Areva's fixed-price bet on a first-of-its-kind reactor cost it €5.5B and the company

In 2003, Areva — the French state-owned nuclear engineering champion — won a contract to build the world's first EPR (European Pressurised Water Reactor) at Olkiluoto, Finland. The buyer, Teollisuuden Voima (TVO), insisted on a fixed-price contract. Areva agreed, betting that its experience building 60 reactors worldwide would let it absorb the risk of a first-of-its-kind design.

The bet was wrong. The EPR design was vastly more complex than anything Areva had built before, with new safety systems, thicker concrete walls, and untested construction methods. The project fell behind from the first year. By 2009 — the original completion date — the reactor was still a hole in the ground. Design changes, welding quality disputes, and regulator-mandated rework piled onto a schedule that had never been realistic.

The cost ballooned from €3 billion to approximately €11 billion. Areva lost €5.5 billion on the project alone. TVO filed for arbitration and won a €450 million compensation payment. The financial strain was existential: Areva reported a record €4.8 billion loss in 2016, and the French government was forced to restructure the company. Areva was split into two entities, its reactor business (Framatome) was sold to EDF, and its fuel division was renamed Orano. The company that had been a pillar of French nuclear industry for decades was effectively dismantled.

Olkiluoto 3 finally began regular commercial operation in May 2023 — 14 years late. It was the most expensive power plant ever built per megawatt, and it had destroyed the company that built it.