Restarting nuclear power: the big challenge of cost control – Economics
Reviving nuclear power, at what cost? Financing terms are being worked out for a massive project to build new reactors that will involve the French for decades. 2023 will be decisive for France’s energy future, which must legislate the share allocated to each energy source, especially nuclear energy, in order to phase out fossil fuels and achieve carbon neutrality by 2050.
To make France “the first low-carbon industrial country”, the government supports the construction of six new-generation EPR reactors, with the option of another eight EPR2 reactors, while developing renewable energies (solar, wind, etc.). The first phase is the presentation of a bill to the Senate on Tuesday to “save time” in administrative authorization procedures, while EDF is already preparing the commissioning of the first two units in Penly (Seine-Maritime) in 2035-37.
60 billion euros per year
To support its choice, the government cited in particular the forecasts of the electricity network operator RTE, which showed a total cost of 10 billion euros per year lower for the nuclear fleet renewal scenario: 60 billion per year, against 70 billion. scenario without updating. But who will bear the costs between the state, the consumer and the heavily indebted EDF? “Several financing methods are being discussed,” we reply to the Ministry of Energy.
“This is not convincing,” we believe Greenpeace. “Nuclear power is not an energy that can respond to the climate emergency given the very long construction times,” said Pauline Boyer, manager of the nuclear campaign. Although “renewable energy technologies are being adopted and allow for a faster return on investment”.
In 2021, global investment in wind and solar power will be almost 15 times greater than investment in new nuclear power plants, according to the World Nuclear Industry Status Report (WNISR), published in October. According to EDF, the construction cost of the six new EPR2s is estimated at €51.7 billion (excluding financing costs), plus €4.6 billion in case of implementation difficulties. Thus, the complete renationalization of EDF should allow investors to gain confidence.
Delays that inflate the bill
Investments in nuclear power are initially exorbitant and take years to produce the first kWh. In addition, the only EPR under construction in France, Flamanville (Manche), is now 12 years away from commissioning, making the count four. “I don’t know if anyone in the world knows how much EPR2 will cost. But in addition to the cost, one can wonder whether such an industrial program is possible, “says analyst Mycle Schneider, coordinator of the WNISR report, noting, for example, the lack of weapons in the sector.
When you have the impact of standardization and multiple projects, you reduce the overall average cost significantly
Both the government and EDF claim feedback from EPR sites around the world and the mass production model will save money. “When you have the impact of standardization and series of projects, you significantly reduce the average cost as a whole”, – stressed the energy transition minister Agnès Pannier-Runacher before the Senate.
RTE CEO Thomas Weirenz emphasizes that this cost will also depend on the financing conditions, in other words, the cost of the debt, which “will have a decisive impact on the cost of electricity generation”. However, as in the UK with the Hinkley Point EPR project, “new nuclear power will need to benefit from public support mechanisms to achieve an affordable financing cost and lower the cost of electricity sold”. This could include “price guarantees for the electricity produced” as it benefits from wind and solar, “and/or involve some direct government funding,” he continues.
Economy Minister Bruno Le Maire, for his part, considered the cost to the state “completely affordable” if electricity could be sold through private long-term purchase and sale contracts. “In order to establish this financial model, in-depth discussions should still be held between the ministries together with EDF and then the European Commission,” the Ministry of Energy Transition emphasizes. “Arbitrations” are expected to be held “in the coming months”.