State auditor raises EDF nuclear production costs estimate

Tue May 27, 2014 3:04am EDT

* Court raises French nuclear production cost by a fifth

* Court sees maintenance, uranium, staff costs

* Recommends government to decide on reactor life extension

By Michel Rose

PARIS, May 27 (Reuters) - France's audit court raised its estimate of the average production cost of EDF's nuclear reactors over their lifespan by more than a fifth on Tuesday, with maintenance costs more than doubling since the court's last review in 2012.

The Court des Comptes, a quasi-judicial body, said in a report that production costs for the French utility's 58 French nuclear reactors had risen to 59.8 euros per megawatt-hour (MWh) from 49.6 euros/MWh between 2010 and 2013.

The court, which was asked to update a previous report by a parliamentary committee, calculates the average cost of French nuclear power production over its current 40-year lifespan, from construction to dismantling.

A 118 percent rise in maintenance investments accounted for 5.1 euros/MWh or half of the estimated increase, the court said, while operating charges were seen up 11 percent and accounting for 2.7 euros per MWh of the revised cost.

The higher price of nuclear fuel, as favourable uranium supply contracts expired, and accelerating staff costs caused by the renewal of EDF's ageing workforce were among the reasons the court cited as contributing to the rise in operating costs.

The court's revision is likely to give a boost to the critics of nuclear energy, on which France relies more than any other country in the world, as it weakens one of its main selling points - its competitiveness compared to other sources.

Although nuclear production costs, according to the court, are not above the 62-102 euros/MWh for onshore wind and 114-547 euros for photovoltaic power estimated in a previous report, or the 70-100 euros for new gas- or coal-fired plants, the gap between them is closing noticeably.

France, which has repeatedly delayed an energy transition law now slated for July, faces large investment costs whether it continues its nuclear-driven energy policy or it embarks on a route towards using other fuels.

The court said the cost of EDF's current fleet was also likely to rise in the future, with the state-owned group's maintenance investments seen rising to 4.3 billion euros on average between 2011 and 2025, from 3.7 billion euros last year.

EDF's expected capital expenditure bill between 2011 and 2025 was put at 62.5 billion euros by the court.

However, an extension of the lifespan of the reactors, from the 40 years they were built for, to 50 or 60 years as EDF wants, would reduce production costs, the court said.

It also recommended that the government take a position on whether it wants to extend the reactors' lifespan or not, to allow EDF to plan long-term investments.

The report also said it could not give an estimate for the production cost of new nuclear reactors such as Areva's next-generation EPR.

But although these new models, like the one under construction in Flamanville, northern France, were likely to have lower operating costs than current models, a bigger construction bill would probably result in higher production costs than the old fleet. (Editing by David Evans)

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