Dark Times for Nuclear “Revival”

Wall Street Journal:

PARIS—Engineering firm Areva SA said it expects its 2014 net loss to widen to about €4.9 billion, or $5.6 billion, from a year earlier, as delays to a reactor project in Finland and low demand for nuclear projects continue to hammer the company.

The French firm’s latest profit warning follows three successive years of reported losses stemming from delays to a nuclear reactor project in Finland and a big write-off after a mine acquisition went sour. The company was also hampered by the aftermath of the 2011 Fukushima disaster in Japan, when many utilities shelved or delayed plans for nuclear power plant construction.

Areva, which is 85%-owned by the French state, on Monday said preliminary financial information shows a full-year net loss of about €4.9 billion, compared with a loss of €494 million in 2013. The estimated loss is bigger than Areva’s current market capitalization of about €3.7 billion, raising speculation as to whether the French state will need to inject capital into the company.

French Energy Minister Ségolène Royal said Monday that she wants Areva to find synergies with state-controlled power utility Électricité de France SA and the state Commission for Atomic Energy. “I want the creation of a French nuclear team that would position itself on international markets to win contracts,” she said.

Financial Times:

Areva has been hit by cost overruns on its flagship Finnish Olkiluoto 3 reactor, which is due to come online in 2018, 10 years behind schedule. The project has so far been the subject of €3.9bn of impairment charges — with analysts expecting more writedowns at the group’s full-year results.

In a statement on Monday, Areva, which has a 10 per cent stake in the Hinkley Point nuclear project in the UK, said its 2014 impairment charges were also related to its new French uranium conversion plant Comurhex II.

The company also warned of further provisions on renewable energies contracts, having already incurred charges of €373m on its discontinued solar business.

Areva declined to comment on a possible state bailout. People close to the matter said a rescue package had not been finalised.

NYTimes:

The French nuclear industry’s travails underline the gloomy state of the nuclear industry since the Fukushima disaster in Japan in 2011. Moreover, the French industry, though long a world leader, has in recent years been threatened by its own mistakes. It has also had trouble coping with the emergence of new challengers like China to sell nuclear plants in countries in emerging markets and the West that value the clean-energy possibilities of nuclear power more than they fear the technology’s potential dangers.

The loss that Areva warned of on Monday would be substantially larger than its stock-market value of about €3.7 billion, suggesting that the troubled company, plagued by cost overruns and write-downs, may need new funds to continue operating. Areva’s capabilities are vital to France’s ambitions to remain a world provider of nuclear plants and services like supplying fuel.

With few new nuclear plants being planned to replace the older ones that are being phased out in the West, “Europe will see a gradual decline in nuclear’s share of electricity supply,” said Antony Froggatt, an analyst at Chatham House, a London-based research organization.

Instead, the momentum is shifting eastward, with industry growth over the next few decades most likely to center on companies in China, India, Russia and South Korea.

Although the United States is building few new plants, it still leads the world in power generated by nuclear plants, followed by France and Russia, according to the World Nuclear Association, a trade group. But the rising force in the industry is China, the site of about half of the nuclear stations being built or planned. India also has big nuclear plans and like China tends to favor its domestic companies.

Meanwhile, someone – we don’t know who – has been buzzing French Nuclear Plants with drones.

Newsweek:

With devastating simplicity, John Large explains how drones could be used to coordinate a terror attack on a nuclear power station. First, one drone hits the distribution grid serving the plant, depriving the facility of off-site power, making it dependent on its diesel generators to cool the reactor, which generates up to 1,000 megawatts of power – enough to light up half of Paris. Then the generators are easily taken out by an unmanned drone with a relatively small payload. Without power to cool the radioactive fuel, Large estimates it would take approximately 30 seconds before the fuel begins to melt, leading to potential leakages of nuclear waste.

It’s the same cause behind the meltdown at the Fukushima nuclear plant in Japan after it was hit by a tsunami in March 2011. But potential terrorists wouldn’t need to trigger an earthquake, just be able to accurately pilot a pair of readily-available commercial drones carrying small payloads of explosive. Last year, unmanned drones were spotted flying over at least 13 nuclear power stations in France. The last widely-reported sighting was on 3 January, when two aircraft were seen flying over a nuclear facility in Nogent-sur-Seine, in northern-central France.

According to Large, of consulting engineers Large & Associates, based in London, who was commissioned by Greenpeace France to evaluate and report on the spate of flyovers, the “unacceptable” risk posed by a terrorist drone attack means that many of Europe’s nuclear power stations – including the majority of those in France – should be shut down.

He has advised countries around the world on nuclear safety and believes that governments must reassess the balance of risks and benefits of nuclear power due to the increased danger from terrorists targeting them with modern and readily available hardware such as unmanned drones. “If the risk of a nuclear plant’s design, age and location is unacceptable, governments must consider closing those plants down,” he says. “At the moment, most of the plants in France are not acceptable. The plants in the rest of Europe are old and need reviewing in this respect.” Banning the drones will only spark an underground network of drone builders, adds Large; the best solution for some plants is to close down altogether rather than risk a meltdown.