In view of this strategy for reworking the penetration welds, in its meeting on 8 October 2019, EDF’s Board of Directors approved the continuation of works at the Flamanville EPR site.
Furthermore, the technical investigation into reworking the welds located on the main secondary circuit with quality shortfalls and/or not complying with the requirements of the break preclusion reference document defined by EDF is ongoing, with a view to recommencing welding as soon as possible.
In view of the above, on 9 October 2019(1) the Group submitted a new schedule and a new estimate of construction costs for the Flamanville EPR. If the above goal regarding the validation of the chosen repair scenario by the ASN is achieved, the provisional schedule for implementing the preferred scenario for repairing the penetration welds will involve fuel loading to take place in late 2022 and re-estimating construction costs at €12.4 billion(2), an increase of €1.5 billion. Most of these additional costs will be booked as other operating income and expenses(3) and not investments.
Furthermore, due to the change in the date of fuel loading, in 2020 there will no longer be any income from the phase of installation tests to be booked when calculating net investments(4). The new schedule and construction cost targets remain dependent on the investigations conducted by the ASN, notably regarding the procedures envisaged by EDF for dealing with the welds in the main secondary system, and in particular the qualification of the welding robots for the penetration weld repairs.
If the alternative scenario referred to above were ultimately to be adopted, this would entail more additional costs and potentially significant additional delays. Other risks may also emerge (see section 2.2.4 “Operational Performance, risk factor 4A Management of large and complex industrial projects [including EPR]").
In the UK, EDF Energy owns 66.5% of the construction project of two nuclear plant sat Hinkley Point, with the remaining 33.5% owned by China General Nuclear Power Corporation (CGN). The project company Nuclear New Build (NNB) is the project owner and the New Nuclear Projects and Engineering Department together with Edvance are responsible for the design studies.
EDF is also working, as part of its partnership with CGN, on two nuclear construction projects in the UK: Sizewell C and Bradwell B (see section 1.4.5.1.2.4 “Nuclear New Build business”).
In China, EDF owns 30% of TNPJVC (Taishan Nuclear Power Joint Venture Company Limited), which was set up to build and operate two EPR nuclear reactors in Taishan, in the province of Guangdong in China. CGN holds a 51% stake and Yudean a 19% stake.
Unit 1 operated without any noteworthy incidents during its first year of operation. Net annual output for 2019 was 11.953TWh for unit 1 and 4.225TWh for unit 2.
In 2019, unit 2 achieved all the major milestones, opening up the way for its commercial commissioning on 7 September 2019.
EDF continued to provide technical support to the Taishan project, while simultaneously incorporating feedback from start-up and operation activities for other EPR projects. In 2020, the main challenge relates to the successful full inspection of unit 1, scheduled to begin in early July for a period of 80 days.
To date, the commercial commissioning of unit 1 has been implemented with a tariff that is lower than that expected by EDF and that will remain in force until the end of 2021 (see section 2.2.4 “Operational Performance, risk factor 4A Management of large and complex industrial projects [including EPR]"). Discussions between electricity producers and the Chinese authorities will lead to a definitive tariff which will apply to the 3rd generation nuclear plants. Work is ongoing with the competent authorities with a view to determining future evolution of the tariff.
On 25 January 2019, the French government published the main guidelines of the multi-year energy programme. In accordance with these guidelines, the government asked the EDF group to prepare by mid 2021 a file with the nuclear industry relating to a programme of renewal of nuclear facilities in France. The sector contract signed on 28 January 2019 by the French government and the Nuclear Sector Strategic Committee (CSFN) contains a section on the preparation of the industrial capacity necessary for the performance of a programme of construction of new reactors in France. In order to keep in line with this initiative, EDF has started to prepare economic and industrial proposals based on the EPR2 technology. EDF will provide the information to enable the French government to define an appropriate regulatory framework for the financing of such an industrial programme.
EDF submitted a safety options file for the “New Model EPR” (NM EPR) project at the end of 2016 to the Nuclear Safety Authority which examined it in 2017. In early 2018, the Permanent Group of experts for nuclear reactors submitted its conclusions on the safety options file. In particular, it found that “most changes in the design used for the NM EPR project take into account the lessons learned from the feedback on Flamanville EPR and on the reactors currently operating as well as lessons learned from the accident at Fukushima Daiichi,” and “is of the opinion that the design options used for the NM EPR project, complemented or modified in the light of the discussions held during the technical examination which have led to a number of commitments, are likely to ensure a safety level at least equivalent to that of the Flamanville 3 EPR reactor and complies with the recommendations of ASN Guide 22 (on the design of Pressurised Water Reactors).” In its opinion 2019-AV-0329 of 16 July 2019, the French Nuclear Safety Authority “considers that the safety handbook adopted for the planned NM EPR reactor is on the whole satisfactory, in particular as regards legislation, the guide dated 18 July 2017 […] and international recommendations”.
Furthermore, the work undertaken by EDF and Framatome on the New Model EPR project led to the finalising in 2017 of the technical configuration of a model named EPR2 which could replace the nuclear fleet currently operating in France and ultimately expand the French nuclear industry’s export offers.
EPR2 is an optimised version of the EPR, following on from the EPR in industrial terms, whilst integrating feedback from EPR worksites and power plants currently in operation.
In March 2018, EDF signed a non-binding industrial cooperation agreement with the Indian national electricity company Nuclear Power Corp. of India Ltd. (NPCIL) for the construction of six EPR reactors in India at the Jaitapur site. This agreement sets out the industrial plan, the roles and responsibilities of partners, and the next steps in the project. In this regard, EDF and its partners will be supplying all the studies and equipment for the nuclear island, the conventional island, the auxiliary systems, and the cooling sources and galleries. EDF will not be investing in this project. A comprehensive conditional non-binding offer was submitted to NPCIL at the end of 2018 by EDF and its partners. 2019 was characterised by significant progress on technical convergence.
(1) See EDF’s press release of 9 October 2019 “Flamanville EPR: EDF has adopted a scenario for upgrading the main secondary system penetration welds with robots and has adjusted the construction schedule and estimated cost accordingly”.
(2) In euros 2015, excluding interim interest.
(3) IAS 16 paragraph 22 on abnormal costs incurred in connection with assets constructed by the Company. These costs will affect the years 2020, 2021, and 2022. Other things being equal, the impact on EDF’s net income for 2020 is estimated to be -€0.4 billion, and will not affect net income.
(4) Standard IAS 16 paragraph 17.
