Pivotal project Europe’s first nuclear plant in 15 years
Areva hopes delay-hit Finnish plant’s completion will redeem region’s first reactor in 15 years
On the shores of the Baltic Sea, beneath the big azure sky of a Nordic spring, Finland’s Olkiluoto-3 nuclear plant looks almost complete. A team of painting contractors streaming out of the red reactor building at the end of their shift are the only external sign that this is still a work in progress.
Yet, as the final touches are made to western Europe’s first new nuclear power station for 15 years, its owners have a blunt assessment of progress.
“If the nuclear industry wants to have a future it cannot afford more projects like this,” says Pekka Lundmark, chief executive of Fortum, the Finnish power company which owns a 26 per cent stake in TVO, the consortium behind Olkiluoto-3.
Areva, the French reactor manufacturer, began building Olkiluoto in 2005 with a target for completion by 2009 at a cost of €3.2bn. The latest timetable would see it open almost a decade late at the end of 2018 and nearly three times over budget at €8.5bn.
The project is the most extreme example of the delays and cost overruns which have become commonplace in the nuclear industry, plunging reactor companies such as Areva and Toshiba’s Westinghouse subsidiary into financial crisis.
Areva’s ability to complete Olkiluoto over the next year and learn lessons from the fiasco as it presses ahead with similar projects in France and the UK will go a long way to determining the industry’s chances of recovery.
Olkiluoto is entering a crucial phase with “cold functional testing”, the first operational trials of the reactor system, due to start in June. Several further important milestones must be cleared in the months ahead before the Finnish nuclear regulator can issue an operating licence.
“The road to completion is quite clear,” says Jarmo Tanhua, TVO chief executive. “We already have a full-scope [computer] simulator running, so we know at least that the plant operates in theory. We just have to show that it also does in practice.”
As well as Fortum and other smaller Finnish power suppliers, TVO’s owners include several of the country’s largest manufacturers such as UPM, the paper producer, which are relying on Olkiluoto-3 for long-term energy supply.
This has left TVO facing an awkward balancing act, between co-operating with Areva to finish the project while also pursuing the French company and its former partner, Siemens, for billions of euros of compensation for the delays.
Talks aimed at a settlement broke down a year ago and the International Court of Arbitration made a “partial award” last November in favour of TVO. It has yet to rule on how much Areva and Siemens, which exited the consortium in 2009, must pay.
Olkiluoto liabilities were among the main factors that led the French government to arrange a €5bn bailout of Areva, 87 per cent owned by the state, and force it into a tie-up with EDF, the French utility, due to be completed this year.
Responsibility for Olkiluoto will remain in a separate “old Areva” to protect state-controlled EDF from TVO’s compensation claim, which would ulti-
‘If the nuclear industry wants to have a future it cannot afford more projects like this’
mately be borne by French taxpayers.
The restructuring has raised alarm in Finland that Areva might neglect Olkiluoto in favour of projects at Flamanville in France and Hinkley Point in the UKwhich are both led by EDF.
All three projects involve the European Pressurised Reactor, technology conceived by French and German engineers in the 1990s that was supposed to herald a new era of international growth for the French nuclear industry. Instead, it has turned into a nightmare as construction problems, along with renewed safety fears after the meltdown in 2011 at Japan’s Fukushima nuclear plant, have combined to curb demand.
The EPR was designed with safety as the top priority after the Chernobyl meltdown in Ukraine a decade earlier.
But extra safeguards, such as a concrete dome over the reactor strong enough to withstand an aircraft strike, have proved ruinously expensive.
The Flamanville plant is six years late and €7bn over budget, with the risk of further delays beyond the current 2018 opening target as French regulators scrutinise potential faults with reactor components. TVO declared last month that no such faults existed at Olkiluoto.
Two EPRs under construction at Taishan in China by state-controlled CGN in partnership with EDF and Areva have proceeded more swiftly. One is on course to become the first operational EPR worldwide by the end of 2017, a mere four years late.
EDF and Areva are hoping for a smoother experience at Hinkley Point, where concrete was poured for the first permanent structures in March.
Difficult parts of the construction process have been mocked up at Hinkley in full-scale steel and concrete models, allowing engineers to practise before embarking on the real thing. After heavy losses elsewhere, EDF and Areva desperately need to make money from Hinkley’s two reactors.
The £18bn project has been criticised in Britain for the £92.50 per megawatt hour price guaranteed to EDF for electricity from the plant, rising with inflation for 35 years — more than twice the current wholesale price. It will only prove a good deal for EDF if it can control construction costs better than at Flamanville and Olkiluoto.
EDF has no direct economic interest in Olkiluoto because the reactor will be owned and operated by TVO.
However, Fortum’s Mr Lundmark says that completion of the project is crucial to the reputation of the French nuclear industry, adding: “We want to make sure that Areva has the technical and financial resources available to successfully deliver what they have committed to.”
Areva insists that the sale of its reactor business to EDF will have no impact on its ability or commitment to completing Olkiluoto-3.
TVO’s Mr Tanhua says the trauma of the past decade will eventually be forgotten once the plant begins producing reliable, low-carbon energy. “We can still become a flagship for the EPR and show there is a future for the European nuclear industry.”
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