French power utility EDF received a fresh blow on Tuesday after Italy’s biggest utility Enel announced it has pulled out from a project to build a next-generation nuclear reactor in northern France, and five other power plants to be built in France using EPR technology, following last year’s referendum in Italy to prevent nuclear energy from returning into the nation.
The French utility admitted earlier this week that changes in engineering and design due to stricter regulation in the wake of Japan’s Fukushima disaster forced it to hike the construction cost of the European Pressurized Reactor being consctructed in Flamanville, northern France, to 8.5 billion euros ($11.12 billion), more than double the original estimate of 3.3 billion euros which was claimed by EDF in 2005.
In 2007, Enel signed a agreement with EDF which gave it a stake in the EPR nuclear power plant. A spokeswoman for EDF said Enel would receive about 700 million euros, including interest, to cover expenses the Italian group had already paid in relation to its 12.5 percent stake in the Flamanville 3 project.
EDF stock prices have plummeted by 28 percent this year alone, after concerns about the cost of refurbishing current reactors and building new ones.
“In a way, the last 24 hours have killed French nuclear finally because the cost makes it totally impossible to export and now you have one of the few partners actively withdrawing; it looks really bad,” said UBS analyst Per Lekander.
“EDF’s UK subsidiary put out a release saying that the cost increase should have no impact on cost estimates for the group’s plans to build EPRs in the UK. However, the news is likely to increase skepticism about costs for nuclear critics in the UK,” Deutsche Bank analyst Martin Brough said in a note on Tuesday.
Repeated delays have also hit the construction of the first EPR reactor, Finland’s Olkiluoto 3, built by French nuclear group Areva and Germany’s Siemens.
France, the world’s most nuclear-reliant country, is now trying to cut the share of its electricity produced by its 58 nuclear reactors to 50 percent from 75 percent by 2025. Critics say the heavy dependence on nuclear energy has been difficult for France as it has repeatedly had difficulty coping with seasonal demand spikes.