Areva deal helps fuel Energoatom's European progress

04 November 2015

Energoatom, Ukraine's nuclear power plant operator, has highlighted its progress in working closely with European companies and institutions since opening an office in Brussels a year ago. The latest evidence of this is the signing announced today of an agreement with French engineering firm Areva.

Areva-Energoatom November 2015 - 460 (Energoatom)
Energoatom's Nedashkovsky and Areva's Cerruti signing the agreement in Brussels
(Image: Energoatom)

The agreement - a memorandum of understanding "to reinforce cooperation between the two companies for safety upgrades of existing and future nuclear power plants in Ukraine, lifetime extension and performance optimization" - was signed by Michael Cerruti, commercial director of Areva's Reactors and Services Business Group, and Yury Nedashkovsky, president and CEO of Energoatom.

Cerruti said the MOU demonstrates Areva's engagement in Ukraine and its capacity to provide services for all types of nuclear reactors, including Russian-design VVER units.

At its opening on 5 November last year, Energoatom said the main objectives of the new office include the adaptation of Ukrainian regulations to European standards; closer cooperation with European institutions, including the European Bank for Reconstruction and Development (EBRD) and Euratom, the nuclear watchdog of the EU; and expanding Energoatom's range of partners for joint projects in Ukraine and Europe.

At a press briefing in the Belgian capital on 29 October, Nedashkovsky, noted that Energatom's 15 nuclear power units provide 60% of Ukraine's electricity. Energoatom published a transcript of the conference yesterday.

"Our company is carrying out a very strong modernization and reconstruction program, which is being funded by the European Community, Euratom and the EBRD," Nedashkovsky said. He noted that changes at Energoatom were part of a process started in March 2014, when the European Union and Ukraine signed an Association Agreement that heralded a new phase in the development of EU-Ukraine contractual relations, aiming at political association and economic integration.


Energoatom operates four nuclear power plants in Ukraine – Khmelnitsky, Rivne, South-Ukraine and Zaporozhe - with a combined installed capacity of 13,168 MWe.

The state-run firm is the only company in the world operating VVER reactors that has two sources of supply for its nuclear fuel, Nedashkovsky said. "We are willing to share that experience with European companies operating VVER reactors," he said.

Ukraine has traditionally relied solely on Russian nuclear fuel manufacturer TVEL for those supplies, but in December last year Energoatom and USA-based Westinghouse agreed "to significantly increase" nuclear fuel deliveries to Ukrainian nuclear power plants until 2020.

Westinghouse originally signed a fuel supply contract with Energoatom in 2008. Through that contract, Westinghouse supplied a total of 630 nuclear fuel assemblies to the three VVER-1000 pressurized water reactors at the South Ukraine plant.

On 19 October Energoatom announced it had held a tender to expand its use of Westinghouse fuel at the Zaporozhe plant. According to its entry in the Visnyk Derzhavnykh Zakupivel state procurements bulletin, on 30 September, Energoatom awarded a UAH 16.85 million ($731,000) contract to Kharkov Institute of Physics and Technology to assist with this project between 2016 and 2020.

On 29 September, Energoatom said it had awarded a €339,990 ($369,000) contract to Westinghouse Electric Sweden AB, based in Västerås, to supply four fuel assembly simulators for the Zaporozhe plant.

Its plans with Westinghouse were underlined further with the signing on 28 October of cooperation agreements with Belgian companies Transnubel Engineering and Tractebel Engineering. According to an Energoatom statement, the possibility of delivering fresh nuclear fuel to Ukrainian nuclear power plants from Westinghouse's Swedish facility was discussed during talks with Transnubel.

"Transnubel is one of the European leaders in the area of transportation of radioactive materials and affiliated services. The procedures and service provision standards are in line with EU requirements, ensuring the highest safety levels during transportation of radioactive materials," Energoatom said.

The agreement with Tractebel Engineering relates to Energoatom's program to increase the safety of its reactors. The two companies are also considering working jointly on increasing the capacity of Ukraine's VVER-1000 reactors. Energoatom added that Tractebel Engineering is ready to provide engineering and technical support during the completion of units 3 and 4 of the Khmelnitsky plant, among other future construction projects.

Ukraine renounced an agreement with Russia's Rosatom on construction of the Khmelnitsky units in September.

During the 29 October press briefing, Nedashkovsky said Energoatom had signed an agreement with Barclays bank on financing the completion of the two units at Khmelnitsky.


On October 28 Energoatom also signed a tripartite MOU for the transfer of technology for the production of dry storage casks for used nuclear fuel by USA-based Holtec International to Ukraine's Turboatom. The document defines the scope and terms of collaboration between the partners in the construction of Ukraine's central used fuel storage facility (CSFSF). The projected cost of Turboatom's services to Holtec could reach $200 million over the next ten years, including some $60 million for equipment for the CSFSF, Energoatom said. Holtec and Turboatom plan to sign a commercial contract for the project by January 2016.

In January this year Energoatom and Holtec signed an amendment to a 2005 contract to build the CSFSF at the Chernobyl nuclear power plant and supply used nuclear fuel dry cask storage systems. The CSFSF will receive used nuclear fuel from nine of the country's 15 reactors - seven VVER-1000s and two VVER-440s - at Khmelnitsky, Rivne and South Ukraine. The Zaporozhe nuclear power plant operates its own on-site used fuel storage facility that was commissioned in 2001.


