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NUCLEAR

French nuclear giant Areva to sell unit to EDF

Atomic energy giant Areva on Thursday agreed to sell a majority stake of its nuclear reactor unit to electricity group EDF as part of an awaited reconfiguration of the French sector.

French nuclear giant Areva to sell unit to EDF
The headquarters of the French nuclear group Areva in La Defense near ParisPhoto: AFP
EDF said in a statement that the long-time energy rivals “signed an agreement of understanding on June 30” under which the electricity utility agreed to purchase between 51 and 75 percent of nuclear reactor unit Areva NP for an amount valuing the entire affiliate at €2.7 billion ($3 billion).
   
The amount is less than the €4 billion Areva had sought for the reactor subsidiary, but will provide part of the seven billion in financing Areva says it will need  by 2017.
   
Areva also said it will seek a further €1.2 billion in funds through internal financing operations, spending cuts and further assets sales.
   
The company is now expected to focus on its uranium mining and nuclear waste treatment activities, awaiting significant recapitalisation the French government previously promised as part of its mandated restructuring of the country's energy sector.
   
Once the world-beating, one-stop-shop in the global civil nuclear sector, Areva encountered significant financial problems following the 2011 Fukushima disaster in Japan, as several countries sought to reduce or even eliminate nuclear energy, like Germany's plans to phase it out by 2022.
   
Meanwhile, Areva has run into major construction difficulties with its first EPR reactor in Finland, which is now expected to begin operating in 2018 — nine years late, and at nearly €4 billion ($4.5 billion) in costs to Areva.
   
As losses mounted, so did Areva's debt, which reached six billion euros at the end of the first half of 2015.
   
As a result, the French government has been pushing for greater partnership or quasi-merger of long-time rivals Areva and EDF to save a nuclear activity that French Economy Minister Emmanuel Macron has called “an industry of the future in France and abroad.”
   
The French state owns 87 percent of Areva and 84 percent of EDF.
   
The sale of the nuclear reactor unit to EDF marks the end of Areva's formerly profitable full-service model, which offered clients all aspects of development ranging from conception and construction to waste treatment.
   
In May Areva said it would slash up to 6,000 jobs worldwide amid €1 billion of cost-cutting by 2017.

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ENERGY

Why Germany’s nuclear exit is posing tough questions about its energy future

The Bavarian village of Gundremmingen is so proud of its nuclear power station that its coat of arms is graced with a giant golden atom.

Why Germany's nuclear exit is posing tough questions about its energy future
Gundremmingen nuclear power plant. Photo: DPA

But change is coming to the village, with the plant facing imminent closure under Germany’s energy transition policy.

Former village mayor Wolfgang Mayer’s house has direct views of the imposing complex with its two 160-metre cooling towers — taller than the spires of Cologne Cathedral.

The plant still produces 10 billion kWh of power per year, though parts of it have already been shut down — enough to provide the entire Munich metropolitan region with electricity.

The power station will be decommissioned on December 31, 2021, along with two other facilities in northern Germany.

By the end of 2022, Germany will have achieved its goal of completely phasing out nuclear power, set by Chancellor Angela Merkel on May 30, 2011, in the wake of the Fukushima disaster.

SEE ALSO: Berlin agrees to compensate power firms for nuclear phase out

The plan represented a dramatic change of course by Merkel’s ruling conservatives, who just a few months earlier had agreed to extend the lifespan of Germany’s oldest power stations.

But it was met with widespread public support in a country with a powerful anti-nuclear movement, fuelled first by fears of a Cold War conflict and then by disasters such as Chernobyl.

Village church

In Gundremmingen, however, the decision has been a tough pill to swallow.

The nuclear power station has been “as much a part of the village as the church” and it feels as though “something is dying”, said Gerlinde Hutter, owner of a local guest house.

According to Meyer, it will take at least 50 years to remove all radioactive material from the site after the plant has been decommissioned.
The German government is still looking for a long-term storage site for the country’s residual nuclear waste.

Gundremmingen is not the only German village facing big changes as the country strives to implement its energy transition strategy.

Renewables have seen a spectacular rise since 2011 and in 2020 made up more than 50 percent of Germany’s energy mix for the first time, according to the Fraunhofer research institute — compared with less than 25 percent ten years ago.

The declining importance of nuclear power (12.5 percent in 2020) “has been compensated for by the expansion of renewable energies”, Claudia Kemfert, an energy expert at the DIW economic research institute, told AFP.

Nuclear power stations have therefore not been replaced by coal, though the fossil fuel does still represent almost a quarter of the electricity mix.

The gas dilemma

In fact, the phase-out of nuclear energy has been joined by another plan, announced in 2019, to close all of Germany’s coal-fired power stations by 2038.

This presents a particular challenge for Germany, which remains the world’s leading producer of lignite.

Mining for the brown coal, which is highly polluting, continues to lead to the destruction of villages in the west of the country in order to expand huge open-cast mines.

If Germany is to free itself from lignite, renewables such as wind, solar, biomass and hydropower will have to make up 65 percent of the energy mix by 2030.

Yet the country, which has long been at the forefront of wind energy in Europe, installed only 1.65 gigawatts (GW) of wind farms last year — the lowest level in a decade, according to the WindEurope advocacy group.

To meet the government’s targets, Germany would have to add 9.8 GW of solar and 5.9 GW of onshore wind annually, according to Kemfert.

But the development of new areas for wind or photovoltaic energy production is complex, with plans often coming up against resistance from local residents and the risk of damage to the landscape.

And unless storage and distribution can be improved via so-called virtual power plants, these new forms of energy do not have the same stability as thermal or nuclear power.

To secure its supply, Germany could therefore be tempted to build more gas-fired power stations.

But this would risk reinforcing its dependence on Russia, as illustrated by the controversy surrounding the construction of the Nord Stream 2 gas pipeline.

A gas-fired power station is already in the works for the town of Leipheim, just around the corner from Gundremmingen.

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