Still wondering why more nukes are not getting built in the West?
In 2002, the Finland’s parliament approved the construction of Olkiluoto 3 expecting completion by 2009. To guard against cost over-runs, Finnish utility Teollisuuden Voima (TVO) signed a €3.2 billion (roughly US$4.2 billion at current exchange rate) fixed-price turnkey contract with a consortium including French AREVA and German conglomerate Siemens in December 2003 – two of the biggest names in the business. At the time, the project was deemed as a reasonable-cost, risk-free model to build future nuclear plants. There were expectations that a new generation of nukes would be built using the same fixed-price, turnkey contract formula. Construction began on what was then the world’s first European Pressurized Reactor (EPR) in May 2005.
Things, however, did not go according to the script. As technical challenges began to surface in designing and building the sophisticated, first-of-a-kind EPR, the project began to fell behind schedule. Inevitable changes in the regulation, safety and design followed resulting in further delays. Not surprisingly, the builders and the owners began blaming each other.
This was followed by further delays, leading to disputes and lawsuits with each side seeking multimillion dollar damages from the other. It got nasty tarnishing the reputation of AREVA, Siemens, EPR and nuclear power.
Few under construction in the West: Number of Nuclear Reactors under Construction
Source: The world nuclear industry status report 2014, Mycle Schneider
It became abundantly clear that merely signing a fixed-price turnkey contract does not eliminate the inherent risks. Moreover, it is hard to imagine AREVA ever entering into a fixed price contact for a nuclear reactor in the future, EPR or otherwise – assuming it receives any orders at all.
In Sept 2014, TVO announced that the AREVA-Siemens consortium building Olkiluoto 3 had updated its schedule indicating that the reactor may not start operating until late 2018. That would put the operating date nearly 10 years behind schedule. Estimates for the total costs of the project vary, most putting it around €8.5 billion (roughly $11 billion). AREVA estimates losses of about €3.9 billion ($5 billion), devastating even by AREVA’s standards.
In making the latest announcement, Jouni Silvennoinen, a TVO spokesperson, said, “However, it is hard for us to accept such a late start-up forecast given by the supplier because the completion degree is high, the completed works fulfill very high technical standards, and we know what the remaining works are.” AREVA attributes recent delays on reactor instrumentation & control (I&C) system approval.
Nuclear’s fortunes not rising: World Nuclear Reactor Fleet, 1954–2014
Source: The world nuclear industry status report 2014, Mycle Schneider
According to AREVA, the updated schedule is critically dependent on TVO’s commitment and cooperation. “From the beginning of the project, the role of the owner is essential to the progress on the project,” it said. Despite their past disputes, the two sides have vowed to cooperate to speed up the reactor’s commissioning process including review of technical and safety matters by the Finnish regulators.
Finland gets most of its power from coal- and natural gas–fired power plants plus its 4 existing reactors. Olkiluoto 3, when completed, will reduce its dependence on fossil fuels. By all estimates, it may also be the last nuclear reactor to be contemplated for quite some time, in Finland and possibly elsewhere.
Published Originally in EEnergy Informer: The International Energy Newsletter October 2014 Issue.
