PARIS — Shares in Electricite de France SA slid Monday after the French state-owned utility’s U.S. partner, Constellation Energy Group, pulled out of a project to build the first of a new generation of nuclear power plants in Maryland.
The announcement dealt a serious setback to EDF’s ambitions to lead a nuclear renaissance in the United States. The company is the world’s largest electric power producer.
EDF shares slipped as much as 1.5 percent in early trading and midafternoon were down 1.1 percent at $43.43 on the Paris stock exchange — and were the biggest loser on the benchmark CAC-40 index.
An EDF spokeswoman said the future of the multibillion-dollar Calvert Cliffs 3 plant project is unclear after Baltimore-based Constellation said it would drop out over risks linked to the high cost of a $7.5 billion loan guarantee.
“It’s impossible to say what’s next for Calvert Cliffs,” company spokeswoman Carole Trivi said, “given Constellation’s decision.” Despite this, “EDF renews its commitment to pursuing new nuclear in the U.S.,” Trivi said.
In a letter to the U.S. Department of Energy on Friday, Constellation said the cost of the $7.5 billion loan guarantee would create unacceptable risks for the company.
EDF, which bought out nearly half of Constellation’s nuclear operation about two years ago, said Saturday it was “shocked” that Constellation “unilaterally decided” to pull out. Their joint venture known as UniStar Nuclear Energy LLC was thought to have the potential to create 4,000 jobs and ease Maryland’s electricity shortage.
House Majority Leader Steny Hoyer, whose district includes Calvert Cliffs, called the decision a “disappointment” and said he will seek to revive the project.
The likely loss of the Calvert Cliffs reactor is “a severe blow” to EDF’s nuclear strategy in the U.S., analysts at Macquarie Securities said in a note to clients.
“The Constellation decision jeopardizes the nuclear strategy of EDF in the U.S. as it brings into question the partnership with CEG,” the Macquarie analysts said.
EDF and Constellation are partners in the UniStar Nuclear Energy joint venture, which was to have built and operated Calvert Cliffs.
UniStar once envisioned building four next-generation nuclear power plants based on Areva SA’s EPR reactor design. But tumbling electric and gas prices caused Constellation to rethink their potential return on investment, and in July the French partner took a 1.1 billion euro provision in its first-half accounts.
Constellation’s pullout leaves EDF searching for a new partner if it wants to fulfill its aim of leading a “nuclear renaissance” in the U.S., “which could prove difficult given the current market environment,” Macquarie Securities said.
Constellation’s shares gained 15 cents, or less than half a percent, to close Monday at $32.30.