Oblast opportunity

The tiny 215 sq km Russian enclave of Kaliningrad, stuck between Poland and Lithuania was ceded to Russia in 1945. But since then, the Soviet waters that lapped around Russia’s westernmost territory, or oblast, have receded. Now its neighbours Poland, Lithuania, Latvia and Estonia belong to the European Union. It is closer to Sweden and northern Germany (less than 500km) than it is to the contiguous border of its mother country. To the east and south are the more Slavic countries of Belarus and Ukraine.

Now Russia, too, is looking west. It is planning to build two 1150MWe VVER-1200 reactors, AES-2006 design, for startup in 2016 and 2018 in Kaliningrad’s Neman district, 100km east of the city of Kaliningrad, and about 15km from the Lithuanian border. The plant would be uniquely western and outside-looking. And not just because it would be Kaliningrad’s first, and one of the most westerly plants ever planned by Russia (apart from the Soviets’ aborted Zarnowiec plant, on the western side of the Gulf of Gdansk in present-day Poland).

For years, Russia’s Atomstroyexport has been exporting its nuclear power station designs to China (Tianwan), Bulgaria (Belene). Now it is planning projects in Belarus (Ostrovetskaya, in Grodno, which on paper looks identical to the Baltic NPP design) and possibly four units in Turkey. But this project is different in three ways.

First, the new plant would aim to export as much as 1.3GW (56%) of electricity outside of Kaliningrad to sell to nearby markets. Energy could supply Poland overland. It could tap into a planned 1000MW connector from Alytus, Lithuania to the northeastern Polish towns of Elk, Olsytzn and Narew. It could also reach Germany through Poland, or via the Nord Stream North Sea gas pipeline route that terminates at Greifswald. It could supplement power to its Baltic neighbours Latvia, Lithuania and Estonia.

If only for domestic reasons, neighbour Lithuania is of particular interest. A third of Kaliningrad’s electricity comes from Ignalina 2, due to be closed down at the end of 2009 as a condition of Lithuania’s accession to the EU. Although a replacement has been mooted, its future remains uncertain (see ‘Carry on regardless,’ NEI June 2009 p15).

Second, for the first time ever, Russia is looking for European investors to take a minority stake, up to 50% minus one share, in a domestic nuclear plant. A spokesman estimated the plant cost at EUR5 billion, to be financed by the state and foreign investors. Russia state nuclear energy corporation Rosatom, it would appear, is looking to follow in the footsteps of Bulgarian utility NEK, which attracted German utility RWE as a 49% stakeholder in the Belene construction project in 2008. Since then, RWE has been unsettled by cost increases in the project, according to a report in Nucleonics Week. A spokesman declined to comment on how Atomenergoprom might deal with that problem, but partner-company Inter Rao UES did comment. It said, “cost increase risks will be considered and we hope that they will be hedged while project financing is being formed.” Inter Rao UES is an electricity importer and exporter, now 53% owned by Rosatom. Its role in the Baltic NPP project is to build up funds, recruit investors and it will ultimately sell the generated electricity. (The project will also be a testing ground for Atomstroyexport-Inter Rao UES cooperation).

The Russians are looking for potential partners “with a good reputation on the international market and a significant experience in cooperation with foreign partners.” Inter Rao declined to specify who is in the frame, but Spanish utility and energy group Iberdrola has admitted its interest, according to Spanish newspaper El Economista. A Fortum spokeswoman told NEI that it is not involved.

A spokesman from German utility E.ON, which has partnered with RWE in a nuclear new-build contract in the UK, refused to comment on whether it is investing in Baltic NPP. But I think it would be likely. In a July press release that praised Russia for opening up 50% of its domestic electricity market for wholesalers and industrial clients, it claimed to be the largest foreign investor in Russian energy since taking over the OGK-4 electricity company in 2007. It operates four gas-fired power stations and a coal-fired power station in the country and is planning to build five more by 2011.

Bidding is expected after October 2009. “This is a very good investment project and, as we think, a good foundation for a new partnership establishment,” said Rosatom head Sergey Kirienko at Atomexpo in May 2009.

Related Articles
Goodbye Ignalina 2
Construction starts at Baltic NPP
Lithuanians protest about rising bills
Foundations laid for Baltic NPP
World survey part 2: Russia and CIS
Russia and Belarus plan NPP together
Belarus chooses site for 2016 plant
Russia signs cooperation agreement with Kuwait
Chernobyl action plan