MorganEnergy

From the February 2009 issue of EEnergy Informer.

Future prospects for nuclear power in UK and elsewhere are at stake as AREVA comes under attack by TVO

Construction started in 2005 on Olkiluoto 3, a 1,600 MW European Pressurised Water Reactor (EPR) in Finland, next to 2 older operating units. At the time, it was heralded as the first third generation plant in the world with a 4-year projected construction period. The project was also unique in two other respects:

• The plant’s output was spoken for by a consortium of utilities spearheaded by Finland’s Teollisuuden Voima Oy (TVO) and a number or heavy industries – which made it easy to arrange financing without government guarantees or subsidies; and
• AREVA, the giant state-controlled French conglomorate in association with German behemoth Siemens assumed significant liability by agreeing to what essentially amounted to a turn-key, fixed price contract to build the facility in record time.

Nuclear enthusiasts were elated at the new business model, suggesting that a new generation of safe and modern reactors could be built following the same approach. The rosy scenario, however, began to unravel as construction delays and disputes about who was to blame for them ensued.

The first sign of trouble emerged in August 2007 when TVO announced that construction delays had pushed the completion date into 2011. In October 2008 it was announced that commissioning would not begin till 2012. In mid January 2009 AREVA
admitted it could not be certain exactly when the station would be completed, raising fears that the 2012 date would slip even further.

Now finger pointing has started, with TVO blaming AREVA and its partners, while AREVA has tactfully tried to put the blame on tardy approval process from the Finns. Regardless of who is to blame, the reputation of AREVA, the new business model for financing nuclear plants, and the future prospects for a nuclear renaissance in Europe, and elsewhere, are at stake.

Expressing frustration, Jarmo Tanhua, CEO of TVO, said he was “extremely disappointed” that the plant was not going to be completed until 2012 – three years later than originally expected while blaming AREVA and Simens for suggesting the embarrassing problems that have given valuable ammunition to the anti-nuclear lobby had been caused by the Finns. In a prepared statement he said, “TVO totally rejects the consortium’s accusations that TVO has any responsibility for the delay.” AREVA claims that the delays were caused by the Finns taking 12 months to review and approve critical safety documents rather than the three months that were agreed in the original contract.

Regardless of who is to blame, the latest setbacks have become a srious source of concern for policy makers in London who are hopeful that nuclear power can deliver quickly before Britain’s approaching energy crunch. Electricite the France (EDF), which acquired British Energy, has announced plans to have at least one new operating nuclear reactor in the UK by 2017. EDF expects to collaborate with AREVA, which has applied for approval of an EPR plant in the UK.