Areva gets capital funding boost, new investors

  • EDF will purchase a $2.7 billion stake
  • Nuclear firms from China, Japan, and Kazakhstan seek equity shares

France’s EDF Throws Areva a Financial Lifeline

Common_face_of_two_euro_coin(Reuters & French news media sources) France moved to shore up its nuclear industry with utility Electricite de France SA (EDF) agreeing to buy the reactor construction business of state-run peer Areva  for 2.5 billion euros ($2.7 billion).

Areva is behind schedule on projects in France, Finland and China, and the costly delays have raised concerns at EDF as it lines up Areva to build two new nuclear plants at Hinkley Point in Britain.

The contract signed with EDF clears the way for Areva to raise five billion euros in new capital, largely from the French government.

“Today marked a new step in the restructuring of France’s nuclear industry which the government is pursuing with determination,” Economy Minister Michel Sapin said.

Areva said in a statement that EDF will buy as much as 75% in Areva NP, as the unit is known, in a deal that values it at €2.5bn ($2.68bn). EDF plans to sell a 24% stake to other investors in the future.

The deal excludes a series of potential liabilities related to the nuclear reactor manufacturing unit, such as potential losses related to the construction of the Olkiluoto-3 nuclear plant in Finland and possible losses related to deficient components made at the Le Creusot forging plant in France. Those potential liabilities will remain in Areva.

The takeover is part of a French government plan for a €8bn plan to rescue Areva after five years of consecutive losses.

The sale to EDF of Areva NP is expected to be final in the second half of 2017 and hinges on the results of tests carried out by the French regulator on the primary circuit of the Flamanville-3 reactor and satisfactory audits at Areva’s Le Creusot, Saint-Marcel and Jeumont forging facilities.

Areva will seek to raise €2.9bn from the sale of units that make nuclear-submarine engines, wind turbines and nuclear reactors for research.

  • Chinese, Japanese, Kazakh companies eyeing Areva stakes

Nuclear companies from China, Kazakhstan and Japan are in discussions with Areva about taking stakes in the French reactor builder.

According to Reuters, French online news website BFM Business reported that China National Nuclear Corporation (CNNC), Mitsubishi Heavy Industries, and Kazakhstan’s Kazatomprom were each set to buy up to an 11% stake in Areva.

The three will inject 400 million euros each, BFM reported. It said they would be able to chose board members and that the French government’s stake in Areva would fall to 67% of capital.

Neither EDF nor Areva would independently confirm the investment report.

EDF Talks on Building Jaitapur Indian Nuclear Plant May Take 3-4 Years

(Bloomberg) Electricite de France SA, (EDF) may take another three to four years to complete talks to build six nuclear reactors in India. The project has not broken ground and the environmental permit was rescinded due to delays in starting work at the site.  Farmers in the area have mounted protests about concerns their crops would be affected by radiation from the plants due to an accident.

Areva signed a preliminary accord in 2009 to build six 1,650 MW reactors at Jaitapur, a coastal town in India’s western province of Maharashtra. The project has been on hold as Areva has also sought clarity on India’s nuclear liability laws.

India’s coal interests, and heavy industry firms who want to build domestic PHWRs instead of relying on foreign vendors, have pushed to keep the law’s stringent conditions in place. The coal miners have no interest in seeing nuclear reactors take the place of fossil fuel power stations.

When negotiations are complete, Areva will submit a non-binding offer to build six EPR reactors for Nuclear Power Corp. of India  (NPCIL) in Jaitapur. The Indian government could finance part of the Jaitapur project alongside other investors.

It is not clear how India will fund its share since a separate deal with Westinghouse for six 1150 MW AP1000 reactors hinges on successful export loans from the U.S. The prospects for the loans will depend on a new Congress approving a change to the agency that makes them. A separate dispute over U.S. export loans for commercial aircraft has hobbled the U.S. Export Import bank limiting its lending authority to $10M.

Areva ,which is seeking infusions of capital to operate, is in no position to provide India with the upfront financing for 10 GWe of nuclear power costing $48-64 billion. Additional costs would include grid upgrades to get the enormous increase in power to customers across the nation.

