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Areva: Giant Footprints in the Energy Evolution
By
May 30, 2009 - 12:03:44 PM

www.areva.com

www.areva-td.com

Established: 2001

Headquarters: Paris, France

CEO, Areva: Anne Lauvergeon

Chairman/CEO, Areva T&D: Philippe

Guillemot

Employees (AREVA): 75,414

Employees (AREVA T&D): 31,000

Ownership: CEA (government-funded technological research organization created by President Charles de Gaulle in 1945) owns 79% of parent company, biggest share of the 87% public sector ownership. Only 4% of shares (investment certificates) are listed on the Euronext exchange.

Annual Dividend: 7.05 Euros

Products & Services

(Categories for Areva T&D)

· Air Core Reactors

· Bushings

· HVDC Solutions

· Distribution Transformers

· Energy Management Systems

· General Circuit Breakers

· High-Voltage Products

· Line Traps

· Market Management Systems

· Measuring and Recording Products

· Medium Voltage Products

· Power Transformers

· Prefabricated Substations

· Protection Relays

· Services in Maintenance, Repair, Consulting,

· Construction Supervision, Retrofitting, etc.

· Substation Automation

· Surge Arrestors

· Telecommunications

Product Sales Segmentation – Areva T&D

· Products – 53%

· Systems – 31%

· Automation – 10%

· Services – 6%

In the Field

· “Green” Ultra High Voltage transformer plant in Wuhan, China built in partnership with Shanghai Electric – May 2009

· Awarded contract along with China Electric Power Research Institute (over 100 million euros) to supply HVDC systems, connecting northeast China and Three Gorges Dam by Dec ‘10 – May 2009

· Providing SCADA/EMS system for Kosova Control System - April 2009

· Opening 8 factories in India to supply substations and equipment at highest voltage levels – March 2009

· Announced completion of Phase I of Alabama Power (a subsidiary of Southern Company) Integrated Distribution Management System (IDMS) project – February 2009

· Partnering with Zhuzhou CSR Times Electric ( China) in HVDC and FACTS (Flexible Alternating Current Transmission Systems) for China and external markets, sharing R&D effort for power semiconductor devices for HVDC and FACTS markets - February 2009

· 5 contracts from U.S. Dept of Energy:

1) Savannah River: construction of a MOX plant

2) Savannah River: treatment of radioactive liquid waste

3) Hanford Tanks: participation in site cleanup and dismantling

4) Global Nuclear Energy Partnership: feasibility studies on the closed cycle

5) Yucca Mountain: Management of the future disposal site

Read more

Areva publications:

Areva Overview

Energy Business

Engineering News:

South Africa Nuclear Funding Challenges Surmountable

NY Times:

Siemens Quits Joint Venture to Build Reactors

In Brief: Areva

Areva is a $14 billion French energy conglomerate with manufacturing in 43 countries and presence in 160 countries, offering carbon-free energy production, transmission, and distribution. The company operates with four major divisions, three engaged in generation, primarily nuclear, from fuel retrieval to power plant operation. Alternative energy solutions complement the production side of the business. The fourth unit, Areva T&D, designs and manufactures a vast array of products for transmission and distribution and is the company’s Smart Grid workhorse.

Strengths

Areva T&D is the global leader in market settlement software used by systems operators to procure, price, and resolve wholesale power transactions. It also leads in energy and distribution management systems used by distribution utilities to manage their control areas.

Currently it’s the top provider of transmission and distribution systems in India. Seventy percent of Indian electricity flows are managed by Areva T&D control/dispatch centers and 20% of High Voltage Direct Current (HVDC) inter-regional linkages. With the exception of China, Areva T&D leads in HVDC development.

In spite of the global recession, the T&D division is performing well with orders up sharply, especially in Asia (+82%) and South America (+57%) for Q1’09. On March 31, T&D backlog growth year-over-year was 10.2%.

In 2008, T&D made up 39% of sales for the company, providing the largest share of operating income as well.

Areva T&D focuses on R&D spending to stay ahead of the competition. R&D trends as a percentage of sales:

· 2005 – 5.7%

· 2006 – 6.2%

· 2007 – 6.8%

· 2008 – 8.0%

In 2009 key investments are being made to increase manufacturing capacity for T&D activities.

Challenges

Most of Areva T&D challenges are those of its parent company. A partnership with Siemens to build a nuclear plant in Olkiluoto, Finland collapsed in January, 2009, leaving the parent company cash-strapped.

In addition, the T&D division primarily makes products and doesn't always know what to do with the subdivision that produces the software. Unlike its success elsewhere, U.S. market acceptance has been primarily limited to Areva’s software, with lesser adoption of its hardware solutions.

For investors, there are limited opportunities for investment in the company given its large public ownership structure.

Our View

Areva has focused on building strategic partnering relationships in nuclear infrastructure development, recognizing that utility relationships drive business its way. This is undoubtedly a factor in Areva T&D’s status as third in global T&D sales. Of the 2,900 employees that Areva had in China in 2008, 2,800 worked in T&D.

The software side of the business has real potential to grow. It is already in more control rooms and more market operations than any other provider -- it has the opportunity to bring more things under its umbrella as the Smart Grid grows out.

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