EDF, Areva, Rolls-Royce In Deals On New UK Nuclear Plants
02/17/2012| 09:17am US/Eastern
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--EDF, Areva, Rolls-Royce in deals worth over GBP500 million on new UK nuclear plants
--Deals underscore French and UK government's continued support of nuclear energy
--EDF aims to start preparatory work at UK Hinkley Point site this spring
By Selina Williams
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(Adds Energy Secretary, EDF comment, detail.)
French nuclear giant Electricite de France SA (>> EDF) and nuclear reactor vendor Areva SA (>> AREVA) Friday signed deals worth over GBP500 million, advancing multi-billion dollar plans to build new atomic power plants in the U.K., despite delays following last year's Fukushima nuclear disaster in Japan.
The deals, which include a GBP400 million contract between Areva and Rolls-Royce Holdings PLC (RR.LN) to supply manufacturing and other services for EDF's first new nuclear reactor in the U.K. and all future EPR reactors in the U.K., were signed at a U.K.-France summit hosted in Paris.
The contracts underscore the French and U.K. governments' continued support of nuclear energy even as Germany and Italy last year halted their atomic plans following the Fukushima disaster.
"The deals signed today reflect our ongoing desire to work closely together with our French allies and the private sector on nuclear, and across the energy mix," said U.K. Energy Secretary Edward Davey.
The U.K. has one of the most advanced programs in Europe to build a fleet of new nuclear power plants. The government has backed nuclear power in efforts to shore up electricity supplies as old plants close, while also meeting targets to reduce greenhouse gas emissions.
EDF is spearheading the U.K. nuclear revival, using Areva's EPR reactors, with its plans to build a new plant at Hinkley Point in Somerset, southwest England.
Other major European utilities, including German utilities RWE AG (>> RWE AG) and E.ON AG (>> E.ON AG), Spain's Iberdrola SA (>> Iberdrola SA) and France's GDF Suez SA (>> GDF SUEZ) are also planning billions of pounds investment in 16 gigawatts of new nuclear capacity in the U.K. by 2025.
However, U.K. nuclear ambitions have been delayed by around a year following the Fukushima crisis, analysts and industry executives say, as regulators reviewed the safety of the new reactors being considered for deployment in the U.K. in light of risks such as potential flooding and power loss.
EDF, which had originally planned to have its first new reactor in commercial operation in 2018, has said it will give the timeline for the construction and commissioning of the new reactor when it takes its final investment decision on Hinkley at the end of this year.
In the deals signed in Paris earlier Friday, EDF also signed a contract worth over GBP100 million with the Keir/BAM Nuttall joint venture for preliminary works at Hinkley.
The deal allows EDF to start excavations and clearing the ground at Hinkley as it prepares the site. The company plans to start the work this spring.
"The agreements announced today show we have maintained momentum in 2012. We now have a strong platform in place to build on our existing achievements and continue our work," said Vincent de Rivaz, chief executive of EDF's U.K. subsidiary EDF Energy.
To date, EDF has spent around GBP180 million on new nuclear in the U.K., including supply chain, skills and training.
Last year, EDF received planning permission from the local council for preparatory works at Hinkley and also submitted its application for the Hinkley plant to the U.K.'s Infrastructure Planning Commission, which was set up to fast track applications for large infrastructure projects of national importance.
In December, the U.K.'s nuclear regulator also issued interim approval of Areva's EPR nuclear reactor design, which EDF will be using in the power plants.
EDF operates eight of the U.K.'s existing nuclear power stations
-By Selina Williams, Dow Jones Newswires +44 207 842 9262; selina.williams@dowjones.com
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