According to Interfax Ukraine, Hryhoriy Plachkov, deputy director for investment and long-term development at Energoatom, told reporters last week that the company had already spent $567 million of its own funds on the safety upgrade program.

As of 29 July, 37 of 88 safety upgrade measures had been completed. Three of the units - South Ukraine 2, Zaporozhe 1 and Zaporozhe 2 - are undergoing work to extend their operating lives.

To help fund this program, Energoatom has €600 million in loan agreements with the EBRD and Euratom, which came into force at the end of last year and in May this year, respectively.

All 15 nuclear units in Ukraine are of a similar design (VVER 1000 and VVER 440/213), which are in operation in some EU member states. All are Russian VVER types, two being upgraded 440 MWe V-312 models and the rest the larger 1000 MWe units – two early models and the rest V-320s. The EBRD has said that the safety level of the units can be upgraded to reach internationally accepted standards.

Energoatom plans to use €11-13 million from the two loans by the end of 2015 and €125-160 million next year, Plachkov said. The interest rate on the €300 million loan from the EBRD is Libor plus 1%, he said, while the rate on the Euratom loan will be determined separately for each tranche of €50 million.

"Believe me there is no cheaper credit in the world," Plachkov said, adding that Energoatom would service the loans and meet repayments through its sale of electricity.

The company plans to recalculate the total cost of financing the program in the first half of 2016.


Nedashkovsky said in August that there is an acute shortage of electricity in Ukraine due to "some irregularities" with the country's nuclear power plants, which prevented them from reaching their full capacity, as well as a shortage of coal and record-low water levels this summer. To compensate for this deficit, Ukraine "has had to resort to expensive power imports from Russia, with which we are in actual fact at war", he said.

Energatom's meetings in Brussels last week included talks with Poland's Polenergia "to map out the next steps" of a pilot project to export electricity from unit 2 of the Khmelnitsky plant to the EU. Energoatom, Polenergia and Ukrenergo signed an MOU on the project in March. Ukrenergo is a Ukrainian state-run power distribution company, while Polenergia is a vertically integrated group of companies working in energy generation, trading and distribution.

The Ukrainian government approved this so-called "energy bridge" project in June and Energoatom has said the agreement will make it possible to use all its available nuclear capacity and attract funds for the completion of Khmelnitsky 3 and 4.

Kharkov-based Ukrenergosetproekt, the general designer of Ukraine's electricity network, is working with Khmelnitsky Nuclear Power Plant Energoprojekt in Kiev on an analysis of work to commission a 750 kV overhead transmission line from the Khmelnitsky nuclear power plant to Rzeszow in Poland. That work will include linking up with the grid of Burshtyn Island thermal power plant - Ukraine's biggest coal-fired power station.

The project was launched as part of the creation of a trans-European energy network (TEN-E) and also part of the Baltic Energy Market Interconnection Plan (BEMIP), which started as an EU initiative in 2008.

At the press briefing last week, Nedashkovsky said: "During the Soviet era, Ukraine exported about 30 billion kilowatt hours per year to Eastern Europe. After the collapse of the Soviet Union, Eastern Europe separated from its power grid and only in the early 2000s was the export of electricity from Ukraine to Europe partially resumed via the Burshtyn Energy Island."

The Burshtyn power station was disconnected from the national grid in 2002 to form the Burshtyn Energy Island, a separate grid that exists to export power to the EU nations of Hungary, Slovakia and Romania. When the energy bridge project is completed, Ukraine will be able to contribute to the supply of carbon emissions free electricity, along with other nuclear power producers in the EU, he said.

Asked about the decrease in exports from the Burshtyn Energy Island amid the conflict in Ukraine, Nedashkovsky said some thermal power plants had been destroyed or damaged and the country's main coal mines are located in areas now controlled by pro-Russian rebels.

"Electricity exports from Ukraine are exclusively from coal-fired generation, but if we look to the future, the Ukraine-EU 'energy bridge' will bring a capacity of 1 million kilowatts of nuclear power for export to the EU. With this technical capability, a long-term, not less than 20-year, contract will be entered into," he said.

Energy Charter

Nedashkovsky also met with the secretary-general of the Energy Charter, Urban Rusnak, on 27 October to discuss cooperation between Ukrainian and European nuclear enterprises.

Energoatom said Rusnak emphasized the company's important role in ensuring Ukraine's energy security and invited it to take part in the Energy Charter Industry Advisory Panel.

Nedashkovsky said the invitation would enable Energoatom "to establish a new level of relations with our European partners and will simplify the participation of Ukrainian nuclear companies in international projects".

The Energy Charter Treaty and the Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects were signed in December 1994 and entered into legal force in April 1998. To date, the Energy Charter Treaty has been signed or acceded to by 52 states, the European Community and Euratom. Ukraine ratified the Treaty in 1998.

The fundamental aim of the Energy Charter Treaty, a legally-binding multilateral instrument, is to strengthen the rule of law on energy issues, by creating a level playing field of rules to be observed by all participating governments, thereby mitigating risks associated with energy-related investment and trade.

Energoatom said it is the first nuclear power plant operator to be invited to join the Energy Charter Industry Advisory Panel.

Researched and written
by World Nuclear News