Russia urges more ambitious nuclear capacity target

27 June 2017

Rosatom's deputy director-general for international business has described the World Nuclear Association's aim to add 1000 GWe of new capacity by 2050 as fully achievable and "perhaps modest". Kirill Komarov spoke to World Nuclear News during the AtomExpo conference and exhibition held last week in Moscow.

Komarov, who becomes the chairman of the London-based Association next year, said the annual event had attracted a record number of participants, with about 6500 attendees, representatives from 64 countries (not including Russia) and 32 official government delegations.

He told WNN: "The consensus of everyone gathered here, including those who are not part of the nuclear community, is that nuclear energy has a place in the global energy mix. The World Nuclear Association's Harmony project targets the construction of 1000 GWe of new nuclear power capacity and for nuclear to have a 25% share of production capacity by 2050. I believe in this forecast and we will do all we can at Rosatom to work towards its achievement." With the Association "as one of the voices speaking loudly", then adding 1000 GWe by 2050 is "perhaps modest and maybe we can do more than that", he added.

Referring to Rosatom Director-General Alexey Likhachov's comments during the plenary session of the conference on 19 June, Komarov said investment in wind and solar power technology was ten times higher than in nuclear generation.

"That's not because those technologies are better and ours are worse," Komarov said. "Perhaps we as a nuclear community missed out and didn’t put sufficient effort into explaining safety and mankind's need for nuclear power, not only in terms of energy, but also knowledge, education and science, as well as the non-energy uses of nuclear technologies."

Bearing witness

Now in its ninth year, AtomExpo was "bearing witness" to the growing and worldwide interest in the development of nuclear power, Komarov said during a press briefing. "According to the International Atomic Energy Agency, only 34 countries have nuclear energy facilities, so that means 30 other countries still have nothing but would like to," Komarov said. He stressed the main theme of this year's conference was The atom as part of a zero-carbon energy future.

"Unfortunately for some reason, a lot of the time we forget in our discussions and in the scientific community that nuclear energy is part of the green energy balance, just like wind and solar. The objectives that mankind has set itself in the framework of the Paris climate conference are just intermediate steps.

"The president of the United States wants to exit the Paris Agreement. What does that mean for humanity? With all due respect to the USA, it is going to mean a lot because, believe me, I travel across the world and see that people's approach is changing. Whereas before they simply said they need electricity, now they care how that electricity is generated. They know about CO2 emissions and the damage to human health and to the planet. Regardless of the specific country, Asian countries want to have an energy mix that takes into consideration diversified sources with minimum impact on the environment.

"Over the last two days of the conference there have been many speeches that say you don't need to put different types of energy in opposition; it's not either/or for renewable energy and nuclear power, it should be both/and."

Komarov referred to a statement by William D. Magwood, IV, director general of the OECD Nuclear Energy Agency, that it is important to have an energy balance not only to meet demand but also for the stability of the electricity grid.

"Mr Magwood said there is evidence the maximum share of renewable energy in the energy mix of any country should not exceed 40% otherwise the grids would not be able to cope with the bottlenecks because they would need backup for peak consumption which would be problematic. Well, what about the remaining 60% in the energy mix? We think that nuclear has every reason to meet that objective," Komarov said.

"The nuclear renaissance was very popular about eight years ago, but now we don't talk about it, even though in the last two years we have seen a record level of commissioning new reactors - 20 GWe of new capacity in 2015-2016. That's a record figure since 1990. So, the nuclear renaissance that was discussed back then has become a reality, with many more projects on the way. Rosatom has built eight units, which are at different stages of implementation, and we plan to build 25 units across the globe. Other countries, including South Korea, China and France are also active."

2016 was a "very successful year" for Rosatom, he said, and its portfolio of orders is worth $134 billion over the next decade. Many of these contracts are "now active" and cover the full life cycle of nuclear facilities, he said.

