Constellation Energy has entered into a partnership with state-owned EDF to construct a third reactor at Calvert Cliffs based on Areva’s EPR design.
Current Areva projects are slipping behind schedule and EDF has raised the projected cost of Flamanville by 25 percent.
EDF is building a 1,650-megawatt, Areva SA-designed EPR at Flamanville in Normandy and plans similar models in the U.K, the U.S. and China. Areva is developing an EPR in Finland, which is over budget and behind schedule.
Areva is having money problems.
State-owned Areva was given the go-ahead for a 15 per cent capital increase to finance investments, in which EDF could raise its 2.4 per cent stake to 7 per cent, according to officials.
Part of the problem seems to be that the officials running these two entities can’t get along.
Christine Lagarde, finance minister, said on Wednesday that Areva and EDF “must imperatively get along” following months of rancour between Henri Proglio, chairman of EDF, and Anne Lauvergeon, Areva’s chief executive.
The French government recently released a report on Areva and EDF that was ordered in the wake of their failure to win a major reactor contract in Abu Dubai (it went to a South Korean firm).
Shortly after the report’s publication, President Nicolas Sarkozy’s office released a statement that Paris would look into the possibility of EDF buying a stake in Areva, a move long-resisted by Areva Chief Executive Officer Anne Lauvergeon.
This is high-stakes politics in France which gets 80 percent of its electricity from EDF’s 58 nuclear plants.
Paris’ influence in EDF has been growing over the past months. The utility’s Chief Executive Officer Henri Proglio, in place since last year, was heaved into his chair by Sarkozy. Proglio is to restore France’s position as a world-leading reactor exporter.
A major political scandal is engulfing President Sarkozy; French police have questioned a member of his cabinet.
Mr Sarkozy has also denied any wrongdoing.
Does Constellation CEO Mayo A. Shattuck mention any of this Parisian turmoil? No. Instead, he says the plant is endangered by the U.S. Department of Energy’s delay in granting a massive, taxpayer-backed loan guarantee for the project. He seems to be bothered by the fact that the DOE is actually bothering to read Constellation’s application before approving it.
Ebony Meeks, a spokeswoman for the Department of Energy, said the agency understands Constellation’s frustration, but “our main priority is to be a steward of taxpayer dollars.”
Taxpayers should be grateful to the DOE. EDF-Areva shenanigans aside, Calvert Cliffs III is a financially risky proposition. No one has ever built a nuclear reactor in a “deregulated” wholesale market like PJM which Maryland is now part of. All other nuclear plant have the backing of fully regulated utilities or publicly-owned utilities. A nuclear plant represents a large “lump” of new power that will be dumped onto the PJM market in ten years’ time when the plant is finished. What will happen to electricity prices? Calvert Cliffs III will be burdened with debt and cost over-runs at that point. Will it be viable without financial backing from U.S. and French taxpayers? Shattuck knows it won’t be that’s why he’s complaining.
Meanwhile, on a serious note, French first lady Carla Bruni-Sarkozy is “struggling” with her cameo role in a new Woody Allen film, “with one scene requiring 35 takes” even though she has no lines.
Owen Wilson, who stars in the romantic comedy, reportedly offered support to the glamorous mother of one, who was watched from the sidelines by her husband, President Nicolas Sarkozy.
EDF has also been under attack for sloppy handling of nuclear waste.
Maryland Governor O’Malley has announced a new Long Term Electricity Plan for our state. As the planning horizon extends to 2030 so it could be assumed that Calvert Cliffs III might be in operation, a careful assessment should be made of the political risks surrounding the French government’s investment in the plant.
Can we count on Calvert Cliffs III?