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Industry insights: AREVA

Alexis Gazzo, EY, interviews Anil Srivastava, CEO, AREVA Renewables

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Anil Srivastava joined AREVA group in 2009 as Senior Executive Vice President and CEO of AREVA Renewables. He is also a member of the AREVA Executive Management Board.

How would you describe AREVA?

AREVA supplies carbon-free power generation solutions. As the global nuclear industry leader, its unique offer covers every stage of the fuel cycle, nuclear reactor design and construction and related services. The group is taking the lead in low carbon solutions – wind, solar, bioenergy, hydrogen and energy storage – and aims to be one of the sector’s global top three in 2012.

What is AREVA’s current position and competitive advantage in the renewable market?

Renewable energy technologies are integral to the low carbon power generation solutions AREVA offers alongside nuclear. Committed to renewable energy since 2005, the group has bought advanced technologies, particularly in offshore wind and CSP.

AREVA’s goal is to become a major international player by supplying competitive technologies. It was one of the first to enter the offshore wind market, and the Alpha Ventus wind farm is proof the technology works. Today, AREVA has over 600MW in confirmed pipeline and 1GW under negotiation, putting us in second position in Europe behind Siemens, and in the industry’s top three globally.

We are the leader in bioenergy, with almost 3GW installed and an expanded market position (from a pure engineering, procurement and construction provider to technological solution provider).

AREVA Solar’s Compact Linear Fresnel Reflector CSP technology is delivering direct, superheated steam at California’s Kimberlina power station in Bakersfield, and several large-scale projects are under construction in Australia.

What do you think of offshore wind market dynamics in Europe?

For EU Member States committed to meeting 20% of final energy consumption from renewable energy by 2020, offshore wind is becoming a viable and reliable source. AREVA Wind’s operations include design, manufacture, assembly and commissioning of high-power turbines specially adapted for marine use, notably the M5000.

What are today’s main challenges for offshore wind?

Offshore wind is currently a high-risk/high-reward market going through an optimization phase. While for onshore wind logistical constraints limit blade size, for offshore, we expect much bigger blades in future. We have anticipated this and bought a blade factory (AREVA 'Blades'). We will drive down the cost of offshore wind energy through cost cutting and improved wind harvesting.

The risk in offshore wind is related to construction – high in a marine environment – and needs to be addressed to support development.

Government support is critical here. Germany is a good example of combining stable policy with strong financial support from its state-owned development bank, both key factors for large-scale wind offshore deployment.

We think 2013 will be a turning point, as the industry will reach a first maturity period, with around 3GW of installed capacity (half in shallow waters), andmoves from a high risk to a “manageable risk” industry. We will also need to move to deeper waters, which is more expensive, but delivers stronger wind conditions.

How do you think of French market opportunities?

Following the French Government’s call for bids to develop five offshore wind farms (3GW), AREVA has entered a partnership with the city of Le Havre and the Upper Normandy region. We plan to locate two new sites on the Le Havre port to assemble wind turbine nacelles and manufacture blades, generating up to a thousand local jobs.

What are Areva Solar’s main development prospects?

AREVA decided to enter the solar thermal market by investing in CLFR technology, as we believe it offers more cost reduction potential than parabolic trough, and fewer risks than tower technology.

CLFR’s main advantages are relatively low cost, modularity and ease of assembly (a significant advantage as most markets are in developing countries), using mostly off the shelf components. It can also be an important source of local jobs.

We focus on markets with strong capital markets, good solar conditions and a clear regulatory regime. Our main development areas today are Australia, India and the US, and we are looking at Saudi Arabia, South Africa and Morocco.

How does CLFR compete with other solar thermal technologies and PV?

Our technology provides constant steam quality, with variable, adjustable temperatures. It can easily be combined with a fossil-fueled plant (as a booster), with cogeneration and desalinization facilities.

The market for "solar boosters" alone is a huge opportunity. There are a large number of thermal plants in places like India and South Africa. Developing solar booster capability for a small share of these could represent several GW of capacity, and avoid large amounts of CO2 emission.

With significant upcoming projects, 2013 will be a turning point for our technology, by which time we expect to complete the Cogan Creek 44MW solar booster project and the 250MW solar thermal gas hybrid Solar Dawn project, both in Australia.

How will current financial sector turbulence impact deployment of renewables?

A challenge for financing renewable energy will be attracting new investors, in particular pension funds, which usually seek long-term assets, like real estate.

There is clearly a case for renewable energy generation, which can produce significant amounts of cash flow. In the current economic climate, many investors are rethinking strategies, and, as government bonds and real estate assets lose their attractiveness, this might be an opportunity for renewable energy.

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