* Follows EDF overruns announcement for Flamanville reactor
* Enel to get 613 mln euros plus interest for prepaid
* Last 24 hours have 'killed' French nuclear - analyst
(Releads, adds details, background)
By Stephen Jewkes and Michel Rose
MILAN/PARIS, Dec 4 French power group EDF
received a new blow on Tuesday when Italy's biggest
utility Enel announced its has pulled out from a
project to build a next-generation nuclear reactor in northern
The French state-owned utility said earlier this week
stricter regulation in the wake of Japan's Fukushima disaster
has forced it to revise up the construction cost of its European
Pressurized Reactor built in Flamanville, northern France, to
8.5 billion euros ($11.12 billion).
In 2005, EDF estimated the reactor's cost at 3.3 billion
Enel said in a statement its decision reflected the
uncertain timeframe for other nuclear investments in France and
a sharp drop in power demand.
A spokeswoman for EDF said Enel would receive about 700
million euros, including interest, to cover expenses the Italian
group had already paid in relation to its 12.5 percent stake in
the Flamanville 3 project.
Shares in EDF were the biggest losers on France's CAC 40
index of French blue chips, closing down 2.3 percent,
before Enel's announcement.
"In a way, the last 24 hours have killed French nuclear
finally because the cost makes it totally impossible to export
and now you have one of the few partners actively withdrawing;
it looks really bad," said UBS analyst Per Lekander.
The group said on Monday the French EPR's construction would
be completed in 2016.
Flamanville 3 is the first nuclear reactor built in France
in 15 years and a landmark project for EDF, which hoped to
capitalise on three decades of experience to win deals to build
nuclear plants in countries such as Britain and India.
"EDF's UK subsidiary put out a release saying that the cost
increase should have no impact on cost estimates for the group's
plans to build EPRs in the UK. However, the news is likely to
increase skepticism about costs for nuclear critics in the UK,"
Deutsche Bank analyst Martin Brough said in a note on Tuesday.
Repeated delays have also hit the construction of the first
EPR reactor, Finland's Olkiluoto 3, built by French nuclear
group Areva and Germany's Siemens.
Construction works of two EPRs in China are going as
France, the world's most nuclear-reliant country, is now
trying to cut the share of its electricity produced by its 58
nuclear reactors to 50 percent from 75 percent by 2025.
President Francois Hollande's government is due to shut
France's oldest reactor by the end of 2016.
Enel signed a strategic partnership agreement with EDF in
2007 giving it a stake in the EPR nuclear power plant.
The agreement also envisaged at the time the building of
five other power plants using the same EPR technology with an
option for Enel to buy a 12.5 percent stake in each plant.
Enel said a referendum in 2011 banning the development of
nuclear energy in Italy had undermined the strategic importance
of the partnership.
The Milan-based utility runs nuclear power plants in
Slovakia and in Spain through its subsidiary Endesa. It
used to operate four nuclear plants in Italy before a referendum
in 1987 following the Chernobyl tragedy stopped nuclear power
($1 = 0.7642 euros)
(Additional reporting by Muriel Boselli in Paris and Karolin
Schaps in London; Editing by Helen Massy-Beresford and