Finnish “nuclear deal”

A month ago, the Finnish NPP operator Fennovoima terminated the contract for the construction of Hanhikivi-1 NPP by Rosatom. Over the past month, some points have become clearer, and it seems to me that this decision will put an end to Finland’s plans for the development of nuclear power plants. Now I will explain why.

1. Why Finland needs a nuclear power plant

Oddly enough, Finland is extremely poor in energy resources – they are not available on the territory of the country and have to be imported. This is bad news. The bad news is that, due to the rocky soil in the country, it is problematic to create underground storage facilities for gas and oil (according to press reports), which leads to the need for its constant import through pipelines and through LNG. Obviously, for greater energy security, the country needs to develop technologies that are less dependent on imported resources. In the seventies, nuclear power plants became such a lifesaver – then two nuclear power plants of 900 MW each were built in the country: one by the USSR, the second by Sweden (and later the Swedes overslept their nuclear power).

Although the rapid development of renewable energy sources began in the nineties, the Finns did not abandon plans to expand nuclear power plants. In January 2002, it was decided to build a new fifth reactor. No one at that moment realized how difficult this process would be.

Olkiluoto nuclear power plant.  The third block, around which all the main drama is, is on the left and stands out prominently.
Olkiluoto nuclear power plant. The third block, around which all the main drama is, is on the left and stands out prominently.

2. Olkiluoto-3 – how well it all started

Three bidders entered the tender:

  • Rosatom with the already proven times of VVER-1000

  • french AREVA with her latest EPR project

  • American General Electrics with “napkin” ESBWR

GE quickly merged, but AREVA and Rosatom took a big bite. For AREVA, receiving this order was fundamental, since the company needed to return to the big game due to the increasingly obvious revival of the nuclear power plant market in the world (9 more years before Fukushima). Therefore, the French launched a colossal marketing campaign according to the good old tradition: how they came up with a system of generations of reactors for aviation, where the “blasphemous VVER” was a step below the miracle of French engineering; actively recalled Chernobyl and totalitarian Russian technologies (yes, 20 years ago); actively dumped, as the project had to get a bloody nose. As a result, Olkiluoto went to the French not without a fight, and then began.

It should be understood that by the beginning of the 21st century, the French nuclear industry was in a state of deep sleep. Since the end of the large-scale nuclear power plant construction program, not a single nuclear power unit has been commissioned in the country since the 1980s. There were no foreign projects either, and therefore the huge cooperation created within the country for the production of nuclear power plant elements quietly died. Framatome – the designer and builder of French nuclear power plants, realizing that in the coming years there will be a goal with orders, chose a completely logical plan: to dump all production capacities off the balance sheet, focus on servicing reactors and develop technologies with which it will be possible to blow up the market in 10-15 years. This is how the idea of ​​a purely French EPR reactor was born (before that, there were heavily modernized Westinghouse projects).

In 2001, in the course of a large-scale restructuring, Framatome merged with the AREVA mega-holding, in order to successfully return to the international market.

3. Olkiluoto 3 – French start and lose

When entering the tender, the French lied a little to the Finns about the degree of readiness of the EPR project – at the time of 2001 it was still a concept with completely unfinished working documentation. The plan was for the time between the conclusion of the contract and the start of construction around 2005 to complete it. But it was smooth on paper, and then everything went to hell. Due to the complexity of the project, the working documentation was not ready, not only by 2005, its final version, in fact, appeared only by the time the reactor was launched in 2021. The documents were constantly amended, and due to the huge scale of work, the French at some stage they simply forgot about tracking edits, which is why different factories could have completely different versions of drawings. This led to the fact that after the equipment arrived at the site, it might simply not be assembled into a single whole, as, for example, with the reactor vessel, which suddenly did not fit its strapping, and this fool had to be dragged back to the plant … to Japan.

Yes, to Japan. Due to the fact that nuclear cooperation inside France died, when AREVA decided to revive it, it turned out that there was nothing to revive: some enterprises died, others changed their line of business long ago, and still others did not want to spend a lot of money on organizing production for a single nuclear power plant. As a result, the French were forced to collect more than thousands subcontractors for the supply of various equipment. Logistic hell? Yes, he is the one. Due to the abundance of enterprises, quality control was simply at the bottom level, equipment acceptance was sometimes carried out on the site, which led to oddities, like with a reactor. No one, even in AREVA itself, really understood who was responsible for what and at what stage of the production process. Simply put, the French management won itself.

This was superimposed by the fact that in Finland itself the industry could produce little for the needs of the nuclear power plant, and what was – was too expensive. And the French were already building at a huge discount. Therefore, instead of expensive Finnish workers, Poles and Asians were imported, who sometimes had no construction experience at all. The same was observed, however, with French engineers who regularly messed up with technology – for example, due to an incorrectly read drawing, the density of reinforcement in concrete was several times lower than required. And there was also confusion with the materials – due to the supply of concrete of the wrong brand, some sites had to be poured again.

