French auditor says EDF must ensure financing to build new nuclear

PARIS (Reuters) - France's public auditor said on Thursday EDF must establish the financing and profitability of nuclear reactors before launching projects, dealing a blow to the state-owned utility's ambitions to build new units.

EDF's reactor-building unit Framatome is designing an EPR2 reactor, which it says will be cheaper and easier to build than its current-generation EPR model that has racked up billions in cost overruns and years of delays at construction sites in France and Finland.

EPR reactors are the world's largest, with 1,650 megawatt capacity. Two are in operation in China and EDF is building two more in Britain, but Framatome is working on a simplified EPR2 model.

This will have a single steel-lined concrete hull for its containment building compared with the EPR's double hull, which is designed to be safer, but is harder to build.

"The financial and technical gains expected from the EPR2 project must be confirmed," the Cour des Comptes, France's public audit body, said in a report.

It added the construction of new EPRs in France cannot be envisaged without clear preliminary answers on the financing and nuclear power's place in the electricity mix.

The construction of EDF's Flamanville 3 EPR nuclear reactor, expected to start operation around 2023, is more than a decade behind schedule.

The project, begun in 2007, is expected to cost at least 12.4 billion euros, compared with the initial 3.5 billion euros budget.

France has set a goal to reduce the share of atomic power in France's electricity to 50% by 2035 from more than 70% now.

In Monday's cabinet reshuffle, former green politician and nuclear critic Barbara Pompili was appointed environment minister.

EDF sources have told Reuters her appointment may delay any decision on nuclear newbuild before the end of President Emmanuel Macron's mandate in 2022.

(Reporting by Benjamin Mallet; Writing by Maya Nikolaeva; Editing by Edmund Blair, Geert De Clercq and Barbara Lewis)