Highlights for the corporation include, he said, the launch in August last year of its first VVER-1200 reactor - unit 1 of the Novovoronezh II nuclear power plant. Also known as Novovoronezh 6, the unit is a VVER 1200/392M pressurised water reactor unit with a design net capacity of 1114 MWe. It is the first of two such units at Novovoronezh II - the lead project for the deployment of the AES-2006 design incorporating a Gidropress-designed PWR, an evolutionary development from the VVER-1000.

He also referred to the settlement of Rosatom's dispute with Bulgaria, over that country's decision to scrap the Belene nuclear power plant project. In June last year, the International Court of Arbitration ruled in favour of Rosatom subsidiary Atomstroyexport (ASE) over its claim for compensation. Bulgaria's National Electricity Company awarded ASE the contract to build two 1000 MWe reactors at Belene, on the Danube River near the Romanian border, in 2006. The Bulgarian government abandoned the $10.5 billion project in 2012 amid difficulties in attracting investors.

Flagship projects

Komarov said Rosatom is "definitely not slowing down" and its plans this year include the launch of a third power unit at Tianwan, China, as well as the start-ups in Russia of Rostov unit 4 and Leningrad II unit 1.

The corporation's European nuclear power plant construction projects are all on track, he said.

A construction licence for the Hanhikivi project in Finland is expected to be granted next year and an operating licence in 2022. The project's Finnish owner, Fennovoima, and RAOS Project, a subsidiary of Rusatom Energy International, have a reactor supply contract for Hanhikivi 1 that is proposed for construction in Pyhäjoki, northern Finland. According to the schedule agreed with Rosatom, the unit will start producing electricity in 2024.

Komarov also noted that, in March, Hungary had received the go-ahead to start construction of new nuclear power units at Paks next year as planned, following European Commission approval of commitments it made to limit distortions of competition. An inter-governmental agreement signed in early 2014 would see Russian enterprises and their international sub-contractors supply two new units at Paks - VVER-1200 reactors - as well as a Russian state loan of up to €10.0 billion ($11.2 billion) to finance 80% of the project. The Commission concluded that Hungary's financial support for the Paks II project involves state aid, but it could approve this support under EU state aid rules on the basis of these commitments.

Komarov said the Commission's requirement that the Paks II project adheres to European standards for procurement was "entirely doable".

Rosatom faced "some down-time" waiting for the Commission's decision, but continued to work on documentation for the project, he said.

"Everything regarding the design will be completed by next May and at same time we are making sure we don't violate regulations against the start of preparatory work before receiving a construction licence. We've agreed with our Hungarian partners that we'll do whatever we can at the preparatory stage. Our objective is to run as many tenders as possible and do what we have agreed with the Hungarian government, which is to ensure the share of Hungarian suppliers will be up to 40%."

Rosatom plans to hold a workshop for potential suppliers to the project, from Hungary and elsewhere, in September and October.

The financial aspects of the project have been resolved, he said, adding that in May there had been an 'exchange of letters' recognising the contract terms and thus that the "obligations are now in force".

Asked about "problems" with the project to build the first nuclear power plant in Belarus, Komarov said he "would not dramatise" the situation at the construction site. He was referring to Rosatom's replacement of a reactor pressure vessel that was dropped at the site last summer, even though the equipment was not damaged.

"In any country where there is the construction of a nuclear power plant for the first time, you're bound to run into problems, but these are not insurmountable. Next year we'll have an important milestone with the completion of construction," he said.

He stressed that the reactor design for the two units at Ostrovets were not first-of-a-kind and were of the same design as new units for Novovoronezh, Bangladesh, Turkey and Egypt.

The equipment had been tested already, he said, and "very closely monitored" by the Belarussian customer and regulator, as well as by the IAEA and the World Association of Nuclear Operators.

There has been opposition to the project from neighbouring Lithuania, he said, but this was not for technological reasons. "When they joined the EU they made a big mistake and shut down the [Ignalina] plant which had supplied 65% of their electricity supply. Now they depend on [imported] power supply and they don't like the fact a nuclear power plant is being built in Belarus because that's the exact opposite of what they've done," he said.

An inter-governmental agreement on cooperation in the construction of a nuclear power plant in Belarus was signed in March 2011. Operation of the first unit of the Ostrovets plant is scheduled for November 2018 and the second unit in July 2020, to give 2340 MWe net capacity online.

