Areva in talks with TVO over EPR delays

By Peggy Hollinger in Paris
Published: October 16 2008 23:34

Areva is weighing the need for further delays to its flagship nuclear reactor in Finland, which could result in new provisions for a project already running two years behind schedule and an estimated €1.5bn ($2bn) over budget.
The French nuclear operator is in discussions with its Finnish utility client TVO over the need to adjust the timetable for the fourth time in two years on the world’s biggest nuclear build project. This means that the new generation, heavy-duty EPR reactor might now not enter service until 2012, against an initial target of 2009 and will cost far more than the original estimate of €3bn.

A new delay will also be a big blow to France’s hopes to dominate the nuclear revival with the world’s first new generation reactor in service. Both TVO and Areva admitted yesterday that the current timetable, under which the EPR is due to enter service in 2011, could be difficult to meet. “In terms of timing it is still challenging,” said Philippe Knoche, Areva’s former strategy boss who was drafted in to help resolve the delays.
Jouni Silvennoinen, the TVO senior vice-president appointed to oversee the construction works last month, stressed the calendar remained “challenging”.
Another Areva official said that despite three earlier delays there remained “no margin for manoeuvre” in the highly complex construction process, which employs 4,000 people working in shifts around the clock six days a week at the Olkiluoto nuclear site on the western coast of Finland.
The two sides are already locked in a dispute over who is responsible for the previous delays and more importantly for the final cost overruns. The construction of the EPR is being overseen by Areva, leader of a consortium with Germany’s Siemens. The dispute could extend through the consortium and down to suppliers such as French construction group Bouygues, which has come under fire for the organisation of work under its responsibilities.
The dispute and problems that have beset Europe’s first reactor in almost 20 years offer a vivid illustration of the challenges facing governments as they seek to relaunch nuclear power.
The Areva-designed 1600 MW reactor has been a favourite to lead Europe’s nuclear revival, as it is the first of a new generation of reactors that promises to increase safety and reduce waste.
Britain has in effect made the EPR its reactor of choice after it agreed last month to sell British Energy to French electricity group EDF. The French nuclear operator intends to build four EPRs in the UK as part of a global series to reduce costs and increase efficiencies.
But skyrocketing raw material costs and scarce nuclear skills have pushed up costs. Moreover, the Finnish experience has highlighted the widely differing approaches to nuclear regulation in different countries, which make the final investment costs of the EPR as yet uncertain.
Copyright The Financial Times Limited 2008