EPRs will be built at other sites.
An agreement (but not a binding contract) to build two EPRs at India's Jaitapur site was signed in 2010. The project has moved at snail's pace. Construction was to start in 2013 but unresolved issues (including financial arrangements) continue to delay the project.28
Perhaps Areva will secure further orders in France. That will depend in part on debates over future reliance on nuclear power and other electricity sources, and a debate over permitted lifetimes for the current fleet of reactors.
Areva is involved in developing a 1.1 gigawatt pressurized water reactor called ATMEA. But in March 2015 Areva recognized an €80 million (US$89m) impairment for its share of ATMEA development costs "following the downward revision in the number and schedule of potential sales of this reactor outside Turkey, in the absence of tangible progress in the selection processes of the countries involved at the end of 2014."
The World Nuclear Industry Status Report 2014 states:
"The smaller PWR design, ATMEA, developed in collaboration with Mitsubishi, has been mentioned as an option for Jordan, Hungary, Argentina, and Turkey for the Sinop project. However, these are all, at best, long shots and unless ATMEA attracts interest in more prestigious markets and get comprehensive safety approval from a highly experienced regulator, it appears to have little future."8
Lessons from the EPR saga
What to make of the EPR saga? Areva is backing the wrong horse − the outcome of current political debates will result in a declining role for nuclear power in France, coupled to the growth of renewables.
Areva has also backed the wrong-sized wrong horse: a giant reactor with a giant price-tag.
Areva has backed the wrong-sized wrong horse at the wrong time − the Global Financial Crisis and its aftermath, stagnant energy demand, the liberalization of energy markets, the political fallout from the Fukushima disaster and other factors have dampened demand for new reactors and made it more difficult to secure finance (or government subsidies) for huge projects.
The EPR saga undermines the rhetoric of standardised, simplified reactors designs ushering in a new era of nuclear growth.
The EPR might have demonstrated the potential for mass production to drive down costs − but in reality it is demonstrating the opposite.
The EPR saga shows that developing modified versions of conventional reactors (in this case pressurized water reactors) can be complicated and protracted and can end in failure. How much more difficult will it be to develop radically new types of reactors?
The EPR saga shows that even countries with extensive nuclear expertise and experience can mess things up.
Even before the EPR fiasco, the large-scale, standardised French nuclear power program was subject to a negative economic learning curve − costs were increasing over time.29 The EPR represents a negative learning curve on steroids. That point is emphasised by construction cost estimates of £16−24.5 billion (US$24.3−37.2b; €21.7−33.2b) for two planned EPRs (with combined capacity of 3.2 gigawatts) in the UK.30 In the mid- to late-2000s, the estimated construction cost for an EPR was £2 billion31; current estimates are 4−6 times higher.
Private companies have pulled out of EPR projects in several countries (Italy, the US, the UK, etc.). Thus the EPR fiasco reinforces points made in the International Energy Agency's World Economic Outlook 2014 report − that nuclear growth will be "concentrated in markets where electricity is supplied at regulated prices, utilities have state backing or governments act to facilitate private investment," and conversely, "nuclear power faces major challenges in competitive markets where there are significant market and regulatory risks".32
1. World Nuclear Association, April 2015, 'Nuclear Power in Finland', www.world-nuclear.org/info/Country-Profiles/Countries-A-F/Finland/
2. World Nuclear News, 6 July 2012, 'Partial ruling on Olkiluoto 3', www.world-nuclear-news.org/-Arbitration_court_rules_on_Olkiluoto_3-06071...
3. Reuters, 1 Sept 2014, 'Finland's nuclear plant start delayed again; Areva, TVO trade blame', www.reuters.com/article/2014/09/01/finland-nuclear-olkiluoto-idUSL5N0R20...
4. 21 Apr 2015, France's nuclear calamity has UK worried, www.thelocal.fr/20150421/flamanville-frances-own-nuclear-nightmare
5. Carol Matlack, 16 April 2015, 'Areva Is Costing France Plenty', www.bloomberg.com/news/articles/2015-04-16/france-s-areva-falters-in-rea...
6. World Nuclear Association, March 2015, 'Nuclear Power in France', www.world-nuclear.org/info/Country-Profiles/Countries-A-F/France/
7. Steve Bird, 26 Oct 2013, 'Deaths, chilling safety lapses, lawsuits, huge cost over-runs and delays: Why we can't trust the French with Britain's nuclear future', www.dailymail.co.uk/news/article-2477202/Deaths-chilling-safety-lapses-l...
