UPDATE 3-EDF's new-generation nuclear reactor delayed again, costs rise

* EDF shares fall 4 pct on new EPR delays, close down 2.2 pct

* Cost now more than three times original budget

* CEO says new 10.5-bln-euro cost estimate is realistic

* Says Flamanville woes have no impact on Hinkley Point (Adds UK Dept of Energy comment, Levy quotes)

By Geert De Clercq

PARIS, Sept 3 (Reuters) - Technical problems and tightened safety rules have further delayed French utility EDF’s new-generation nuclear reactors and its cost has now ballooned to more than three times initial estimates.

The European Pressurised Reactor (EPR) being built in northern France - and which EDF also plans to build in Hinkley Point, Britain - had already been delayed by years due to problems with suppliers and new safety requirements following the 2011 Fukushima disaster.

But the discovery of weak spots in the reactor vessel and problems with safety valves have added to doubts about the EPR, which France and Britain have chosen to replace their older reactors, a costly process that will take decades to implement.

EDF said on Thursday the EPR it is building in Flamanville, Normandy would not be operational before 2018 and would cost 10.5 billion euros ($12 billion), up from an initial budget of 3 billion.

The announcement knocked about 4 percent off the French utility’s shares, but the firm’s chief executive put a brave face on the new delay.

“I have total confidence in the Flamanville EPR,” EDF boss Jean-Bernard Levy told a news conference. “It is a priority for EDF and a major issue for the French nuclear industry and its international reputation.”

Britain’s involvement is especially sensitive as it has offered French state-controlled EDF a 35-year power price guarantee to ensure the EPR reactors are commercially viability.

Levy said Britain’s two EPR reactors at Hinkley Point, to be built by EDF and its Chinese partners, would be the same as at Flamanville, not a simplified “New Model” it is now working on with Areva, which designed the original EPR.

The EPR is a new type of pressurised water reactor built to resist even the impact of a commercial airliner crash, but it has been criticised as too big and too expensive.


Levy said the EPR was a prototype and therefore prone to difficulties. But he added the new cost estimate was realistic and insisted Flamanville’s woes would have no impact on the 22-billion-euro Hinkley Point project for two EPRs.

He said Hinkley Point’s commissioning date would depend on the final investment decision by EDF. This could suggest the start of the British reactor might also be delayed from the 2023 target announced in October 2013, when EDF signed an agreement with the UK government.

A spokeswoman for Britain’s Department of Energy and Climate Change said: “The UK government and EDF continue to work together to finalise the project. The deal must represent value for money and is subject to approval by ministers”.

EDF has taken over Areva’s reactor business, which posted four years of losses after the 2011 Fukushima disaster brought the industry to a virtual standstill, and it is looking to improve the design of the EPR.

The company also wants to build two more EPRs at Sizewell in eastern England.

The repeated delays and cost overruns at Flamanville and at another EPR being built in Olkiluoto, Finland have weighed heavily on the French nuclear industry’s reputation and helped competitors from South Korea and Russia win market share.

Construction in Flamanville started in 2007 and the plant was supposed to go into service in 2012, but EDF has announced new delays and cost overruns every few years.

In November, EDF said Flamanville would start in 2017. The last time the cost was revised upwards was in 2012 when state-controlled EDF said it would cost about 8.5 billion.

In April, nuclear regulator ASN said weak spots had been found in the reactor steel due to concentrations of carbon that could weaken the mechanical resilience of the metal and its ability to resist the spreading of cracks.

This forced EDF to do costly new tests and further delayed the project. In June, the regulator also raised questions about safety valves at the plant.


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