The stakes are high for France’s nuclear power operator EDF, as it waits for the results of a tender to build up to four new reactors in the Czech Republic.
The French state-owned company said on Tuesday that it had submitted an updated bid for the project and expects a decision from Czech utility CEZ (CEZP.PR), opens new tab this year.
WHY IS THIS PROJECT IMPORTANT FOR EDF?
If it wins, it would be the company’s first overseas contract since it landed the Hinkley Point project in Britain in 2016, marking a major vote of confidence in the company.
At home, EDF has yet to complete its first EPR (European Pressurized Reactor) at Flamanville after a delay of 12 years and faces scepticism about its ability to execute plans for another six new reactors in the country.
“Everyone has an eye on Prague’s decision,” Vakis Ramany, EDF senior vice president in charge of international new nuclear development, said ahead of the bid submission.
WHY IS THE CZECH CONTRACT IMPORTANT FOR EUROPE?
A win is not just critical to the company but also to its strategy to lower costs and increase the efficiency of other nuclear reactors planned in France and across Europe.
Europe’s leading nuclear power-plant builder aims to deliver one or two reactors a year on the continent from the 2030s, a pace not seen since France commissioned its fleet of nuclear stations in the 1980s and 1990s.
“This is the pace necessary for us to continue to consistently improve our performance from one project to the next, so that synergies can be maximised,” said Ramany.
EDF is pushing for a major revival of nuclear power in Europe, which it says is essential to cut carbon emissions and strengthen energy security.
WHO ELSE IS BIDDING?
EDF is up against tough competition from Korea Hydro & Nuclear Power (KHNP), a subsidiary of Korean conglomerate KEPCO.
The Korean company beat EDF 15 years ago on a bid to build four reactors in the United Arab Emirates, after the French company entered the process late and with higher costs.
KHNP’s bid likely has much lower costs, say industry participants.
The cost of a single EDF reactor is around 10 billion euros ($10.73 billion), according to French newspaper Les Echos.
EDF declined to comment on the estimate, as well as costs in its proposal. KHNP also declined to comment on costs.
The bill for EDF’s Flamanville EPR is now at 13.2 billion euros ($14.14 billion), while the two Hinkley Point reactors are expected to cost up to 35 billion pounds ($43.93 billion) based on 2015 values.
U.S. company Westinghouse (WAB.N), opens new tab has withdrawn from the tender.
WHAT ARE EDF’S CHANCES OF SUCCESS?
EDF should benefit from its proximity to the Czech Republic, and its proposal to involve Czech industry in the project, said Marc-Antoine Eyl-Mazzega, director of the Energy and Climate Center at the French Institute of International Relations.
However, EDF has never built an EPR1200, a simplified version of its classic EPR that it is proposing for the Czech tender, and still needs certification for the new model.
“It must pass this absolutely crucial stage so that the Czech authorities are convinced and have full confidence,” said Eyl-Mazzega.
There are also still questions over whether Prague will be able to finance the project, he added, describing it as “a “colossal financial gamble”.