Areva: the first nuclear victim of the recession, but will it be alone?

(Source: Datamonitor) French nuclear energy company Areva has struggled to expand its portfolio in recent years, as have a number of its competitors. Of all reactors being built by 2015, Areva will be responsible for none, while EDF will only be responsible for one. Asian companies may be gaining market share, but this does not dispel the possibility that this is just the beginning of a downturn in the industry.

In some respects, it should come as no surprise that Asian companies have taken the helm. The West suffered more from the recession than Asia, making financing far harder to obtain, and nowhere is financing more important than in the nuclear industry. Reactors take 10 years to build, with no return on investment (ROI) before this point. Although nuclear power is an excellent baseload fuel, it remains a very risky investment.

In a recent tender in Abu Dhabi between Areva/EDF and Korea Electric Power Company (KEPCO), it was KEPCO's cheaper reactor design that won. This highlights a further challenge for the industry. Not only do companies need to find willing investors, they have to quote prices that some believe are unrealistic for a safe reactor.

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