In general, man-made chaos was going on at the construction site, due to which jambs were regularly discovered, the construction time was delayed, more and more injections from the budget were required (as a result, the nuclear power plant construction project increased in price by 4 times – from 3 billion euros to 12). Due to problems with Olkiluoto, AREVA lost some astronomical amounts on it every day, due to which the concern became ill and died. An urgently reorganized other concern, EDF, had to complete the construction of the nuclear power plant, into which the remains of AREVA were poured.

4. STUK, Hanhikivi and “will be before the end of the year”

Looking at the epic with Olkiluoto-3, the Finnish nuclear regulator STUK began to tighten the screws – each discovered defect at a nuclear power plant under construction led to new revisions of the rules. When in 2013, against the backdrop of the still unclear situation with Olkiluoto, the Finns signed a contract with Rosatom to build a new nuclear power plant, no one guessed how difficult it would be. I had to turn to Rosatom because no one else wanted to enter the tender. AREVA was already convulsing, Westinghouse was also bent and it was not up to it, the Japanese had just had Fukushima and Toshiba merged. Because of this, investors began to run away from the project, and it was then that they remembered the Russians. Rosatom was ready to partially finance the construction: out of 6.5 billion euros, Finnish Fennovoima provided 1.6 billion euros, the remaining expenses were going to be covered by Rosatom, providing a loan of about 5 billion euros in exchange for a 34% stake in the nuclear power plant under construction. The deal worked out for everyone.

And then STUK woke up. The most important step before starting construction is obtaining a license for it. And this is where the problem came up: STUK constantly changed the requirements, tightening them because of Olkiluoto. The status of obtaining a license was constantly in the “will be until the end of the year” mode, and this period constantly shifted to the right. As a negotiator, STUK turned out to be very tight and difficult, as the Finns were ready to pull the plug to the last, tightening up to the point that now Finland has the most stringent requirements for the construction of nuclear power plants in the world, much more stringent than the requirements of the IAEA. And the Finns can be understood – no one wants a second Olkiluoto, but the situation itself does not get better from this. The volume of required permits and audit turned out to be much larger than usual for other projects, this was superimposed on the strict requirements of the regulator for licensing equipment and software, thanks again to the French, as well as a significant misunderstanding of the mechanisms of interaction with STUK from the customer (!), Which closed the processes for a long time documentation for yourself.

At the same time, all this time, preparatory work was going on at the site – administrative and service buildings were erected, communications were being prepared. But the issue of obtaining a license still hung. 7 years is generally a record for a rather everyday procedure, so Finland received a minus in karma even before May 2022.

5. Gap and its consequences

The events of May 2, 2022 may cause stagnation and death of the nuclear industry in Finland. On that day, Fennovoima unilaterally terminated the construction contract with Rosatom. The reason was given as the project’s failure to obtain a license. Which is already quite ridiculous, since not obtaining a license for a nuclear power plant project that has successfully operating reference units is nonsense. As well as the period of consideration of the application in 7 years. All external observers understand in principle that STUK’s requirements are not entirely adequate. And knowing this, it is unlikely that anyone without a big discount from Finland will put his hand on building a nuclear power plant for them. And the Finns cannot give such a discount, since they do not have money for the construction of a nuclear power plant at their own expense.

Another problem is that the termination of the contract was carried out very stupidly – in fact, the Finns grossly violated it: Rosatom, as the owner of 34% of the shares, was not notified of the vote, the decision was made behind the scenes and was not subject to discussion. The money spent on the project, and I remind you that almost 70% of the funding was provided by Russia, the Finns, of course, refused to return (it is known from open sources that about $ 1 billion has already been mastered, on whose accounts the rest of the amount is unclear). As a result, it turned out that Rosatom was rudely “thrown at his own money.” In this connection, the state corporation is going to sue Fennovoima. Here they may object to me that, well, damn it, 2022, the sanctions are there and that’s it. But the joke is that Finland did not impose sanctions against Rosatom and the Hanhikivi nuclear power plant, the rationale for the kidnapping was formally non-political, and the fact that in this case a contractual obligation was grossly violated is chaos. It is clear that the Finns will not throw Americans like that, but potential builders of nuclear power plants, of which there are actually few (China, Korea, Japan, France), will naturally take into account such risks in the cost of the project.

6. As a result, what we have

  • Olkiluoto-3 has not yet been put into commercial operation due to STUK’s position (although the fuel is loaded and the unit is connected to the power grid, full capacity is again delayed – now until September 2022);

  • The construction of the Hanhikivi nuclear power plant has been cancelled;

  • There is no money for a new nuclear power plant;

  • Because of STUK’s rigidity (or inadequacy, here’s how you look at it), no one is eager to work with Finland in the nuclear field;

  • Rosatom’s litigation with Fennovoima could undermine the latter if it loses the trial;

  • The termination of the contract itself looks very ugly and can become a black spot on the reputation of the Finns

At the same time, the issue of replacing old NPP units with new ones will rise in full growth in the next decade, but I now assess the chances of building new NPPs in the country as extremely insignificant.

Author: Vladimir Gerasimenko


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