UPDATE 3-EDF delays Flamanville 3 nuclear project again

Wed Jul 20, 2011 5:26pm GMT
 

* Reactor seen starting production 2016 vs 2014 previously

* Production chief says confident this is final delay

* Costs now seen at 6 bln euros vs previous goal of 5 bln

* Flamanville is key project as EDF vies for UK deals

* EDF shares up 1 pct, French power prices edge higher

(Adds EDF executive, UK background)

By Marie Maitre

PARIS, July 20 (Reuters) - EDF has delayed the completion of its first French next-generation EPR nuclear reactor by another two years to 2016, saying it expects the project's costs to rise to 6 billion euros ($8.52 billion).

In July 2010, the state-controlled utility delayed the commercial start of the 1,600 megawatt nuclear reactor by two years to 2014. At the time, it had also raised its cost estimate for the project in northern France from 4 to 5 billion euros.

But Herve Machenaud, EDF's power production and engineering chief, said he was confident there would be no further delay.

"We went beyond confirming existing or unavoidable delays. We have also provisioned for the risks we consider likely during the assembling of equipment and during the testing," Machenaud told Reuters in a telephone interview.

"This schedule is credible. We all believe in it," he added, saying the 2016 date had been agreed jointly with reactor maker Areva , civil engineering group Bouygues and turbo generator supplier Alstom .

Machenaud blamed harder-than-expected civil engineering work for part of the delay in a project that is required twice as much concrete and electric wires, and four times more steel, than the previous nuclear power projects EDF built in France.

"In reality, construction conditions are far more complex and difficult, with far more demanding regulation, than it was the case 15 years ago so we made an error of appreciation when we said we would know how to do that in 54 months," he said.

EDF also cited two serious accidents on the construction sites and safety tests carried out after the Fukushima accident among the reasons behind the fresh delay.

EDF shares closed 1.7 percent higher at 26.4250 euros, in line with the European sector , as analysts said the new delay had been expected.

"The new delay and the cost increase do not really come as a surprise," said an analyst who asked not to be named.

"The only material impact we could see in coming weeks is on European power prices as the fact that Flamanville 3 will not start producing as expected means the market in 2015 will be tighter than is currently priced in," the analyst said.

In France, the baseload power contract for 2012 delivery edged 15 cents higher to 55.75 euros a megawatt hour by 1700 GMT. <0#ELBFR-RTR>

EDF, which operates France's 58 nuclear reactors, said 80 percent of the civil engineering work of the Flamanville 3 project had now been completed, and that work had started to assemble the piping and electrical equipment.

Flamanville 3 is the first nuclear reactor built in France in 15 years and a landmark project for EDF, which hopes to capitalise on three decades of experience to win deals to build nuclear plants in countries like the United Kingdom and Brazil.

EDF plans to build four 1,600 megawatt EPRs in Britain, two at Hinkley Point in Somerset and two at Sizewell in Suffolk.

EDF's UK subsidiary said on July 5 it would announce this autumn a new date for the startup of its first nuclear power plant in Britain -- until now set for 2018 -- following regulatory delays in the wake of Fukushima.[ID: nL6E7I50Q7]

(Additional reporting by Caroline Schaps in London; Editing by Christian Plumb)

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