Komarov also highlighted Rosatom's achievement regarding fuel supply to Western-designed pressurised water reactors. In December last year, Swedish utility Vattenfall announced it had signed long-term supply contracts with three nuclear fuel manufacturers, adding for the first time Russia's TVEL - a Rosatom subsidiary - to its established relationships with French Areva and American Westinghouse. The agreements - worth SEK 1.2 billion ($131 million) in total - cover 19 consignments to Ringhals 3 and 4 between 2018 and 2025. TVEL will account for about a fifth of these, while Areva and Westinghouse will supply the remainder. TVEL's contract to supply TVS-K fuel for the Ringhals plant includes delivery of commercial reloads of nuclear fuel assemblies starting from 2021.

Komarov said: "So, we have maintained not only the fuel supply market for NPPs of Russian design, but we are also supplying Western-design NPPs. We are seeing great interest from Western countries because this means they can diversify their risks."

Further afield

India "may become a regional leader" in nuclear power, Komarov said. Early this month, Russia and India signed a framework agreement enabling construction of the 'third stage' of the Kudankulam nuclear power plant, including an inter-governmental credit protocol for implementation of the project. On 19 June, India's Atomic Energy Regulatory Board announced it had issued a permit for pouring of first concrete for the second stage of the Kudankulam NPP project, namely units 3 and 4. Komarov said Rosatom expected that first concrete would be poured in late June or early July.

Asked whether Rosatom was in contact with Pakistan, he said, "We haven't got work with them yet."

During the conference, Rosatom signed an agreement with a consortium of Turkish companies on the main conditions for acquiring a 49% stake in JSC Akkuyu Nuclear, the company that will build and operate Turkey's first nuclear power plant. The agreement - signed by Cengiz Holding, Kolin İnşaat Turizm Sanayi ve Ticaret AŞ and JSC Kalyon İnşaat - sets out the main conditions for the companies to buy a 49% stake in JSC Akkuyu Nuclear, currently wholly owned by Rosatom subsidiary JSC Rusatom Energy International.

JSC Akkuyu Nuclear was created in 2010 to manage the project to build and operate the four-unit Akkuyu nuclear power plant in the Turkish province of Mersin. Rosatom said it would sell up to 49% of the company to other investors from Turkey and elsewhere, but will retain the 51% controlling stake. The project to build four 1200 MWe Gidropress-designed AES-2006 VVER pressurised water reactors at Akkuyu is being financed by Russia under a build-own-operate model, in accordance with an inter-governmental agreement Turkey and Russia signed in 2010. The plant is scheduled to start operations on 29 October, 2023 - the centenary of the founding of the Republic of Turkey.

Komarov described signing of the new agreement as a "critical event" as it is the first time Rosatom is partnering with such a large consortium of private investors.

"In Finland, the model already existed and we are a junior partner, but in Turkey it's the opposite," he told reporters. "The transaction has not yet closed and we are still the 100% owner [of the project]. The inter-governmental agreement sets guarantees in terms of price and our liabilities to construct the plant according to schedule. Since the beginning, the agreement was until the end of the plant's life cycle and we will remain a 51% shareholder because it's important for the Turkish government to have the support of an experienced operator.

"We've signed, not the final agreement, but information we will be sending to the Turkish government and we need to get its approval. What's important is that these companies are Turkish construction companies which have not yet built nuclear power plants, but have constructed large-scale industrial facilities, like bridges and airports."

He stressed this "isn't a Russian project in Turkey; it's a true Russian-Turkish partnership". The 51%-49% split is "just arithmetic", he said, "because in reality we are two equal partners investing in very serious capacity that will be operating for the next 50-60 years."

He added the importance of separating the project "from any political turbulence which can occur even between two friendly nations".

Asked whether Rosatom could offer Saudi Arabia its growing expertise in renewable energy along with its experience in nuclear power, Komarov said the corporation is "working on a green energy balance" that it hopes one day to bring into overseas markets.

