Cancellation of Finland’s nuclear project likely, as Europe retreats from nuclear power

“It is entirely possible that Finland’s Fennovoima project will fail as a result of EON’s exit,”

“A cancellation of the project seems very likely.”

Utilities are pulling out of nuclear projects across Europe as financial constraints and uncertainty over energy prices increases risk.

EON Exit From Finnish Nuclear Reactor May Trigger Failure Bloomberg, By Torsten Fagerholm – Nov 1, EON AG (EOAN)’s plan to pull out of a joint venture that’s building a nuclear reactor in Finland increases the risk that the project may fail, thwarting the government’s plans to cut reliance on energy imports.
EON, Germany ’s biggest utility, is seeking to sell its 34 percent stake in Fennovoima Oy by the first quarter and focus on operations in Sweden and Denmark , it said on Oct. 24.

Fennovoima is preparing to start construction on the reactor, with a capacity of 1,600 to 1,800 megawatts, at Pyhaejoki in northern Finland in late 2016.

“It is entirely possible that Finland’s Fennovoima project will fail as a result of EON’s exit,” Timo Vainio, an analyst at Pareto Securities ASA in Helsinki, said by e-mail……

Nuclear Expertise

The project will fail unless a utility company can be found to replace EON, Fennovoima’s only partner with nuclear expertise, said Markku Jaervinen, a financial analyst at Evli Bank Oyj in Helsinki, who estimates the value of EON’s stake in the project at about 700 million euros ($908 million).

“A financial investor will not be enough,” he said by e- mail. “A cancellation of the project seems very likely.”

Utilities are pulling out of nuclear projects across Europe as financial constraints and uncertainty over energy prices increases risk. EON’s withdrawal from Finland follows its decision in September 2011, along with SSE Plc (SSE) and RWE AG (RWE), to give up building nuclear plants in the U.K. Hitachi Ltd. (6501) of Japan plans to complete the acquisition of EON’s and RWE’s nuclear startup venture in the U.K. this month……

Fortum Oyj (FUM1V), Finland’s biggest utility, is unlikely to snap up EON’s stake in the reactor, according to Benita Barretto, London-based senior utilities analyst at Berenberg Bank….. Political as well as financial risks make utilities reluctant to commit to atomic reactors, Kinnunen said by e-mail. EON only recently got their fingers burned in Germany,” he said. “These types of risks also haunt their competitors, with even Vattenfall looking far-fetched as a candidate.” http://www.bloomberg.com/news/2012-11-01/eon-exit-from-finnish-nuclear-reactor-may-trigger-failure.html

November 2, 2012 - Posted by Christina Macpherson | business and costs, Finland

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