Paris - French utility EDF said it plans to bid for a contract to build nuclear reactors in South Africa in a possible Franco-Chinese partnership.
EDF’s nuclear business helped it to post higher 2011 earnings on Thursday, offsetting lower hydroelectric power generation.
The group kept its profit growth forecasts despite higher costs to fund safety improvements at the 58 nuclear reactors it runs in France, recommended following the Fukushima disaster.
While some countries such as Germany have turned their backs on nuclear energy since Japan was hit by an earthquake and tsunami, South Africa is pressing ahead with plans to add 9 600 megawatts of capacity, with a tender expected by June.
“We are in a position to either offer a fully French technology, such as the EPR (next generation nuclear reactor), or a Franco-Chinese technology in partnership with Areva and CGNPC (China Guangdong Nuclear Power Corp),” chief executive Henri Proglio told Reuters.
France’s nuclear policy council last year decided to set up a partnership with China to build a new type of nuclear reactor, though it has been subject to criticism due to fears France would transfer its know-how and lose its competitive edge.
The reactor could be cheaper, however, and the project could benefit from China’s experience as the world’s biggest builder of nuclear reactors. The French EPR reactor has been plagued by cost overruns and delays.
EDF was told by South Africa to bid along with the Chinese, said Herve Machenaud, head of EDF’s production and engineering.
The Franco-Chinese solution would involve the world’s biggest maker of nuclear reactors Areva and China Guangdong Nuclear Power Corp (CGNPC), though the technology has yet to be finalised, Proglio said.
EDF posted a 4.7% rise in 2011 earnings before interest, tax, depreciation and amortisation to €14.82bn ($19.37bn) on sales up 2.2% at €65.31bn.
The group kept its forecast for annual average core earnings growth of 4% to 6% at constant exchange rates and an average annual net profit rise of 5% to 10% in the period from 2011 to 2015.
EDF first gave its growth goals last July, when it announced plans to expand its energy portfolio and raise its power output capacity to 200 gigawatts in 2020 from 150 gigawatts.
Recurring net income grew 13.4% to €3.52bn last year, EDF said, despite volatile international energy markets and difficult macroeconomic conditions.
“2011 results look solid, in particular at the net income level,” a London-based analyst said. “For 2012 we also see scope for some downward revision of estimates, in particular if a tariff rise of 2% is not secured in August 2012.”
EDF shares fell 1.8% to €18.34 as uncertainty over government electricity tariff plans and the outcome of France’s May presidential elections weighed. The utilities index fell 0.67%.
Nuclear outputIn France, nuclear output in 2011 was 421.1 terawatts/hour (TWh), exceeding EDF’s raised target of 415-420 TWh as EDF made better use of its nuclear generation capacity.
French nuclear output should reach 420-425 TWh this year, EDF said, taking into account component replacements and outages related to safety checks following Fukushima.
France’s ASN nuclear watchdog has said the country must invest billions of euros to improve the safety systems of its nuclear facilities to withstand the kind of extreme shocks that triggered Fukushima.
EDF has said it would cost close to €50bn over the next 30 years to prolong the lifespan of 19 of its nuclear power plants from 40 to 60 years.
EDF has turned itself into a global utility with ventures in Eastern Europe, the United States and the UK. But it is still highly dependent on the French market for profit.
The future of nuclear energy in France has featured prominently in political debates ahead of the country’s elections. Proglio declined to comment on the possible consequences of the election result.
President Nicolas Sarkozy’s centre-right government is advocating the extension of the lifespan of France’s reactors to 60 years, but Socialist candidate Francois Hollande wants to cut the share of nuclear energy to 50% from 75% by 2025. He also wants to shut France’s oldest nuclear plant at Fessenheim.
EDF is diversifying its nuclear-dominated portfolio by boosting its businesses in gas, coal, hydropower and renewables.