WNISR, 25 March 2022
On 12 March 2022, the first European Pressurized Water Reactor (EPR) on the European continent was connected to the grid at the Finnish Olkiluoto power plant. The 1600 MW Olkiluoto-3 (OL3) is the third unit at Olkiluoto located on the shore of the Gulf of Bothnia in western Finland. Nearly 17 years since construction start, plant operator Teollisuuden Voima Oyj (TVO) described the grid connection as Finland’s greatest climate act “commissioning of the most powerful nuclear power unit in the world approximately 30% of Finland’s electricity will soon come from one island, where the entire lifecycle of nuclear power is managed. We are TVO—a nuclear power operator acting for the climate.”
The grid connection led credit-agency Standard & Poor’s to raise TVO’s rating from BB to BB+. However, that note is still in the “non-investment grade, speculative” (“junk”) category.
Olkiluoto-3, first kilowatthours 13 years late — Photo TVO
As WNISR has documented over the years, the EPR has been an industrial and financial disaster.
The project began in December 2003, when Finland became the first country in Western Europe outside France to order a new nuclear reactor since 1988. AREVA NP, then a joint venture owned 66 percent by AREVA and 34 percent by Siemens, was contracted to build OL3 under a fixed-price, turnkey contract with the utility TVO. After the 2015 technical bankruptcy of AREVA Group, in which the cost overruns of OL3 had played a significant part, the majority shareholder, the French government, decided to integrate the reactor-building division under new-old name Framatome into a subsidiary majority-owned by state utility Électricité de France (EDF). However, EDF made it clear that it would not take over the billions of euros’ liabilities linked to the costly Finnish AREVA adventure. Thus, it was decided that the financial liability for OL3 and associated risks stay with AREVA S.A. after the sale of AREVA NP and the creation of a new company AREVA Holding, now named Orano, that focuses on nuclear fuel and waste management services, very similar to the old COGEMA.
As with the second EPR, under construction at Flamanville in France, OL3 was considered by the nuclear industry as a showcase for next-generation reactor technology with TVO and AREVA predicting 56 months to completion. OL3 construction started in August 2005, with operations planned from 2009. That target date arrived and passed. Instead of 56 months from construction start to operation, it took 3.5 times as long or 199 months to grid connection. Commercial operation is currently scheduled for July 2022.
In 2009, WNISR concluded “it is clear that investor concerns on plant costs and delivery remain valid”, and the reasons for failure have been reported over the past 12 years in the annual WNISRs.
In September 2020, after confirming yet further delays to the operation date for OL3, the project Director, Jouni Silvennoinen, said he would not guess the total costs and losses and that in terms of the project being a failure, “We do not comment.”
The OL3 project was financed essentially on the balance sheets of the Finland’s leading firms and heavy energy users as well as a number of municipalities under a unique arrangement that makes them liable for the plant’s indefinite capital costs for an indefinite period, whether or not they get the electricity—a capex “take or pay contract”—in addition to the additional billions incurred by AREVA under the fixed price contract. With the confirmation of the settlement and TVO disclosing its total investment, it is possible to estimate the cost of the Finnish EPR. TVO’s current capital expenditure assumptions and the effect of the settlement agreement put its total investment at around €5.5 billion (US$6.42 billion); on top of this, AREVA had losses of €5.5 billion, for a total of €11 billion (US$12.4 billion) compared with the initial estimate cost in 2003 of “around €3 billion”.
Approval in December 2021 by Finnish regulator STUK for the start of operations at OL3 came despite the shutdown of the Taishan-1 EPR in China due to fuel failure announced on 30 July 2021. The reactor remains down as of late March 2022, and investigations into the causes are on-going. The suspicion of generic design issues in the reactor core was reported in November 2021, and French regulator ASN in January 2022 confirmed that fuel failure had been caused by turbulence in the reactor core, with ASN Deputy Director stating that, “There is clearly a gap between what has been modeled there and the reality”. However, Finland’s regulator, STUK, in granting permission to startup OL3 on 16 December 2021, accepted the assurances from TVO that the nuclear fuel manufacture is different than for Taishan. It remains possible that the failures at Taishan-1 will impact on OL3 operation as they are impacting on prospects for Flamanville-3.