Nuclear uncertainty in France a long-term market issue – traders

The French market needs to be prepared for longer nuclear maintenance periods in the years ahead, according to traders.

Whereas the sharp drop in nuclear availability in the third quarter of 2016 may be unusual, a decline compared to previous years is likely given the age of most French nuclear reactors.

“Even [operator] EDF has said as much and we are starting to see the consequences now,” one trader said.

Equipment needs to be replaced more frequently and stringent safety requirements means that components could be delayed, as nuclear authority ASN imposes additional checks.

This problem has already been demonstrated in the replacement of steam generators, which are susceptible to the same issue of high carbon content in the composition of the steel as the nuclear vessel at the new 1.65GW reactor at Flamanville.

Demonstrating that the nuclear vessel is still viable despite the carbon content has proven difficult and protracted. The methodology was approved by France’s nuclear safety authority ASN on 12 December but the completion of the final safety case is not expected before the end of 2016, after EDF announced in April that further tests were needed.

Of the 87 irregularities in safety documentation identified by Areva during an audit initiated last year, one concerns a new steam generator destined for reactor 5 at the Gravelines nuclear plant. The reactor is now scheduled to be offline for almost 12 months and is one of four reactors to be unavailable this winter.

ASN is also still carrying out its analysis of irregularities of existing steam generators at reactor 5 at Bugey and reactor 2 at Fessenheim. The latter has had its serviceability certificate withdrawn, and EDF and Areva decided to carry out a programme of tests to have the suspension lifted.

The longest maintenance period concerns reactor 2 at Paluel, where an incident, which occurred during the replacement of a steam generator, is now expected to keep it offline for over two years.

A steam generator was also at fault during the longest maintenance period of 2015, when an insufficient safety case was submitted to ASN and kept the reactor offline for over 10 months.

“The problem with issues like this is that you never know how long it’s going to last,” a second trader said. “We saw this least year in Belgium that it can take a long time to recover.”

Two nuclear reactors at the Doel and Tihange nuclear power plants were offline from March 2014 after cracks were detected in the nuclear vessels. The green light to restart was only given in November 2015, demonstrating the potential time period involved in carrying out extensive tests and building up a safety case.

“The uncertainty is adding to a general bullish mood, with risk premium spreading all across the curve,” a third trader said. “Anticipating nuclear availability has become a lottery and sellers on the fuel markets appear to be holding back in anticipation of even higher prices.”

Weak nuclear availability in France is expected to boost demand for coal- and gas-fired generation in several European countries. joachim.moxon@icis.com