Although the nuclear energy industry in Ukraine has continued to be dogged by drama and political fallout in the past two decades – and the international community’s wariness with Ukraine has yet to be completely replaced with confidence – nuclear energy is the cornerstone of the country’s economy.

Perhaps recognising this, the president of Energoatom, Ukraine’s national nuclear energy generation company and charged with bringing the structure of nuclear power management into compliance with domestic and international legislation, recently acknowledged that safety is fundamental to Ukraine’s approach to nuclear power. Speaking at the European Commission, Brussels, in February, Yuri Nedashkovskiy said that the strategic goal of Ukraine’s nuclear energy sector was “compliance with all safety norms which today can renew public confidence in the peaceful use of nuclear technology.” However, he also reaffirmed that this was intimately bound up in a continuing commitment to nuclear energy. “We need to ensure the economically effective and competitive operation of the nuclear energy sector in order to ensure the energy security of Ukraine,” he said.

A glance at the statistics shows just how important nuclear power is to Ukraine’s energy security. Today Ukraine has 15 reactors and, according to the country’s Ministry of Energy, nuclear power plants kept supplying 45-48% of Ukraine’s total electricity production from 2000-2005. By the start of 2006, this had reached 50%. A large share of primary energy supply in Ukraine comes from the country’s uranium and substantial coal resources. The remainder is oil and gas, mostly imported from Russia. Ukraine receives most of its nuclear services and nuclear fuel from Russia.

Energoatom operates Ukraine’s 15 units at four nuclear power plants. The country’s nuclear production increased to 87TWh in 2004, which accounted for 48% of total domestic electricity production. The capacity increased from 11,268MWe net in 2003 to 13,168MWe in 2005, which was 26.3% of the country’s total installed capacity. This increase was due to the addition of two new VVER-1000 reactors. All the reactors are Russian VVER types, two being model V-213 VVER-440s and the rest the larger VVER-1000 units.

Seeking independence

In the past couple of years the industry has believed itself to be on a sure enough footing to expand. In 2004, Ukraine commissioned two large new reactors (Khmelnitski 2 and Rovno 4, or ‘K2R4’) and the government plans to build up to 15 new reactors by 2030.

“They are talking about a tremendous amount of reactors,” said Irina Borysova, a project manager at the World Nuclear Association. The long-term aim is to increase the amount of nuclear energy to 60% of the country’s fuel by 2030. “The future is looking good for the industry,” said Borysova. “Energy production will be all about nuclear and local coal; and to be honest nuclear is the priority because you really can’t see how local coal is going to potentially produce that much.”

The over-arching impetus for the expansion is Ukraine’s desire to wean itself off its dependency on Russian gas. But according to Borysova, while this was intensified by January’s drama – when Russia threatened to “turn the gas taps” off in Ukraine – the desire and intention to be self sufficient long preceded this.

“January’s incident emphasised the urgency,” she said. “Ukraine has seen this as a potentially worrying situation for a long time. They just didn’t expect it to actually happen. The reality is that Ukraine will always need to buy Russian gas – it’s just not possible to avoid it – but the aim is to increase the local supply of energy so that they are not as dependent on Russian gas as they are today.”

While reducing Russian gas imports to a minimum, Ukraine’s aim is to increase the amount of local uranium it uses to supply its power plants from the current level of 30-50% to 100% by 2030 and to supply all energy needs from coal and nuclear. But to do so, Ukraine currently has to address the state of its uranium mines, which have been poorly neglected since the collapse of the Soviet Union, and bring them into satisfactory condition. “The local coal is quite bad quality too,” added Borysova. “A lot of effort has to be made to significantly recondition the power plants so that they can burn the low grade coal more efficiently. Sometimes the power plants are burning both gas and coal, depending on which fuel is available.”

In an increasingly western-oriented Ukraine, some of the reactors may be developed along the lines of western, rather than Soviet, reactors. Khmelnitski 3, for which the concrete foundation is already in place, was originally designed as a VVER reactor but it is understood that senior figures within the country’s nuclear industry are increasingly sympathetic to switching it to a western design.

The expansion is presenting other challenges. With an operational life of around 30 years, Ukraine must start to decommission its oldest reactors as soon as 2011 or 2012. In his speech in Brussels, Nedashkovskiy acknowledged that the design lifetime for all nuclear power plants in Ukraine, apart from K2R4, will expire by 2025. However, he added that a programme of life extension was “economically and technically reasonable.” In the case of Rovno 1 and 2, generally considered as ‘generation I plus’ VVERs, this is likely to result in political pressure from the European Union about ensuring safety. There are even fears that such pressure may lead to premature closure of the two reactors.

However, Ukraine also faces an immediate and pressing need to address the load shortfall of transmission lines. At present, the load factor of Ukraine’s power plants stands at around 75% – down from 81% in 2004. “There just isn’t sufficient transmission capacity,” said Borysova. While loans from the European Bank for Reconstruction and Development (EBRD), World Bank and local financial institutions have been approved, the sluggish nature of the load factors is holding the nuclear industry back. “It’s the major issue that needs to be addressed right now,” said Borysova. “After the collapse of the Soviet Union, energy demand dropped to two times lower than it was before and there was no need to reinforce the transmission lines. But demand is rising and they just can’t keep up.” However, Nedashkovskiy calculates that by 2015-2016, the load factor will have risen to 85%.

