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France nuclear energy investments continuing: economy minister

French economy and trade minister Emmanuel Macron said Tuesday his country will continue to invest in nuclear energy, including providing support for utility EDF's plan to build a nuclear plant in the UK, despite delays on existing projects and a reorganization of the French state-controlled industry.

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Macron, speaking at the World Nuclear Exhibition in Paris, acknowledged that the French effort in the 1990s to combine its reactor design businesses and fuel cycle businesses into a single state-controlled company, Areva, was ultimately a failure.

The company is being broken up, with Areva's reactor business being sold to EDF and a "new" Areva being formed to hold the company's mining, enrichment and other fuel cycle businesses.

The government will invest Eur5 billion ($5 billion) in Areva, he said, and is seeking minority partners who would invest in both Areva and EDF. The state plans to invest in EDF as well, officials have said.

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Both investments are likely to take place through a sale of new shares of the two companies.

The result will be a better defined ability to offer reactors into international tenders, Macron said. In the past, the division between EDF and Areva was seen as contributing to a failure to secure such agreements, and was "detrimental to our image," he said.

The country's expertise in the entire nuclear fuel cycle, from mining to spent fuel reprocessing and reactor dismantling, will be an advantage for the country, he said.

A key element remains the Hinkley Point C project in the UK, a proposed GBP16 billion ($19.8 billion) project to build 3,600 MW of nuclear capacity in the southwest of the country. A decision on whether to go forward on the project has French government support, but is opposed by some EDF unions and executives, with a decision now expected in the autumn.

Hinkley Point C is "very important for the French nuclear industry," Macron said. The construction of the two EPR reactors at the site will benefit from the "delays and glitches" affecting two other EPR reactor construction projects in Finland and France, he said.

Despite the decision of UK voters last week to exit the European Union, the UK is still a leading economic partner, Macron said.

Despite an infusion of government investment into both Areva and EDF, both companies have started cost-cutting programs, Macron said.

'VIRTUOUS OPTION'

Nuclear energy faces challenges including improving safety and becoming cheaper, said Gerard Kottman, president of the French nuclear industry association.

He said there is also a political challenge, especially since in many countries energy policies favor a "strange renewable and fossil fuel cocktail" for the transition to lower-carbon power generation. The industry must push for a mix of renewables and nuclear power, which is a "more virtuous option, Kottman said.

EDF CEO Jean-Bernard Levy said it was "amazing" that France's neighbors are producing electricity with CO2 emissions that are 20 times that of France.

Only 40 countries representing 12% of global emissions have put a price on carbon, which limits what can be done to favor low-carbon sources, he said.

The future of nuclear energy is tied to that of renewables, Macron said.

French energy policy is opening the grid to an increasing amount of renewable power generation, but the goal is not to phase out nuclear energy, he said.

"We have to grow in both industries, it's the heart of our [energy] strategy," he said.

France is committed to refurbishing its existing fleet, a Eur10 billion project, Macron said.

In addition, the country must plan to replace aging reactors that will eventually retire, he said. "We have to build a new fleet of reactors safer and more likely to be accepted by the public."

ELECTRICITY MARKETS NOT PROVIDING NEEDED SIGNALS, IEA HEAD SAYS

Fatih Birol, executive director of the International Energy Agency, said electricity markets around the world have been affected by historically low coal prices and a growing supply of natural gas.

"Current energy markets do not send strong enough signals to invest in low-carbon technologies, including nuclear power," he said.

That is a challenge because the global fleet of nuclear reactors is aging, Birol said. About 60% of the existing nuclear reactors are between 30 and 40 years old, meaning they will have to be replaced in the coming decades, he said.

Reactor retirements will grow in the US and Europe in coming years, although they will be offset by additional nuclear capacity in China, the fastest-growing nuclear energy operator, Birol said.

In 2015, global nuclear capacity increased by 10.2 GW, the largest amount in 25 years, Birol said.

Most of that increase was from reactor construction in China, South Korea and Russia, he said.

--William Freebairn, william.freebairn@spglobal.com
--Edited by Alisdair Bowles, alisdair.bowles@spglobal.com