Ukraine’s power game2 February 2017
The situation in Eastern Europe has change dramatically in recent months with the political landscape shifting as much as the territorial one. As Rumyana Vakarelska reveals these developments have hit the nuclear industry with fuel becoming a reason for concern and driver for change.
Nuclear fuel supply to Ukraine is becoming an increasingly prominent opportunity for international producers, while the country has also developed plans to build its own nuclear fuel fabrication plant in the future.
With the successful completion of £1.2 billion worth Chernobyl nuclear reactor cover at the end of November 2016, the country is now looking at continuous upgrades of its VVER-1000 fleet of nuclear plants. The giant shield is a 36,000-ton radiation-proof structure and is a stark reminder of Ukrainian electricity supply priorities in relation to sustaining nuclear power. Namely, these are the establishment of energy security and diversification of nuclear fuel supply away from the dominant Russian supplier TVEL, a Rosatom subsidiary company.
Westinghouse Electric Company and potentially other new international suppliers are well placed to come to or expand in the Ukrainian market, as the country is trying to step away from Russia’s nuclear fuel supplies after the country’s annexation of Crimea and military incursion into significant parts of eastern Ukraine in 2014. Currently, three of the nuclear reactors in Ukraine are running on Westinghouse fuel. These units comprise the 1000MW South Ukraine 2, the 1000MW South Ukraine 3 and the 1000MW Zaporozhe 5 reactors. In 2016, Westinghouse will deliver five fuel reloads to the South Ukraine and Zaporozhe nuclear power plants in Ukraine.
Earlier in 2016, Westinghouse announced the expansion of its Nuclear Fuel Factory in Vasteras, Sweden, in response to growing demand for nuclear fuel supply diversification for VVER-1000 reactors in Europe. The investment finances additional production facilities, fuel engineering work, as well as the procurement of additional process and assembly equipment for manufacturing the nuclear fuel.
The new facilities were officially inaugurated in August 2016 by Jose Emeterio Gutierrez, then Westinghouse senior vice president for nuclear fuel and components manufacturing and in the presence of representatives from the Vasteras Municipality, the local business community and the Ukrainian Embassy to the Kingdom of Sweden, demonstrating the importance of the Ukrainian market to Westinghouse.
According to Gutiérrez, Westinghouse’s increased VVER-1000 fuel production capability at the Vasteras facility will “enhance security of supply for our customers, while Westinghouse takes pride in being the only [nuclear fuel] vendor able to provide fuel to almost all types of reactors around the globe”.
Following numerous inspections by Ukraine’s nuclear power plant operator, EnergoAtom and to its specifications, Westinghouse has satisfied the Ukrainian authorities as a certified nuclear fuel supplier and currently operates as such under the agreement between Westinghouse and EnergoAtom from December 2014, which envisaged a fuel supply contract extension of an existing deal for fuel provided by Westinghouse to some of the Ukrainian VVER-1000 fleet of reactors.
After the Fukushima disaster in 2011 and the closure of a number of nuclear power plants in Japan, nuclear fuel suppliers have faced falling prices globally and tough international competition.
Given its geostrategic situation, the Ukrainian Government’s development plans for its strategic energy needs envisage the country building its first own nuclear fuel fabrication factory. Such a move could also open new international partnership opportunities for Ukraine. However, the facility will not be able to supply fuel in the provisional future, as the new Ukrainian facility has yet to be commissioned any time between now and 2020. The complex does not currently have a completion date, according to the country’s nuclear complex development plan for 2016-20, adopted in November 2016 by the Ukrainian Cabinet of Ministers, as the cabinet of the country’s government is known.
The document stipulates that in the coming four years, the facility would produce 630 nuclear fuel assemblies. It said that in order to achieve this, Ukraine would have to increase production of uranium concentrate and establish the production of rolled zirconium and fuel rod arrays. However, when it becomes operational, the plant would fabricate fuel for both VVER-1000 and VVER-440 reactors.
While Westinghouse is well set as a nuclear fuel supplier in Ukraine, its focus is in using its technological capacity in VVER fuel production elsewhere in Europe as well.
Five countries – Bulgaria, the Czech Republic, Finland, Hungary and Slovakia – operate VVER-design reactors, namely four VVER-1000 and 14 VVER-440 type reactors, which provide up to 52% of the total electricity in these countries.
Ukrainian’s on-going nuclear fuel needs
According to the Ukrainian state statistics service, Ukraine imported $367.3 million worth of nuclear fuel during the first nine months of this year, of which $266.7 million of that fuel was imported from Russia and $100.6 million worth of fuel was imported into Ukraine from Westinghouse’s fuel fabrication facility in Sweden.
EnergoAtom, which is the only nuclear power generator in Ukraine, produced 65.28TWh of power in January-October 2016, down nine and a half percent from the same period in 2015. EnergoAtom’s share in the country’s power production dropped to 52.3% in the first ten months, down from 55.7% in the period January-October 2015.
