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AREVA and EDF pin their hopes on delayed, super-costly, Olkiluoto-3 nuclear project

Nuclear plant nears completion after huge delays, Western Europe’s first atomic power station in 15 years is test of Areva technology FT.COM 18 MAY 17  by: , Energy Editor  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………

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…….

TVO facing an awkward balancing act, between co-operating with Areva to finish the project while simultaneously 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 how much Areva and Siemens, which exited the consortium in 2009, must pay. Olkiluoto liabilities were among the main factors which 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 for completion this year. Responsibility for Olkiluoto will remain in a separate “old Areva” to protect state-controlled EDF from TVO’s compensation claim, which would ultimately 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 UK which 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 spewed radioactive fallout across Europe. But extra safeguards, such as a concrete dome over the reactor strong enough to withstand an aircraft strike, have proved ruinously expensive to build.

……..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…….

EDF and Areva are hoping for a smoother experience at Hinkley Point, where concrete was poured for the first permanent structures in March…..
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. That is more than twice the current wholesale price, but it will only prove a good deal for EDF if it can control construction costs better than has been the case at Flamanville and Olkiluoto…….. 

May 19, 2017 - Posted by | business and costs, Finland

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