Executive Interview with Anne Lauvergeon | AREVA North America: Next Energy Blog


Anne Lauvergeon, CEO of AREVA, answers some very important questions about AREVA, the company’s strategy, the EPR™ reactor, and the potential of the nuclear energy industry.

AREVA was not selected for the UAE reactor bid. What lessons do you draw from this decision?

It was bad news. When we decide to compete, we compete to win.

Our competitors and AREVA offered two very different products in terms of power rating, nuclear safety and industrial safety. To make a simple comparison, the customer had the choice between a 100 m² house with an armored door and a 120m² house with an armored door, an alarm and video surveillance. Obviously, not for the same price. The safety authorities in Western Europe and the United States, which set the standards, require that new reactor construction be able to withstand the crash of a wide-body aircraft and all types of serious accidents, including a core meltdown. This is a government requirement that does not exist in all countries. Will the safety authorities come to an agreement, or are we headed towards a dual standard for nuclear power? The answer to that question is vital to our business strategy.

But let’s be clear. AREVA is aiming for one third of the new build market. We’re not going to go after everything. And not everything is going to come to us.

Was the Korean bid really a lot lower than the French one?

Yes, but the bid was also “lower” in terms of technology and safety. The euro/dollar exchange rate was also a factor. The Korean reactors have not yet been certified by the UAE safety authority. In addition, the group is still in the running for future projects, given its fuel recycling expertise.

What do you have to say to those who think that the EPR™ reactor is too expensive and too complicated?

With our EPR™, ATMEA1™ and KERENA™ reactors, we offer customers a range of solutions at different power ratings. These are some of the most advanced reactors in the world in terms of safety and security. I believe in nuclear power, but I also have a responsibility towards my children’s generation and those that follow. That’s why we’re selling the safety of zero impact in the event of a core meltdown or the crash of an aircraft. Because we don’t want another Chernobyl, and the events of September 11 have left a mark. This safety comes with a cost; it requires more steel and more concrete. The real question is how high our standards for new reactors are. The safety authorities have set the bar high. That was the condition for public acceptance in Europe and the United States.

As to how competitive the EPR™ reactor is, let’s look at the facts: we signed the largest contract ever with China in 2007 and two EPR™ reactors are under construction there. In February 2009, we signed a Memorandum of Understanding for two others in India and, just before Christmas, we received a letter of intent for a first EPR™ reactor in California. There are a total of four EPR™ reactors under construction in the world and 19 others are planned. If it was not competitive or too complicated, how would we have been able to export it?

Do you still believe that nuclear power has a future?

I’m pragmatic: nuclear power isn’t THE solution, but how are we going to produce twice as much electricity and cut CO2 emissions in half by 2050 if we don’t use nuclear energy, the main source of clean, abundant and safe energy? For the same reason, I don’t see how we can do without renewable energies whenever appropriate. For a long time now, I’ve been promoting an objective debate on the advantages and disadvantages of each solution. If there was a silver bullet, we would know it by now!

I’m glad to see that we’re slowly leaving the ideological wars behind us, and I will continue to follow this line of action because I believe in it as a citizen, not just because it is my job. In this respect, while the Copenhagen summit didn’t culminate in a concrete agreement, it put things on the table. It also made it clear that the climate change battle concerns first and foremost the OECD and the Big Five!

Doesn’t losing this contract cast doubt on AREVA’s strategy?

Not at all. First of all, every call for bids is unique. We may not have been selected in the United Arab Emirates, but we made the short list. There are lessons to be learned from this call for bids, but our business strategy and our target of capturing one third of new build projects in global market by 2030 remain unchanged. Nor should we forget that 80% of our revenue comes from our installed base business which is our core business.

The loss of this contract will leave a void in our 2010 operations. What major projects or initiatives are there to fill it?

Negotiations are in progress in the United Kingdom and India, among others. Moreover, the South African proposal is still in progress, and there are new opportunities in Italy. In the United States, five utilities have expressed an interest in our EPR™ reactor. Fresno Nuclear Energy Group recently joined that list. And let’s not forget that 80% of our income is from the installed base business, where the 2010 outlook is strong. Our EPR™ reactor technology has been chosen for 19 new nuclear power plants – eight in the United States, four in the United Kingdom, four in Italy, two in India and one in France – and another four are under construction in Finland, France and China. Customers are also expressing interest in our KERENA™ and ATMEA1™ reactors.

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