"We thought there was a future in nuclear power when no one else believed in it," said Anne Lauvergeon, chief executive of Areva. The French government-owned company is building the first nuclear reactors to be constructed in western Europe for nearly 20 years.
With "no oil, no gas, no coal and no choice," France decided to go nuclear in 1974, and today about 80 percent of its electricity is generated by 59 nuclear plants across the country. But even France became pessimistic about nuclear power: It stopped building new reactors at the end of the 1980s and in 2002 a government report called the industry a "monster without a future."
How things have changed. Nuclear power is back in favor, thanks to fears about oil supplies, energy security and global warming. France is poised to develop its expertise into a significant export. Its president, Nicolas Sarkozy, considers the sale of nuclear power to be central to his diplomacy: It is a badge of France's technical prowess and a reaffirmation of its status as a global industrial power. Soon after his election 18 months ago, he toured countries from China to Libya to tout France's nuclear expertise, signing deals to open the way for French firms to sell reactors.
France has two competitive advantages in the field. First, it has the most recent and extensive experience of any country in building and operating nuclear plants. That has given Areva's "third-generation" reactor design, called the EPR, an edge over blueprints from its two big rivals: Westinghouse, now a unit of Toshiba of Japan, and GE Hitachi, a recently formed joint venture. Second, French engineers have developed a novel reprocessing technique, so that nuclear energy produces less waste than in other countries.
Areva's EPRs are under construction at Flamanville in Normandy, Olkiluoto in Finland and Taishan in China. Areva forecasts that demand for nuclear capacity could bring it orders for 60 reactors, or one-third of the total market, by 2020 -- each with a price tag of around $6.3 billion. The high cost of building new plants, and the uncertainty over the cost of nuclear energy relative to other sources, could delay the nuclear renaissance, especially in the midst of a credit crunch. Luckily for vendors, governments are bent on tackling climate change and securing energy supplies and are likely to offer big subsidies.
Britain, for one, has given its blessing to France's nuclear ambitions: In September Electricité de France (EDF), a state-owned energy giant that owns and runs France's plants (and is thus closely intertwined with Areva), bought British Energy, a troubled utility in which the British government held a big stake. British Energy plans to build four new reactors in Britain and is now certain to choose Areva's EPR.
In some markets, the French may lose out to local rivals. Last week EDF launched a defensive $4.5 billion bid for half of the nuclear business of Constellation, an American utility. EDF had hoped to use Constellation as a platform to expand in America, and in February this year the two firms' joint venture, UniStar, agreed to propose Areva's EPR for construction in America. But in September Constellation agreed to be acquired by MidAmerican, a unit of Warren Buffett's Berkshire Hathaway.
This could thwart EDF in America, and could even prompt Constellation to dump the EPR and choose technology from GE, in which Buffett holds a big stake. Westinghouse is Areva's most formidable opponent for now, but GE "must be the front-runner when America starts to rebuild its nuclear industry," said Harold Fairfull of Consilium, a utilities-finance advisory firm. He predicts that Areva will be dominant in Europe, and GE in America.
Areva's rivals must relish the fact that both its new showcase reactors have run into trouble. At Olkiluoto, Areva's EPR is three years behind schedule and an estimated $1.9 billion over its initial budget of $3.9 billion. A French nuclear executive says the main reason Areva has had such difficulties was that it bid fiercely to keep GE out. At Flamanville there have also been construction difficulties. Areva and EDF say any firm would have had problems after such a long hiatus in building plants.
France will probably find it easiest to sell nuclear power in emerging markets. Sarkozy's tour of the Arab world raised concern among nonproliferation specialists. But in reality, only a fraction of the projects announced will lead to the building of nuclear power stations, according to a French official. The country most likely to end up signing a contract is the United Arab Emirates, says an insider; a deal with Libya, though, is "unthinkable." But France can count on selling dozens of reactors to countries such as Brazil, China and India.
