Clarifications from Sfen on the Court of Auditors’ Report on the EPR Sector
The Court of Auditors published a follow-up report on the EPR sector on 14 January 2024. This document acknowledges the progress made in reviving nuclear energy in France but raises concerns about costs, profitability, and synergies between the domestic programme and international projects. Sfen provides clarifications on the Court’s analyses and highlights the conditions necessary to ensure the competitiveness and success of this strategic sector.
After a highly critical report in 2020 on the EPR sector, the Court of Auditors published a follow-up report on 14 January 2024, entitled: “The EPR Sector: A New Momentum, Persistent Risks.” This document examines the EPR2 programme, which plans for the construction of 6 to 14 reactors in France, while also assessing the status of ongoing projects in France (Flamanville), China, Finland, and the United Kingdom. It is natural for the Court of Auditors to focus on this structuring programme for the country. Indeed, the report highlights that the development of the EPR2 aims to address critical issues: energy security, reducing greenhouse gas emissions, and meeting the targets of the Paris Agreement.
During a press conference, Pierre Moscovici, President of the Court of Auditors, commended the progress made: “In less than four years, significant measures have been implemented to revive nuclear energy.” However, the report raises several warnings. One concerns the costs and profitability of projects, notably based on the experience of Flamanville 3, which was recently connected to the grid. Another emphasises the importance of strengthening synergies between the domestic programme and international initiatives to maintain the sector’s competitiveness. The French Nuclear Energy Society (Sfen) has provided clarifications on these two points.
On the Profitability of EDF’s EPR Programme
The Court has provided an updated estimate of Flamanville 3’s investment costs, this time in 2023 euros (€2023), compared to the previous evaluation in 2015 euros (€2015). The construction cost, revised to €13.2 billion (€2015) by EDF in late November 2023, is now assessed at €15.6 billion (€2023), taking inflation into account. This cost should be compared to the initial construction cost of €3.3 billion (€2005).
As in its previous report, the Court broadens its scope to include additional cost categories not accounted for in the initial budget. These include expenses during the first phase of operation and financing costs (interim interest). Consequently, the Court estimates the total cost at €23.7 billion (€2023). Additionally, the associated production cost, assuming an 85% capacity factor and a 4% profitability rate, is estimated by the Court at €122/MWh (€2023).
The Court notes the “low profitability of Flamanville 3” for EDF. This is unsurprising, given the project delays and its nature as a first-of-a-kind (FOAK) reactor. It is important to recall that the Flamanville EPR, which contributed to restarting new-build construction in France, received no state aid. It was financed entirely by EDF’s equity. Moreover, it will sell its production, along with the existing fleet, in a European electricity market where prices are not only uncertain but increasingly volatile.
Sfen has stressed in its response to the PPE consultation that nuclear energy, entering a new investment cycle, will require support equivalent to what renewable energy sources have received. For example, the offshore wind farm in Saint Brieuc[1], operational since 2023, benefits from a guaranteed purchase price of €155/MWh over 20 years, which, among other things, enabled the construction of the Le Havre factory for wind turbine manufacturing.
The Court again highlights the importance of financing costs. In its various publications, Sfen has also pointed out that the final investment cost and production cost of future EPR2 reactors will be highly sensitive to the weighted average cost of capital. It recently stated, in its response to the PPE, that the financial model, which still awaits guidance from the state, could take inspiration from Dukovany 5 in the Czech Republic. This model, approved by the European Commission, combines a guaranteed purchase price with a zero-interest loan during construction.
On Upcoming Decisions for the Domestic Programme and International Projects
The Court notes that following the milestone transition from the initial design phase (basic design) to the detailed design phase (detailed design) of the EPR2 in July 2024, a new evaluation of costs and timelines for the programme is expected in the coming weeks. The Court refers to the updated provisional estimate shared at the end of 2023 by the Senate, which places the overnight construction cost (excluding interim interest[1]) at €67.4 billion (€2020), including €8.7 billion allocated to the development of the EPR2 series.
During its Senate hearing, EDF stated that it is continuing efforts to optimise planning and contracts. The Court also emphasises that financing conditions still need to be finalised by public authorities and subsequently approved by the European Commission under state aid regulations—a process expected to take one year. Meanwhile, these uncertainties “reduce the visibility that industry stakeholders need to commit to projects of this scale and secure financing,” the Court of Auditors states.
Beyond the French programme, the Court makes several recommendations regarding international projects. In the United Kingdom, it advises against approving a final investment decision for EDF on Sizewell C until a significant reduction in its financial exposure to Hinkley Point C is achieved. In its response, EDF’s Chairman highlights the importance of this project for EDF and the French industrial sector. Sizewell C would represent the “first case of industrialisation through project replication, particularly by leveraging the existing supply chain to de-risk planning and shorten construction timelines.” Delays in the UK decision that disrupt the industrial replication schedule could ultimately lead to additional costs for the project.
The Court also recommends that EDF ensure any new international nuclear projects generate measurable synergies with the EPR2 programme and do not delay the domestic programme’s timeline. EDF’s Chairman, in his response, emphasises that a strategic objective of pursuing international projects is to scale up the French nuclear industry. This approach aims to avoid the “risk of marginalisation of our industry in Europe, faced with highly active competition from Korea and the United States.”■
By Valérie Faudon, Executive Director of Sfen
Image: Pierre Moscovici, President of the Court of Auditors, 14 January 2025 – © Valentin Faivre / Hans Lucas / Hans Lucas via AFP
[1] Interim interest refers to the interest accrued on funds progressively disbursed during a loan, before the principal repayment begins.