EnergoAtom said three out of the 15 reactors it operates in Ukraine are currently shut for maintenance and repair, so such operations will have an impact on the volume of nuclear fuel that the country may need at any time, which can have a negative impact on planning and investment in nuclear fuel imports to Ukraine.
Most recently, South Ukraine 2 shut late in November for a scheduled maintenance and refuelling outage, during which Westinghouse fuel assemblies will be loaded into the unit for the first time, according to EnergoAtom’s statement. South Ukraine 2 will become the third unit in Ukraine to use both Russian TVEL and Westinghouse fuel in its reactor core and is expected to restart operations in February 2017. Earlier in 2016, EnergoAtom loaded in addition Westinghouse fuel assemblies into South Ukraine 3 and the 1000MW Zaporozhe 5. Separately, South Ukraine 3 was shut towards the end of November after an emergency control system’s alarm set off that day, EnergoAtom said in a statement.
“There were no violations or any safety issues,” EnergoAtom said. It said radiation levels at the unit are in line with normal levels and that a special team will investigate the cause of the emergency system activation that took place at the unit.
EnergoAtom also restarted the 1000MW Khmelnitski 2 reactor one day ahead of schedule in November, after completing scheduled maintenance, the company said.
Ukraine’s energy strategy to 2030, which was updated in 2012. envisaged 5000 to 7000MW of new nuclear capacity costing approximately $25 billion. The programme aimed to meet the increased electricity demand in the country which is expected to be 307TWh per year by 2020 and 420TWh by 2030, demonstrating the continuity of the Ukrainian Government’s policy to supply half of its electricity from nuclear power.
This would have required 29.5GW of nuclear capacity in 2030, up from 13.8GW now, according to World Nuclear Association analysis. The new government formed in 2014 has confirmed these targets, and said that Ukraine aims to integrate with the European power grid and gas network to make the country part of the European energy market as soon as 2017.
Prospects for Ukraine’s nuclear fuel fabrication facility
In November 2016, the Ukrainian Cabinet of Minister adopted the country’s nuclear complex development plan for 2016-20, but it seems it may need to partner with an international company in order to develop the facility.
Ukraine has got sufficient domestic uranium resources to establish its own nuclear fuel production and replace some imported supplies, according to EnergoAtom, the state-owned nuclear generating company. The country’s nuclear power plants comprise 15 reactors with a total generating capacity of more than 13,800MW. Russia’s TVEL supplied roughly 70% of the nuclear fuel used in Ukraine in 2016 and 60% of that fuel was made using Ukrainian uranium, according to EnergoAtom data.
According to EnergoAtom, by 2020 Ukraine will start mining operations at the Aprelskoe and Safonovskoe uranium deposits in Kirovograd Oblast and Mikolaev Oblast, respectively, in addition to developing the Novokonstantinovskaya deposit in Dnepr Oblast.
Moreover, State Concern Nuclear Fuel, a state-owned Ukrainian company working on establishing an indigenous nuclear fuel cycle in Ukraine, said the plant should have the capacity to handle 400 metric tons of uranium as well as produce 800 fuel assemblies annually. This exceeds what is needed by Ukraine’s existing nuclear power reactors, creating the possibility of exporting some of the fuel, according to information on the company’s website.
“A domestic fuel fabrication facility would ensure diversification of supply and meet the needs of the country’s power reactors”, says Igor Nasalik, Ukraine’s energy minister, speaking at a meeting of the Cabinet of Ministers in November 2016. The question is if the Ukrainian Government will need a partner to build the facility and if the timeframe for the new factory will not move back for a second time.
Reasons to look for partners for the new facility
Ukraine currently has neither the technology nor the equipment to produce nuclear fuel and will have to purchase both of these, according to an analyst close to the development. The plan does not say what companies might be interested in participating in the project. “Fabrication is quite complex, so expertise and technical support from a fuel fabricator is an important consideration”, said a spokesperson for GE-Hitachi regarding the technology used in the new facility.
“As far as PRISM is concerned, it could be used there and could be deployed in a series of power blocks.”
The PRISM reactor is a modular unit designed by GE-Hitachi with a capacity of around 600MW. It can run on either plutonium or conventional uranium-based nuclear fuel and has been suggested as a potential solution for disposal of the UK’s plutonium stockpile, which currently stands in excess of 100 metric tons.
Back in 2010, a government contract for construction of the Ukrainian fuel fabrication plant was awarded to TVEL, as a joint venture between TVEL and Ukraine’s nuclear fuel company. Under the original plan, construction of the facility was to be completed in 2013. Implementation of the fuel fabrication facility project, however, was delayed following Russia’s annexation of Crimea in March 2014 and the outbreak of armed conflict in East Ukraine between Ukrainian government forces and pro-Russian separatists.
