EDF extends depreciation period of 900 MWe units
France's EDF has extended the accounting depreciation period of its fleet of 900 MWe nuclear power reactors from 40 years to 50 years, the company said last week whilst announcing its results for the first half of 2016.
The company said that, during the first six months of this year, "all of the technical, economic and governance conditions necessary to align the accounting depreciation period of the French nuclear fleet with the group's industrial strategy were met".
It added, "The consolidated financial statements at 30 June 2016, approved by the board of directors on 28 July 2016, include the extension from 40 to 50 years of the depreciation period for the 900 MWe series plants excluding Fessenheim on 1 January 2016 and does not prejudice the decisions to authorize the continued operation which will be made unit by unit by the French nuclear safety authority (ASN) after each ten-year visit."
Areva agreement
EDF and Areva last week signed a memorandum of understanding that "formalized the status of the progress of discussions concerning their contemplated partnership", with EDF set to take a majority stake of Areva's reactor business, Areva NP.
One of the MOU's aims is to establish a dedicated company - 80% owned by EDF and 20% owned by Areva - responsible for the design and construction of the nuclear island for new build projects in France and abroad. EDF said its creation is targeted in the first quarter of 2017, "regardless of the acquisition of an exclusive control" of Areva NP.
In addition, EDF noted that a specific due diligence regarding the manufacturing process at Areva's La Creusot forge is currently under way and a complimentary due diligence phase will begin in August, in order for the partners to sign bindings agreements before the end of November on EDF's acquisition of a majority stake in Areva NP. The transaction is expected to close by the end of 2017.
EDF said the extended depreciation period had the effect on its income statement of reducing the asset depreciation expenses and the costs of unwinding the discount to the amount of €0.5 billion ($0.6 billion) in the first half of 2016, with a reduction of €1 billion estimated for the whole of the year. The extension also increased EDF's net incoming, excluding non-recurring items, by €0.3 billion in the first half of 2016, and is expected to lead to an estimated increase of €0.6 billion for the whole year. The impacts on the balance sheet correspond to a reduction in nuclear provisions of €2.1 billion at 1 January.
The company said the extended depreciation is part of its industrial strategy to extend the operating period of the French nuclear power plant fleet beyond 40 years. "It is based on the technical capacity of the facilities to run for at least 50 years, supported by international benchmarks, as well as the progressive investments made as part of the 'Grand Carénage' program," EDF said. The company announced the operating period extension program for the existing fleet in France in 2011.
"These investments will allow the 900 MWe series of pressurized water reactors to approach as closely as possible the safety level of the EWPR, one of the highest in the world, after their fourth ten-year inspection", EDF said.
The depreciation period for the newer 1300 MWe and 1450 MWe series of reactors currently remains at 40 years as the conditions for an extension have not yet been met, the company noted. "The later extension of the other more recent series remains part of the group's industrial strategy, which will be implemented according to energy policy goals," it said.
In July 2009, the ASN approved EDF's general safety case for 40-year operation of the 900 MWe units, based on generic assessment of the 34 reactors, although the individual reactors must still pass their ten-yearly review. Tricastin 1 became the first such reactor to complete its third ten-yearly review in 2010. This was followed by Fessenheim 1 in 2011. However, under France's energy transition law, Fessenheim - France's oldest nuclear power plant - is set to close by the end of this year.
EDF said output from its French fleet of reactors totalled 205.2 TWh in the first half of 2016, down 5.2 TWh compared with the same period in 2015 due to mild weather and extended outages at some units for additional inspections. It has forecast generation of 395-400 TWh for the whole of 2016, down from an earlier estimate of 408-412 TWh. Meanwhile, nuclear output from its UK fleet was up 1.8% to 30.9 TWh during the first half of the year.
The EDF group's sales totalled €36.659 billion in the first half of 2016, down 5.7% compared with the first half of 2015. Meanwhile, earnings before interest, taxes, depreciation and amortization totalled €8.944 billion, down from €9.147 billion a year earlier.
Researched and written
by World Nuclear News
