AGeneral Meeting on 3 February set the seal on a reorganisation of the French nuclear industry that will give EDF more oversight of the Hinkley Point C project. It is the end – almost – of a long process to rescue Areva, France’s state- controlled nuclear company, from financial disaster.

EDF – also controlled by the French state – has reluctantly agreed a bailout package that would see it acquire a 75% stake in a new Areva subsidiary containing its reactor design and build and its nuclear maintenance functions, (‘NewNP’). The deal was agreed in July last year and – along with fresh capital injections from the French state – it was given State Aid clearance by Brussels in November.

What remains of Areva will become a nuclear fuel cycle business, dubbed ‘NewCo’.

That refocus also means the company has retreated from a foray into renewables. It sold a 50% stake in offshore wind company Adwen to Gamesa of Spain, a sale initially agreed in June last year.

However, Areva retains responsibility for completing the Olkiluoto plant in Finland – a precursor to Hinkley Point C. It was multi billion Euro cost overruns and multi-year delays at that project that helped undermine Areva’s finances.

The restructuring should put the reactor builder on a firmer footing. But a still-closer relationship with France’s nuclear construction company does not strengthen EDF’s ability to finance Hinkley Point C. That financial commitment has already been marked by ratings agencies as likely to lead to a downgrade in EDF’s creditworthiness.

NewCo is valued at €2.5 billion. New investors are now being sought for 34% of the company, the aim being to leave EDF with 51% and Areva with 15%. The state will fund €2.5bn of the NewCo capital increase with Japan Nuclear Fuel Limited (JNFL) and Mitsubishi Heavy Industries (MHI) taking a combined 10% stake (5% each) for €500m. EDF says the NewCo transaction should be completed in the second half of 2017.

But the transaction is not quite a ‘done deal’.

All the agreements rest on the outcome of tests on the reactor pressure vessel and other major components destined for Flamanville 3, France’s first EPR reactor (another precursor for the UK’s development at Hinkley Point C) and on the outcome of audits at the companies supplying those components.

It is an issue that EDF has been grappling with since May 2016 and it is one that has not only had implications for the Hinkley Point project but also placed a strain on power supplies and affected power prices across NorthEast Europe this winter.

Inaccuracy and falsification

Areva acquired the Creusot forgings company in 2006, but it had been a main supplier of forged components (reactor pressure vessels, steam generators etc) for many years. In 2015 an Areva quality audit of the pressure vessel Flamanville components – which had been manufactured back in 2005/6 – revealed that the carbon content of the steel was higher than allowed. When Areva began a retrospective quality audit it found “inconsistencies, modifications or omissions in the production files, concerning manufacturing parameters and test results”, according to the French nuclear safety authority (ASN). 

The faults could have affected components at more than two dozen reactors at over a dozen sites and the discovery at Creusot was followed by similar concerns over components provided by a second supplier. Although the full extent of the failings are not yet known, in a September update ASN warned that “regardless of their actual safety consequences, these irregularities reveal unacceptable practices; the reviews initiated by Areva NP must therefore be continued and are liable to bring further irregularities to light."

France has seen a wave of nuclear outages while safety checks were made. In June, ASN identified 18 French reactors whose steam generator channel heads could contain high carbon concentrations, and in October it gave EDF three months to carry out additional inspections to demonstrate the mechanical strength the components, which were manufactured by Creusot Forge and by a foundry in Japan (JCFC). In January 2017, after reviewing investigations and technical demonstrations provided by EDF for the 900MWe reactors, ASN approved the restart of nine units (Bugey 4, Dampierre 3, 

Fessenheim 1, Gravelines 2 and 4, Saint- Laurent-des-Eaux B1, Tricastin 1, 3 and 4). EDF asked for the inspection deadlines to be extended for Tricastin 2 and Civaux 2, but they have been since cleared for restart. As of mid-February, inspections remained underway at Civaux 1.