Finishing K2R4

Yet, while Ukraine’s nuclear future appears reasonably buoyant, for critics of the Ukrainian nuclear industry, the word ‘Chernobyl’ is often followed in the same breath with K2R4. These two reactors were intended to replace the 1800MWe of power lost to the national grid by the closure of Chernobyl 1, in 1996, and Chernobyl 3, in 2000.


Rather like a tortoise slowly working its way through an obstacle course, Energoatom proceeded to construct the units

The facts are that, in August and October 2004, Khmelnitski 2 in the west of the country and Rovno 4 in the northwest, respectively, were connected to the grid. But this was merely the conclusion of a long and interrupted construction process which was in part linked to Chernobyl: even though the reactors at the Chernobyl site are now permanently shutdown, the dispute over payments and replacement of energy has rumbled on ever since.

There is no doubt that Chernobyl’s shadow lingered over the building of these two plants in more than one way. Essentially, the two parties involved – Ukraine and the G7 – appeared content to indulge in a spot of brinkmanship and to squabble over just what payment would be made in return for what action. While both parties agreed that it was critical to ensure that no such accident ever happened again, Ukraine was also keen to secure funding for electricity generation.

Following a 1995 Memorandum of Understanding, in 2000 the European Bank for Reconstruction and Development (EBRD) approved a $215 million loan towards completion of K2R4. Crucial to agreeing this finance was that the parts would be built securely to western safety standards. Anti-nuclear groups then entered the fray, with Greenpeace gaining widespread publicity for their claim that the completion of the plants did not fulfil any of the EBRD’s financing criteria.

The promised loan from the EBRD and one of $585 million from Euratom were deferred in 2001, not specifically because of safety concerns but because Ukraine’s government refused to double the wholesale price of power (to ¢2.5/kWh).

Meanwhile, rather like a tortoise slowly working its way through an obstacle course, Energoatom proceeded to construct the units, drawing on local finance and a bond issue. In August 2004, the then Ukrainian president Leonid Kuchma said that western governments had failed to honour their 1995 undertakings to assist his country in exchange for closing the Chernobyl plant, particularly in relation to the K2R4 completion, grid infrastructure and a pumped storage hydro plant. The following year, the EBRD approved a smaller loan of $42 million and Euratom similarly shrunk the size of its original loan to $83 million.

“The whole situation was quite ridiculous,” said Borysova. “The EU complained about Ukraine not complying with conditions and Ukraine complained that the EU let them down. In the end, I think it was only down to some strong domestic political pre-election incentives that the two plants were built. Otherwise they would not have been built by today.”

Chernobyl legacy

And Chernobyl will not go away. At the start of the year, the EBRD, which is the largest investor in Ukraine, expressed concern about the need to resolve the political, legal, regulatory and administrative issues that have hindered the Chernobyl Shelter Implementation Plan, which is designed to replace the sarcophagus set up around the destroyed reactor unit. The full cost is put at $1091 million. As of January 2006, more than $775 million had been given by the donor countries, mainly from the G7, and a further $180 million has been promised. “A major test for Ukraine in terms of credibility with the international community will be the timely and successful implementation of the international nuclear safety measures and respective policies for its nuclear safety systems,” said a spokesman for the EBRD.


Computer generated image of the new safe confinement structure, which will enclose the damaged Chernobyl 4 and the deteriorating object shelter (‘sarcophagus’)

The level of concern was slightly elevated following the admission at that February meeting in Brussels by Nikolay Steinberg, Ukraine’s deputy minister for nuclear energy, that the collective exposure of personnel in Ukraine’s nuclear power plants in 2005 was slightly higher than the international average. He also acknowledged that “a long-term strategy of radioactive waste management had not yet been developed, and that the financial aspects of radioactive waste management are not settled.”

Ukraine is also looking abroad. Back in January the head of the Russian Federal Atomic Energy Agency, Sergei Kiriyenko, visited Ukraine – at a time when political relations between the two countries remained in a state of heightened permafrost in the wake of the Orange Revolution of late 2004 – and announced that his country was keen to cooperate with Ukraine in building nuclear power plants in third countries. A spokesman for the Ukrainian prime minister’s office said the suggestion had been favourably received. “We spoke about the use of each other’s experience,” he said. “It was a very good proposal.”

To outside observers it may appear paradoxical that the two countries would even consider such a move, given their regular spats – not least the standoff in January over gas prices and supplies. “There’s never been any tension between engineers,” said Borysova. “It’s only been between governments and politicians. Ukraine is dependent on Russian technology for its nuclear power plants – they provide the fuel, parts and expertise and that means it’s not a bad idea for the two to work together. Ukraine is very familiar with Russian technology and you see Ukrainian workers involved at Bushehr in Iran and at the Indian VVER plants.”

Just as the past has taken several unexpected twists and turns, so the future may also hold some interesting switches in direction for the country’s nuclear industry.

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Rather like a tortoise slowly working its way through an obstacle course, Energoatom proceeded to construct the units