Rosatom considers delaying reactor commissioning

30 October 2017

Russian state nuclear corporation Rosatom is considering postponing commissioning new nuclear plants in the face of rising energy prices and pressure from competitors and consumers, Kommersant reported on 25 October.

The situation is exacerbated by the Belorussian nuclear plant, which, in the absence of a real export potential in the west, will inevitably export power to Russia, impacting on the demand for new Russian capacity, the paper noted. Initially, the Belarus NPP was expected to export power to Lithuania, but Lithuania has ruled out this possibility. Rosatom’s plans in the domestic market have already been adjusted, with only five large units now under construction, but there are concerns that this may also affect its foreign projects, which are a key element in Rosatom’s future development.

Rosatom is ready to discuss postponing the commissioning of new units being built in Russia under power supply contracts (Dogovor Postavki Moshnosti -DPMs), which guarantee a return on investment through increased payments from consumers. DPM payments for NPPs continue for 20 years, but penalties are incurred for the late startup of a plant.The relatively high DPM payments for NPPs traditionally cause discontent among consumers and competitors, Kommersant  said. The commissioning of a new 885MWe unit at Beloyarsk NPP earlier this year, for example, resulted in a significant increase in energy prices, the paper added. 

As a result, the government has been discussing reducing payments for new nuclear plants. In September, the Community of Energy Consumers (CEC) proposed postponing the introduction of nuclear utility Rosenergoatom’s new units by six months to two years. On 9 October, Deputy Prime Minister Arkady Dvorkovich instructed the Ministry of Energy, the Ministry of Economy, the Federal Antimonopoly Service and Rosatom to work on this proposal. According to CEC estimates, the price of new nuclear capacity is 25-30 times higher than the price for old generation capacity.

Rosatom disputes the calculations made by critics citing the high cost of nuclear power plants.  First Deputy Director General for Operations Management at Rosatom, Alexander Lokshin, attributed this to the government's decision to add to the cost of new units a fee for technical connection of the plants to power networks at a rate of 6% for 10 years. "These funds, in fact, cannot be counted as part of Rosenergoatom’s revenues, as transmission costs are transferred to the Federal Grid Company."

Rosatom and the government are currently discussing various possibilities, including shifting the commissioning dates for new units at  Leningrad-II,  Novovoronezh-II and Rostov. However, the Ministry of Energy is not ready to release Rosatom from paying fines on DPM for late commissioning, Kommersant said. Rosatom has also made it clear that any reduction in DPM payments would adversely affect the finances of Rosenergoatom and Rosatom, and would have a hugely negative impact on the advancement of Russian nuclear technologies abroad, Kommersant noted.

Given the reduced demand for energy in Russia, Rosenergoatom has already curtailed the investment programme, and some nuclear projects have been postponed or frozen including construction of a commercial unit with a fast neutron BN-1200 reactor at Beloyarsk. Kommersant confirmed, citing Rosatom sources,  that the exclusion of budgetary funds from the DPM would reduce Rosenergoatom’s investment programme, which could affect the construction of the VVER-TOI project lead units at the Kursk-II NPP (so far only at the preparatory stage). VVER-TOI is seen as a key export product, although so far there are no foreign contracts for it because of the lack of reference blocks in Russia. Rosatom says negotiations with potential international customers depend building the first reference VVER-TOI as soon as possible.

Reactors at home and abroad

Currently, two units are planned for start up later this year ready for commercial operation in 2018 – Leningrad II-1 (a VVER-1200) and Rostov 4 (a VVER-1000). Pre-commissioning activities are underway at both units. Unit 1 at Novovoronezh-II (the first VVER-1200 unit) began commercial operation earlier this year. However, this represented a delay of several months due to technical problems, as a result of which Rosatom became liable for fines under the DPM scheme. Work is also progressing at Leningrad II-2  (currently scheduled for commissioning in February 2020) and Novovoronezh-II-2 (currently slated for commissioning in January 2019). These dates may now be changed depending on the outcome of the ongoing discussions.

Meanwhile, Rosatom continues with its plans for construction abroad.  Plans to build 40 units in 14 countries by 2030 create economies of scale, which can reduce project construction costs by over 30%, according to Andrei Rozhdestvin, CEO of Rosatom France and Vice President of Rusatom International Network. He told a recent meeting of Les Entretiens Européens et Eurafricains in Brussels that Novovoronezh II-2  is expected to come online by the end of the year, marking the start of a “construction series”. He said Rosatom’s decision to continue nuclear construction after the 2011 Fukushima accident had made possible economies of scale. Competition from other energy sources had pushed Rosatom to improve its competitiveness. He said that the main factors behind the increase in nuclear projects costs over the past decade were supplier agreements and risk management. Improved project management practices and the use of digitalisation technology had helped Rosatom reduce these costs, he noted.

Earlier this year, Rosatom deputy director-general Vyacheslav Pershukov told RBC television that Rosatom has a “huge portfolio” of $130bn, but that once after current orders for the construction of NPPs abroad were completed, it may have no more foreign orders. Rosatom would then focus more on operational maintenance and repair of NPPs and nuclear fuel supplies, although this may not be enough for the company to “develop”. He added that Rosatom is planning to focus on the market for floating NPPs, noting a “huge” interest from countries with isolated islands remote areas with no grid connection.

 



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