8. World Nuclear Industry Status Report 2014, www.worldnuclearreport.org/-2014-.html
9. Beyond Nuclear, Feb 2015, 'Epic Fail: Électricité de France and the "Evolutionary Power Reactor"', http://static1.1.sqspcdn.com/static/f/356082/25937356/1423508130603/Epic...
10. World Nuclear News, 6 March 2015, 'US EPR plans suspended', www.world-nuclear-news.org/RS-US-EPR-plans-suspended-0603157.html
11. World Nuclear Association, Feb 2015, 'Nuclear Power in Canada', www.world-nuclear.org/info/Country-Profiles/Countries-A-F/Canada--Nuclea...
12. World Nuclear Association, Nov 2014, 'Nuclear Power in Italy', www.world-nuclear.org/info/Country-Profiles/Countries-G-N/Italy/
13. Carbon Commentary, 22 Oct 2014, 'Cambridge nuclear engineer casts doubt on whether Hinkley Point EPR nuclear plant can be constructed', www.carboncommentary.com/blog/2014/10/22/cambridge-nuclear-engineer-cast...
14. US NRC, Aug 2014, 'New Nuclear Plant Designs', www.nrc.gov/reading-rm/doc-collections/fact-sheets/new-nuc-plant-des-bg.pdf
15. Louis Germain and Martin Leers, 21 Jan 2015, 'EDF's chaotic approach of French EPR reactor safety', http://journaldelenergie.com/nucleaire/edfs-chaotic-approach-french-epr-...
16. Emma Bateman, 26 Dec 2013, 'Hinkley C: the Generic Design Assessment has failed', www.theecologist.org/blogs_and_comments/commentators/2209776/hinkley_c_t...
17. Yves Marignac, WISE-Paris, April 2015, 'Fabrication Flaws in the Pressure Vessel of the EPR Flamanville-3', http://bit.ly/EPR_WISE-Paris
Summary posted at: http://safeenergy.org/2015/04/13/the-epr-anamoly/
18. WNN, 20 April 2015, 'Flamanville construction continues while vessel tests due', www.world-nuclear-news.org/RS-Flamanville-construction-continues-while-v...
19. John Lichfield, 18 April 2015, 'UK nuclear strategy faces meltdown as faults are found in identical French project', www.independent.co.uk/news/uk/home-news/uk-nuclear-strategy-faces-meltdo...
20. Reuters, 17 April 2015, http://uk.reuters.com/article/2015/04/17/areva-nuclear-idUKL5N0XE1132015...
21. Liza Malykhina, 17 April 2015, 'France's nuclear power giant beset by setbacks', www.france24.com/en/20150417-french-nuclear-company-faces-major-setbacks/
22. Nadya Masidlover, 22 April 2015, 'Areva reassures on nuclear-reactor components', www.marketwatch.com/story/areva-reassures-on-nuclear-reactor-components-...
23. World Nuclear News, 22 April 2015, 'Areva reviews forging inspections', www.world-nuclear-news.org/C-Areva-reviews-forging-inspections-2204156.html
24. Reuters, 16 April 2015, 'China says no fuel loading at Areva-designed reactor until safety issues cleared', http://in.reuters.com/article/2015/04/16/china-nuclear-areva-idINL4N0XD3...
25. Stephen Chen, 10 April 2015, 'French warning on nuclear reactors being built in China's Guangdong', www.scmp.com/news/china/article/1762861/french-warning-nuclear-reactors-...
26. YLE, 18 April 2015, 'Nuclear watchdog seeks re-check of Olkiluoto 3 reactor', http://yle.fi/uutiset/nuclear_watchdog_seeks_re-check_of_olkiluoto_3_rea...
27. Reuters, 27 Feb 2015, www.reuters.com/article/2015/02/27/us-areva-strategy-idUSKBN0LV1IA20150227
28. World Nuclear Association, 17 April 2015, 'Nuclear Power in India', www.world-nuclear.org/info/Country-Profiles/Countries-G-N/India/
29. Arnulf Grubler, September 2010, 'The costs of the French nuclear scale-up: A case of negative learning by doing', Energy Policy, Vol.38, Issue 9, pp.5174–5188, www.sciencedirect.com/science/article/pii/S0301421510003526
30. The higher estimate is from the European Commission and includes finance costs. European Commission, 8 Oct 2014, http://europa.eu/rapid/press-release_IP-14-1093_en.htm
31. Steve Thomas, Mycle Schneider, and Antony Froggatt, 21 Aug 2014, 'The saga of Hinkley Point C: Europe's key nuclear decision', www.energypost.eu/saga-hinkley-point-c-europes-key-nuclear-decision/
32. International Energy Agency, 2014, 'World Economic Outlook 2014', www.worldenergyoutlook.org