Saudi Arabia has said it plans to construct 16 nuclear power reactors over the next 25 years at a cost of more than $80 billion. It projects 17 GWe of nuclear capacity by 2040 to provide 15% of the power then, along with over 40 GWe of solar capacity.

With such an ambitious nuclear power program, Saudi Arabia would have "every great opportunity" to have safe and low-carbon power supply and at the same time "bring the country to totally new levels of economic growth and education standards", Komarov said.

Rosatom is being proactive with its renewable energy business, he said, because it is complementary to its existing capabilities in nuclear power. He noted that the Russian government is not prepared to subsidise renewable energy per se and that investment in such technology needs to demonstrate the benefits to infrastructure, jobs and taxation. In line with this policy, Rosatom subsidiary Atomenergomash is producing carbon fibre for use in wind power turbine blades, he added.

During AtomExpo, Lagerwey of the Netherlands and OTEK, a Rosatom subsidiary, signed a licence agreement for Lagerwey wind turbine technology. Gazprombank and VetroOGK, another Rosatom subsidiary, signed a ten-year RUB63.1 billion loan agreement on funding the corporation's wind farm construction project. Rosatom said it aims to commission 970 MWe of wind power capacity by the end of 2022.

Komarov said Rosatom would be "rolling out" its wind power technology and would be competitive, not only in Russia but overseas, too. "So, we really are working on a green energy balance - nuclear and wind," he said.

Asked why Rosatom's plan to build Egypt's first nuclear power plant was taking so long to materialise - Egypt and Russia signed a memorandum of understanding on the proposed project in February 2015 – Komarov said this was not a long time for such negotiations.

In April, Likhachov reportedly said the timing for signing the Daba'a nuclear power plant contract is in Egypt's hands.

Komarov said: "Contracts for the construction of four power units, the supply of nuclear fuel for 60 years, the provision of services as well as waste and used fuel management, that's a large package of documents. We don't want to announce their signing ahead of time and so I won't provide a specific date, but we believe the four contracts are at a highest level of readiness to be signed."

Similarly, Komarov was asked for an update on progress with Jordan, with which Russia signed an inter-governmental agreement on cooperation in the construction and operation of two 1000 MWe VVER units at Az-Zarqa in central Jordan in March 2015. He said the investment terms of the agreement would be worked out by the end of this year and a feasibility study involving external consultants also needed to be provided.

Asked whether Mexico was of interest to Rosatom, Komarov said, "Politics changes and if Mexico invited us we would be very happy to bring our technologies. We are very active in the Central and Latin American regions, and we have been cooperating with Mexico for a number of years on the supply of enriched uranium."

Mexico has two nuclear reactors generating almost 4% of its electricity. Its first commercial nuclear power reactor began operating in 1989. There is some government support for expanding nuclear energy to reduce reliance on natural gas, but recent low gas prices have overshadowed this. Laguna Verde's first 800 MWe boiling water reactor came on line in 1989 and is currently licensed to operate until 2029, while unit 2 has been operating since 1994 and is licensed to operate until 2034.

"Rosatom is the only global corporation that has the full spectrum of products for the whole life cycle of a nuclear power plant," Komarov said. "We aren't just coming along with a solution; we're coming with a highly competitive solution."

Rosatom's earnings and profit are growing, Komarov said, but that growth has been curtailed by lower nuclear fuel cycle prices. "The uranium enrichment spot price was once $180 per kg SWU, now it’s about $50/kg, and the uranium spot price has gone from $137 per pound U3O8 to about $20/lb. We're still profitable because we have worked seriously on our costs, even during years that were good for us," he said. "We keep on expanding our business with new products and try to offset what we have under-earned by creating new business. For some of our customers a lower uranium price is a good thing and Rosatom is unique because we are an operator, equipment supplier and product supplier, and we try and balance all those streams. Late last year, our net debt to EBITDA ratio was less than 2. The normal ratio is 6. That means we are in a good position to keep on investing in projects," he said.

Rosatom's overseas projects surpassed 47% of its total revenue last year, he added.

Researched and written
by World Nuclear News