Alt-Energy Watch: Areva Dumps CEO as Utility Sector Preps for Big Changes (ARVCY, GE, EXC, DUK)

France’s government-controlled nuclear power behemoth, Areva SA (OTC: ARVCY), will not renew the contract of CEO Anne Lauvergeon, aka “Atomic Anne,” when it expires at the end of June. Her replacement will be Luc Oursel, currently the company’s deputy CEO. The move could mark the end of the beginning for the world’s largest nuclear plant builders, including General Electric Co. (NYSE: GE), which is partnered with Hitachi, and Toshiba/Westinghouse. And it anticipates an even bigger change coming in the utility and power generation sector.

Areva made our list of the 25 most important alternative energy companies back in October.

Lauvergeon has turned Areva into a vertically integrated nuclear power provider that did everything from mining uranium to re-processing spent fuel. She was also making some effort to bring Areva into the renewable energy market. Her replacement is not expected to tear apart the one-stop shop Lauvergeon created, even though it is not popular with some of Areva’s board members.

But the story is not so much one of personality as it is one of vision. Under Lauvergeon, Areva competed with GE and the others to come up with a nuclear plant design that could be as easily replicated as a Big Mac. Instead of designing every plant from scratch, the big idea was to put together a kit that could be scaled as needed for a particular application. Such a plant could cut design costs, simplify regulatory approvals, and reduce construction costs.

Now, though, new designs probably don’t matter. The continuing disaster in Japan has cooled, if not killed entirely, the construction of new nuclear power plants. Germany and Italy have both decided to stop new construction, and Germany will close all existing plants over the next 11 years. Even China is re-considering its vast commitment to new nukes in light of events in Japan.

Alt-energy generation may be reaching a tipping point as solar PV is getting close to pricing parity with fossil-fuel generation during peak demand periods and new grid storage is being developed to deal with the intermittency problems of both solar and wind generation. Nukes are terribly expensive and have a terrible public image, even worse than coal. Coal may lower our quality of life, but nukes can wipe us all out.

Another issue that works against nukes is the growing tendency of power generation to be distributed among many smaller plants rather than one large centralized plant. What’s going on here is something akin to the network effect we’ve all come to see in the technology world. As the network (in the case of power, the grid) gets better, more things can be and are connected to it, making the network both more valuable and cheaper.

Large power generators will survive only by getting larger and spreading their geographic footprint. In the US, mergers and acquisitions in the utilities sector are growing as the big utilities like Excelon Corp. (NYSE: EXC) and Duke Energy Corp. (NYSE: DUK) spend billions to expand by buying up other big utilities. Ultimately though, even this strategy will have to change as the network effect of distributed generation will gradually overtake the traditional centralized generation model.

Areva is, to coin a phrase, too big to fail — at least anytime soon. The same is true of the other nuclear plant builders and many of the utilities as well. Somehow though, it seems like all they’re doing is re-arranging deck chairs on the Titanic.

Paul Ausick