South Africa Delays Nuclear Plant Plan as Economy Stagnates

(Bloomberg) South Africa has delayed plans to build new nuclear power plants over concern about their cost and the lower demand for electricity as economic growth stalls.

Under a new timeline, the first nuclear power is expected to come on stream in 2037, with a total 20 GWe of nuclear energy added to the national grid by 2050, according to the “base case” scenario outlined in a presentation on the Department of Energy’s updated Integrated Resources Plan.

The proposal also estimates as additional 37 GWe of intermittent power from wind, 18 Gwe daylight power from solar plants, 35 Gwe from gas and 15 Gwe from coal by 2050.

“Gas and renewables forms the biggest chunk of installed capacity by 2050,” the Department of Energy said in the presentation.

Of all of these estimates, only the gas and coal estimates bear any resemblance to reality. The nuclear estimates are not connected to any coherent plan to finance the reactors. Eskom has been hobbled for years in terms of accumulating capital funding due to the government holding down electricity rates to subsidize power for the nation’s poor and unemployed. Officially, South Africa’s unemployment rate is 25%.

The government previously said it wanted to generate 9,600 megawatts of energy from as many as eight reactors that should begin operating from 2023 and be completed by 2029. Price estimates had ranged from $37 billion to $100 billion.

Roastom has offered to finance up to 5o% of the costs, but critics of the deal argue the tender should be held in an open and transparent manner to get the best deal. The proposal has also been tarnished by charges of cronyism as the relative of a high level government official has been awarded a program management contract, without competition, to drive planning for the project.

While President Jacob Zuma has championed Rosatom’s nuclear program, the Treasury has cautioned that the country is not able to afford new reactors at a time when the economy is not growing and the budget deficit needs to be curbed to fend off a junk credit rating.

  • Windmills or Reactor Cores? Inside South Africa’s Energy Clash

(NY Times) Eskom wants to buy 9.6 Gwe of nuclear power, but it is unclear whether the nation can afford the price tag or run the procurement without interference from people bent on obtaining benefits from it via corrupt practices.

Additionally, South Africa’s grid may not be able to support wheeling that much power to customers. See the full report by the NYT which considers energy issue in South Africa from many perspectives

  • Eskom director cited in South African anti-graft report resigns

(Reuters) An Eskom board member implicated in a probe over influence-peddling in the South African government has left his post, the public enterprises department said, days after the state-owned power utility’s chief executive resigned. Eskom CEO Brian Molefe said he would step down in January 2017 after being implicated in the investigation, but denied any wrongdoing.

A report by the Public Protector, a constitutionally mandated watchdog, has raised questions over coal deals between Eskom and a company controlled by the wealthy Gupta family, who are friends with President Jacob Zuma.

The report called for a judicial inquiry into the allegations of corruption in Zuma’s government. Zuma himself denies granting undue influence to the Gupta brothers who run a business empire ranging from media to mining.

NRC Starts Environmental Review for Planned Commercial Spent Fuel Facility

(NRC) The Nuclear Regulatory Commission (NRC) is currently seeking comments from the public related to an environmental review of an application from Waste Control Specialists (WCS) to construct and operate a facility to store spent nuclear fuel in Andrews County, Texas.

WCS filed its application in April and is seeking a 40-year license for a facility that would receive spent nuclear fuel from reactors for storage pending final disposal.

Prior to a decision, the NRC will be conducting two separate reviews, one for environmental impacts and another to identify any safety issues that may arise, to determine whether the facility meets NRC regulatory requirements.

The review will be in compliance with the National Environmental Policy Act’s requirement to do analysis of environmental impacts for major federal actions.

At this time, the NRC has not yet accepted WCS’ application. If the NRC dockets the application, it will announce an opportunity to ask for a public hearing and an date for comments on the scope of the environmental review.

“We cannot proceed with the technical safety review until WCS adequately addresses our request for supplemental information, but we do have the information we need to begin the environmental scoping process now,” said Mark Lombard, NRC director of the Division of Spent Fuel Management.

