France’s Court of Auditors has urged the government and EDF to address many “uncertainties” before continuing their ambitious programme for the construction of new EPR nuclear reactors, noting that the financing remains unclear.
The Court’s 97-page report said “the accumulation of risks and constraints could lead to a failure of the EPR2 programme”, recalling that the EPR of Flamanville in Normandy was only connected to the electricity grid in December 2024, 12 years after the scheduled date.
In 2022, French President Emmanuel Macron said it was time for a nuclear renaissance in France, adding that the operation of all existing reactors should be extended without compromising safety and proposing a programme for six new EPR2 reactors, with an option for a further eight to follow. The first three pairs of EPR2 reactors are to be built at the Penly, Gravelines and Bugey NPP sites, with construction expected to start in 2027. The original cost was put at €51.7bn ($53bn), but this was revised to €67.4bn in 2023. EDF is expected to make a final investment decision in 2026.
EDF and Framatome are developing the EPR2 as a simplified version of feedback from the EPR reactors under construction in France (Flamanville), Finland (Olkiluoto) and the UK (Hinkley Point C) as well as those operating in China at the Taishan NPP. The EPR2 is a pressurised water reactor that meets the general safety objectives of the third generation of reactors.
“The most worrying uncertainties relate to the delays in the design of the EPR2, the unknown on the cost of the first three pairs (of reactors) and the lack of funding for the programme” the First President of the Court of Auditors, Pierre Moscovici told reporters. “The decision of EDF’s board of directors to reduce the financial envelope dedicated to the preparatory work for future EPR2s in 2025, clearly reflects these financial uncertainties” he added.
After a construction site full of technical problems and hazards, the costs of Flamanville 3, the first nuclear reactor to start in 25 years, increased from an initial estimate of €3.3bn to €19.3bn in 2015 and €22.6bn in 2023, “including financing cost”. In its latest report the court noted: “In reality, the total termination cost of Flamanville 3 is higher” reaching €20.4bn in 2015, 23.7bn in 2023.
The Court said this revaluation of €1.3bn compared to its previous report in 2020 takes into account adjustments in the calculation of provisions presented by EDF and in the calculation of the financing cost.
The Court’s 2020 report highlighted multiple failures explaining the delays and additional costs of EPRs under construction or in operation, in particular that of Flamanville 3 in France. It recommended that EDF should “calculate the forecast profitability of the Flamanville 3 reactor and of the EPR2 and ensure its monitoring”.
In its new report the Court acknowledged that since 2020 “the context has changed significantly”. It added: “The nuclear industry is benefiting from a more favourable international context … A progress report on the nuclear sector and the implementation of the recommendations made by the court in 2020 is therefore necessary to assess the conditions for implementing this policy with considerable long-term challenges in financial, industrial, energy and environmental terms.”
It said that analysis showed that, “even if the French nuclear industry has begun to organise itself to implement the strategy set out in 2022, it is far from ready and must still overcome many challenges, some of which are worrying”.
The Court noted that EDF has still not provided a profitability forecast for the EPR2 programme, as recommended, which means financing remains unclear. Even after the funding model is announced, there is likely to be a delay of at least a year while approval for the state funding is sought from the European Commission.
“These delays and uncertainties (which affect also the number of power plants to be built) reduce the visibility of which the actors of the sector need to engage in the industrial projects of this magnitude and obtain financing,” the report said. “The accumulation of risks and constraints could lead to a failure of the EPR2 programme.”
“The EPR2 programme remains marked by a delay in conception, an absence of a final estimate and a financing plan while EDF remains heavily indebted, the court issues a new recommendation: Withhold the final investment decision for the EPR2 programme until its financing is secured and the detailed design studies are progressing in line with the trajectory targeted for the milestone of the first nuclear concrete.” This step only began in July 2024.
The court recommends ensuring that “any new international project in the nuclear field generates quantified gains and does not delay the schedule of the EPR2 programme in France”. It noted that in the UK EDF is confronted at the Hinkley Point C construction site with “a considerable increase in costs accompanied with a new delay of two years, and with a heavy financing constraint caused by the withdrawal of the Chinese co-shareholder”. Meanwhile, at the planned Sizewell C project, “delays are already accumulating, even before the investment decision has been taken”. The court recommended that EDF should not make a final investment decision on Sizewell C “before obtaining a significant reduction in sound financial exposure in Hinkey Point C”.
EDF CEO Luc Remont, in a last-minute response to the Court, said that before the group reaches an agreement with the State and Brussels on the financial framework of the EPR2 programme, “it is necessary for EDF to conclude a preliminary contract with the State which sets out the framework for the investments to be financed under this programme”.
