energy: Re-Energized in France

Anne Lauvergeon had high hopes that the French nuclear-energy company she heads would be the big state-owned firm slated for partial privatization last year. She and her colleagues at Paris-based Areva had prepared all the official paperwork for a public offering and lobbied the government hard to be next in line to go public. Her insistence ruffled some feathers, especially in the Finance Ministry, according to people familiar with the behind-the-scenes maneuvering. But last November she officially lost her battle when the government sold $7.6 billion of shares in Electricité de France (EDF), the huge state electricity supplier, instead.

[an error occurred while processing this directive]Lauvergeon will no doubt get over her disappointment soon, since Areva emerges as a big winner even though it lost out to EDF. That's because, as the price of selling 15% of its equity to the public, EDF agreed to invest as much as $47.6 billion over the next five years, mostly in France. Since nuclear power accounts for more than 75% of France's electricity, a good chunk of that money is likely to go toward upgrading existing plants or building new ones. EDF's dominant supplier: Areva, which has already picked up an order for a new-generation pressurized-water reactor to be built in the Normandy town of Flamanville starting in 2007.

Areva and Lauvergeon are on a roll these days. Nuclear power, written off as dead throughout Europe and much of the rest of the world over the past two decades, is suddenly back in fashion. The public still shudders when recalling the accident at Pennsylvania's Three Mile Island plant in 1979 and the disaster at Chernobyl seven years later. But with worldwide demand for energy rising sharply, oil spiking at more than $60 per bbl. and fears growing about the lasting impact of greenhouse gases, the outlook for nuclear power today is, well, quite radiant.

Last September, some 300 executives from the world of energy and politics clambered into a huge hole in the Finnish town of Olkiluoto to watch a laser light show as the climax of the groundbreaking for the first nuclear plant to be built in Europe in 14 years. The winner of the $3.6 billion plant contract was Areva, in a joint venture with Germany's Siemens. China currently has nine nuclear reactors in operation and says it will increase its nuclear capacity fivefold by 2020. The Chinese are expected to select a Western contractor for two new plants this year. The race is among Areva, Westinghouse and Russia's AtomStroyExport.

Areva is well placed in the U.S. too. In September it announced a joint venture with Constellation Energy, based in Baltimore, Md., to promote a new generation of nuclear plant and expects orders for four reactors once the technology is approved by the Nuclear Regulatory Commission. Even in nuclear-resistant Europe, official attitudes are shifting. Bulgaria is holding a tender for two new reactors; British Prime Minister Tony Blair has called for a debate about the future of nuclear power amid signs that the government may order several new plants; and in Germany and Sweden, public debates are raging about whether to reverse a previous commitment to shut down existing reactors. It's no surprise that Lauvergeon talks about a "nuclear renaissance."