France pumps a billion euros in nuclear research

PARIS, FRANCE - The French government has pledged 1 billion euros (US $1.4 billion) to fund next-generation nuclear development.

The announcement was made by French President Nicolas Sarkozy as part of a 35 billion euro (US $50 billion) stimulus package designed to rejuvenate the French production market. France is keen to remain at the forefront of nuclear power development amid increased competition for global contracts from U.S., Russian, Japanese and South Korean reactor builders. The government is also actively looking for foreign energy companies to invest in new French power plants, a move that could finally open the closed French power market.

France obtains most of its power from 58 nuclear reactors in 19 nuclear power plants. The government has majority stakes in leading utility company Electricite de France (EDF), which runs most of the nuclear plants, and in Areva SA, which manufactures nuclear reactors. Currently, Areva's European Pressurised Reactor (EPR) is being tested for potential rollout in the UK and Finland, but the reactor has come under quite a bit of fire in recent months.

Sarkozy said: "In the coming weeks, we could be brought to making choices that give the best chances to the French nuclear industry. Do we need external partners? Yes, I can say so without taking the risk of predicting a decision. Why? Because it's an industry that is capital intensive."

German energy giant E.ON AG has been tipped to take a stake of up to 8% in the second new-generation EPR plant being planned in Penly. EDF will control a 50% stake in Penly, with GDF Suez SA earmarked to hold one third. The French nuclear industry has been in a state of turmoil throughout 2009, with long-running strikes by EDF workers damaging power production and forcing France to import energy for the first time.

Part of the funding the French government will use in rejuvenating its nuclear industry will come from the sale of Areva's transmission and distribution unit, which is expected to fetch about 4 billion euros (US $5.7 billion).

In addition to the cash boost, Sarkozy announced a rebranding of the country's Atomic Energy Commission (CEA). While the acronym remains unchanged, the group will now be known as the Commission of Atomic Energy and Alternative Energy to reflect future research into renewable energy sources.

Sarkozy commented: "The CEA has technological expertise unsurpassed in the nuclear field, but this also allows it to be at the forefront of global research in solar, biofuels and storage of energy."