(Bloomberg) -- Electricite de France SA, which dominates the nation’s power production, said some of its reactors are equipped with key components that may be substandard. The utility’s shares tumbled.
EDF didn’t say if any of the country’s 58 nuclear reactors will have to be halted, but electricity prices surged in anticipation of potential shutdowns. The announcement is another blow to France, which is more dependent on atomic energy than any other nation. Its industry’s reputation has been undermined in recent years by the manufacturing of faulty parts and construction problems at new facilities.
Shares of the utility fell as much as 8.8%, the biggest drop in almost two years, and were 6.2% lower at 10.18 euros at 11:02 a.m. in Paris. French power prices for the fourth quarter rose as much as 8.5% to 55.55 euros a megawatt-hour, a record jump for the contract.
EDF’s repeated problems with the quality of reactor components, which include faulty welds in its flagship Flamanville project and anomalies in manufacturing records at the Creusot forge, add to growing concerns about the suitability of nuclear energy as an alternative to polluting fossil-fuel plants. Beyond the longstanding concerns about reactor safety after serious incidents at Chernobyl and Fukushima, there are doubts about its economic viability as the cost of renewable energy plunges.
This doesn’t help EDF’s image as it seeks to build nuclear plants abroad, Bloomberg Intelligence analyst Elchin Mammadov said in a note. “The technical issues related to the manufacturing of nuclear-reactor components by Framatome could affect EDF’s nuclear output,” similar to the impact of Creusot irregularities, he said.
Framatome, a French supplier of atomic equipment taken over by EDF and some partners almost two years ago, has informed the utility “of a deviation from technical standards governing the manufacture of nuclear-reactor components,” Paris-based EDF said in a statement on Tuesday. “It concerns in-service components as well as new components which have not yet been installed on any sites.”
Three years ago, EDF had to check almost a third of its nuclear reactors after uncovering manufacturing problems in key components made by Framatome, then called Areva at the Creusot forge. That forced longer-than-planned maintenance outages, reducing the utility’s output. A new reactor under construction in Flamanville, Western France, is also marred by construction delays.
From the time it was informed of the deviation, EDF and Framatome have been conducting in-depth investigations to identify all affected components and reactors, as well as to ascertain their fitness for service, the company said.
The “deviation concerns an excursion from temperature ranges in certain areas during manufacturing operations, more specifically involving detensioning heat treatment on some steam generator welds,” the company said. It has alerted the French nuclear safety authority, and will provide additional information as checks progress, it said.
(Updates with French power prices in third paragraph.)
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