  • DOE Seeks Information on Private Interim Nuclear Waste Storage Facilities

(Power Mag)(DOE) The U.S. Department of Energy (DOE) has issued a request for information to assess the future role of private consolidated interim storage facilities in the agency’s plans for an integrated nuclear waste management system.

The DOE wrote that “[Private initiatives], although were not envisioned in the Administration’s Strategy, represent a potentially promising alternative to federal facilities for consolidated interim storage,” the agency said.

The request for information seeks input on questions such as how private initiatives, as part of an overall integrated nuclear waste management system, would provide a “workable solution” for interim storage of spent nuclear waste and high-level waste.

It also questions what benefits or drawbacks such initiatives offer, compared to a federally financed capital project for a government-owned contractor-operated interim storage facility, which business models those initiatives would pursue, and how they would manage liabilities during the storage period.

It is unclear why DOE thinks that the new Congress would go along with the agency having the lead role in managing an interim storage site.

The DOE’s request comes just days after Energy Secretary Ernest Moniz told attendees at a Center for Strategic and International Studies event that inaction on spent fuel management posed a “significant headwind for many decisions in the nuclear space.”

At least two private sector players have proposed interim storage solutions to date. In April 2016, Waste Control Specialists LLC, with support from AREVA, submitted a license application to the U.S. Nuclear Regulatory Commission (NRC) for a consolidated interim storage facility in Andrews County, Texas.

Holtec International is also gearing up to submit safety documentation to the federal nuclear agency for a proposed consolidated interim storage facility in Southeast New Mexico.

US Needs Long-Term Commitment To Nuclear Research

(NucNet) A long-term commitment to research is needed if nuclear energy is to remain a part of the energy mix, according to expert witnesses at a US Senate hearing this week.

“If you do not take a major initiative now, it is inevitable that in 2030 the country will not have a nuclear [energy] option,” Massachusetts Institute of Technology Institute Professor John Deutch told the hearing, according to the Washington-based Nuclear Energy Institute.

“If the country is going to have a nuclear [energy] option in 2030, it must undertake an initiative of the scope and size that this committee described,” Prof. Deutch said.

“Any such initiative is going to require time, considerable federal resources, redesign of electricity markets, and sustained and skilled management.”

A report prepared by a US Department of Energy task force headed by Prof. Deutch sees four phases in which various advanced reactor designs – including both small modular and large reactor designs – are selected, developed and demonstrated over the coming decades.

The report estimates that such a program would require about 25 years and $11.5bn (€18.8bn). In addition to this long-term plan, the task force said that preserving existing nuclear plants is essential to meet US carbon reduction goals. The report is online:

New Mayor in Niigata Willing to Restart  Reactors at Kashiwazaki-Kariwa

(ASAHI SHIMBUN) An independent candidate who has called for a conditional restart of one of the world’ largest nuclear plants was elected mayor of this coastal city in northwestern Japan on Nov. 20.

Masahiro Sakurai, 54, gained 30,220 votes, compared with 16,459 for Eiko Takeuchi, 47, who opposed a resumption of operations at the Kashiwazaki-Kariwa nuclear power plant.

Sakurai’s victory could lead to a showdown with Niigata Governor Ryuichi Yoneyama over the nuclear power plant operated by Tokyo Electric Power Co. Yoneyama, who won the governor’s election in October, has taken a tough stance against restarting the nuclear plant.

The plant’s site covers part of Kashiwazaki and the neighboring village of Kariwa. All seven of the plant’s reactors have remained idle over the past few years.

“I will gradually but surely reduce the number of reactors in the nuclear power plant,” Sakurai told reporters after the election. “But I recognize the value of resuming operations.”

Takeuchi, who was backed by the Japanese Communist Party and the Social Democratic Party, was against restarting reactors there.

TEPCO, operator of the crippled Fukushima No. 1 nuclear plant, is eager to restart reactors at the Kashiwazaki-Kariwa plant.

During the election campaign, Sakurai said he would “approve a restart of the halted nuclear plant if safety is confirmed and certain conditions are fulfilled.”

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