EDF Wins French Approval to Develop Nuclear Reactor

By Tara Patel

Jan. 30 (Bloomberg) -- Electricite de France SA, Europe’s biggest power producer, won French government approval to develop a second new generation nuclear reactor, with rival GDF Suez SA to invest in the project.

The Evolutionary Power Reactor, or EPR, will be built at an existing nuclear site at Penly, in northern France starting in 2012, French President Nicolas Sarkozy said in an e-mailed statement yesterday.

EDF, which is based in Paris, will have majority control over a company created to spearhead the project to which GDF Suez “will be associated,” the statement said.

The reactor, the country’s 60th, is targeted for completion in 2017 and other investors may also participate, the statement said. “The government acknowledges the willingness of GDF Suez to lead develop and operate the next EPR.”

The decision ends months of speculation about which utility would pilot the project and where it would be located. EDF began construction of a new-generation 1,650-megawatt EPR at Flamanville in Normandy more than a year ago. The reactor is designed by Areva SA, the world’s biggest builder of atomic plants. EDF, which has estimated the cost of that at 4 billion euros ($5.2 billion), plans similar models in the U.K. and the U.S., and has started developing a pair in China.

Both EDF Chief Executive Officer Pierre Gadonneix and GDF Suez SA CEO Gerard Mestrallet had signaled their interest in overseeing the project.

Increased Competition

EDF, which operates 58 atomic plants in France, will partner with other investors in the plan “in particular GDF Suez,” the state-controlled utility said in a separate e-mailed statement today.

GDF Suez operates seven atomic reactors in Belgium through its Electrabel SA unit. The European Commission has put pressure on the French government to increase competition on the national power market, now dominated by former monopoly holder EDF.

EDF signed a deal with Enel SpA in 2007 giving Italy’s largest utility a 12.5 percent stake in the Flamanville generator and an option to invest in five more plants in France. EDF has put Italy on its list of countries, including China, the U.K. and U.S., where it wants to expand nuclear operations.

GDF Suez has agreements to use power from two French reactors run by state-controlled EDF at Tricastin and Chooz. Mestrallet has said he wants to operate EPRs by 2020 and that France is “obviously a priority.”

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net