EnergoAtom’s President Yuri Nedashkovsky said at a press conference in Kiev in March 2015 that TVEL has not fulfilled its contract obligations and, as a result, the contract to build the plant could be passed on to Westinghouse, the company that came second in the tender.
Ukraine worked with Westinghouse this year on the development of TVZ-WR fuel assemblies that were fabricated at Westinghouse’s fuel facility in Sweden and loaded into South Ukraine 2 and South Ukraine 3, as well as Zaporozhe 5.
EnergoAtom has said that the company expects to obtain permits from the State Nuclear Regulatory Committee of Ukraine in 2017 to also use TVZ-WR fuel in the 1000MW Zaporozhe 1, as well as the 1000MW Zaporozhe 3 and the adjacent and identical Zaporozhe 4, bringing the total number of Ukrainian reactors using Westinghouse fuel to six. The State Nuclear Regulatory Committee will analyse how the Westinghouse fuel performs before any decision is made on whether to eventually move to a full core of Westinghouse fuel at any of the reactors.
In addition, the Ukrainian Government has not yet said whether it would want Westinghouse to construct the nuclear fuel plant. EnergoAtom said in September 2010 that TVEL received the contract to construct the fuel facility because it was willing to invest funds in the project, while Westinghouse was not. However, Westinghouse has made one more step towards consolidating its interests in Ukraine by stepping up the country’s new nuclear safety programme, which will also make electricity production levels from nuclear steadier, more efficient and more profitable.
In the autumn 2016, Westinghouse and EnergoAtom said in a joint statement the two companies will become partners in sustaining the safety of Ukraine’s nuclear reactor fleet. The statement was issued during a visit to Kiev by a special delegation of chief executive officers, including Westinghouse’s Interim President and CEO Jose Gutierrez, led by US Secretary of Commerce Penny Pritzker and the US Department of Commerce.
The new safety optimisation programme (SOP), will deliver continued safety improvements to the Ukrainian nuclear power plants meeting the highest international benchmarks as well as specific requirements associated with the European Union’s standards as specified by the Western European Nuclear Regulatory Association (WENRA).
These improvements will complement the substantial safety- related work already underway through the safety upgrade programme administered by the European Bank for Reconstruction and Development. (EBRD). “The SOP will bring together the best practices of global operating experience and advanced technology combined with Ukrainian experts and industries such as Westron and Turboatom”, according to the joint statement.
Russian nuclear fuel supply chain turns to US and Sweden
Meanwhile, TVEL has signed a contract with a US utility for lead test assemblies of the Russian nuclear fuel TVS-Kvadrat, TVEL said in a statement on its website. “We believe this is the first time Russian fuel has been shipped to the US,” according to Global Nuclear Fuel- Americas. Earlier in 2016 TVEL announced a partnership with GNF-A, which is a venture of General Electric, Hitachi and Toshiba aimed at bringing Russian nuclear fuel to US customers.
Rosatom CEO Sergei Kiriyenko said in the statement that TVEL is ready to make every effort to successfully complete the US NRC’s licensing process for lead test assemblies, or LTAs, of the TVS-Kvadrat fuel. However, neither TVEL nor GNF-A provided details of the potential deal such as the volume and value of the fuel or time of delivery.
The TVS-Kvadrat fuel is a 17-by-17 lattice PWR fuel assembly that TVEL developed for operation in Westinghouse-designed three- and four-loop PWRs. There are 35 such units in operation in the US. The technology is based on a TVEL fuel design used in Russian VVER units.
A London-based energy analyst said in a December interview that the attempted move by TVEL into the US market was somewhat surprising, given that relations between Russia and the US had shown some signs of tension under the Obama administration. The analyst also said that the move by the Russian company was more a symbolic than economic one.
“It is a little bit surprising, given the cost associated with the certification process and the viability of this potential market for the Russians,” the analyst said, adding the US nuclear fuel market was at best static, with nuclear new build projects currently limited. “There is some limited new nuclear construction in the US with the AP1000, but generally you have whole regions of the US where there is only existing nuclear and decommissioning, and where the prospects of new construction are virtually non-existent. Under those circumstances, you have to say that the main benefit to the Russian side is a public relations one. It looks like a bold and aggressive move into a new market, even if they don’t actually benefit from it that much financially.”
TVEL has a 17.7% share of the global nuclear fuel market according to information on Rosatom’s website. It is the sole nuclear fuel supplier for 76 power reactors in Russia and also supplies fuel to generators in 14 other countries, including Armenia, Bulgaria, China, the Czech Republic, Finland, Hungary, Slovakia and Ukraine. The overall value of annual fuel exports by the company exceeds $1 billion it says. In September 2012, Rosatom signed a contract with
the Swedish company Vattenfall Nuclear Fuel for the supply of an experimental batch of Russian fuel TVS-Kvadrat for the Ringhals plant in Sweden. There are also several other fuel deals involving the export of Russian nuclear fuel, including to Western Europe, that TVEL is negotiating, according to Rosatom’s website.