ANALYSIS-New French reactor to supply nuclear-shy neighbours

By Muriel Boselli

PARIS, July 23 (Reuters) - Atomic power champion France is building a new generation reactor largely to supply power for neighbours that are wary of having nuclear plants, although its own need is for more flexible sources of energy such as gas.

President Nicolas Sarkozy said earlier this month France would build a European Pressurised Reactor (EPR) by 2017, bringing to 60 the number of nuclear reactors in Europe's biggest atomic energy nation.

But many argue France needs other types of power generation, such as gas-fired or coal-fired plants that can be switched on and off quickly to meet peak demand, rather than more reactors steadily producing electricity.

"In a strictly national framework we don't really need an EPR," said Jean-Marie Chevalier, head of the geopolitical energy centre at Paris Dauphine University.

"But if we position ourselves at a European level, the bloc needs new baseload output capacity, so a second EPR in France could to a large extent provide electricity to its neighbours," Chevalier added.

Nuclear accounts for only a third of Europe's electricity but makes up 80 percent of French generation, allowing France to export power to its neighbours most of the time.

France's decision to reduce its dependence on imported oil and fossil fuels during the oil crises of the 1970s by building dozens of reactors has seen nuclear share of electricity production rise tenfold since 1974.

Many western European countries built nuclear plants in the 1970s but their investments never reached the level seen in France and most have shunned building more plants since the Chernobyl disaster in 1986.