Speaking in a January press conference, ASN Chairman, Pierre-Franck Chevet underlined the significance of the issue.

“This is a truly major issue. A notable finding in April 2016 was the discovery of ‘concealed files,’ a practice which dates back to the early 1960s. Rather than declare an anomaly to the customer or to the competent safety authority, the subject was treated internally and the documents were put aside in a special ‘concealed’ file.”

Chevet said that 100 concealed files concerning French nuclear installations had been analysed and “virtually all of them” were deemed acceptable with regard to safety, expect for those related to Fessenheim 2, which remain under examination.

In addition, Chevet said that other irregularities were discovered necessitating a complete review of all the manufacturing files. “ASN does not preclude the possibility that these reviews will reveal new and serious irregularities,” he said.

Financial pressures and the need for additional human resources are putting pressure on the situation for both the companies involved and the regulator.

“The manufacturers are still in an extremely difficult financial, economic and budgetary situation, while being confronted with major issues,” Chevet added.

“ASN, which is involved in the oversight of the system as a whole, is also lacking human and financial resources. The staff numbers of ASN together with IRSN, its technical support organisation, have increased by nearly 70 over the last three years. This is really the best one could hope for in the current budgetary context, but it does not quite meet our staffing requirements for the medium term.”

International implications

The affected components were sold widely. In January the US Nuclear Regulatory Commission (NRC) said components with forgings from Creusot Forge had been supplied to 17 reactors at 13 US sites, directly or through third-parties. The components included replacement reactor vessel heads, steam generator components or pressurisers and not all had been installed. NRC public affairs officer David McIntyre said in a blog: “We are confident at this time that there are no safety concerns for US nuclear power plants raised by the investigations in France.”

The Swiss regulator, ENSI, said in August that all plants in Switzerland which have (or had) components in service from Creusot forge, were able to verify that the corresponding production documents did not contain any indication of falsifications. However, it has ordered inspection of the steam generators during planned maintenance outages at the Beznau and Gösgen nuclear plants to demonstrate the material toughness, after elevated carbon content was found in the steam generator components in some French units.

Finnish Radiation and Nuclear Safety Authority (Stuk) also confirmed in January that no inadequate or counterfeited documentation related to the manufacture of forged steel parts used in Finnish nuclear power plants has so far been identified by the plant operators. However, it too has asked for detailed investigations to be completed by the end of April.

TVO reported its findings for Olkiluoto 1&2 at the end of October, noting that no counterfeits were detected in the parts delivered to the operating units and all inspected devices were compliant. Investigations concerning parts supplied for use in the Olkiluoto 3 EPR, currently under construction, are still ongoing.

Fortum submitted its report on Loviisa 1&2 in December, which also confimed no parts had been supplied with deficient or counterfeited documentation. However, the company told Stuk that investigations need to be continued because they are difficult and time-consuming. Fortum is expected to submit additional information to the regulator by the end of March.

In France, a key question remains over the main components for the Flamanville reactor and particularly a series of safety tests intended to satisfy the regulator that the pressure vessel meets safety standards.

The EDF investment in Areva depends on:

  • obtaining favourable conclusions from the ASN regarding the outcome of the tests on the primary circuit of the Flamanville 3 reactor;
  • completion and satisfactory conclusions of the quality audits at the Creusot, Saint- Marcel and Jeumont plants.

What are the implications for the UK? The UK regulator said that it did not have safety concerns over components already in the UK (including replacement components for Sizewell B). But progress at Flamanville has a direct impact on Hinkley Point C: if Flamanville is not operational by the end of 2020, the Credit Guarantee provided by the UK government for Hinkley Point C will lapse. The lengthy reactor shutdowns in France have also, of course, been costly for EDF in terms of maintenance cost and loss of income – potentially doing further damage to the company’s rating and raising borrowing costs.  

Janet Wood is editor of New Power magazine ( Caroline Peachey is editor of Nuclear Engineering International