A national level agreement on financing for the proposed 4.8 GW Akkayu nuclear plant has been agreed between Russia and Turkey, with the result that construction work on Turkey’s first nuclear power plant should be able to start in 2011, with completion expected in 2018. The deal, first signed on 12 May by Russia’s president Dmitry Medvedev and Turkey’s prime minister Recep Tayyip Erdogan after more than a year of negotiations between officials of the two states, still depends on agreement by the parliaments of the two countries and the completion of final technical studies, expected during early 2011.

The agreement, signed during a state visit to Ankara by the Russian president, gave approval for the construction of the plant. Unusually, perhaps uniquely, it has been structured as a build-own-operate project, representing what Russian nuclear officials have portrayed as a precedent-setting formula for implementing nuclear power projects in new markets and probably the first time that such a sensitive power plant has been owned and operated outside the host country. The integrated character of Russian state-owned holding company Rosatom allows it to offer a package deal including construction and operation of a nuclear plant abroad, plus fuel and fuel cycle services and financing, according to officials of Atomstroyexport, the Russian nuclear export management company. Although the plant will be wholly owned and operated by the Russian-led consortium, it may have a Turkish partner or partners in time according to the Turkish energy ministry. Turkish conglomerate Park Teknik and utility Elektrik Uretim AS, or EUAS, could take up to 49% of the project, according to media reports.

The new plant will consist of four 1200 MW VVER units of the kind now being built in Russia itself. Under the agreement, power from two of the units is guaranteed an offtake price of 12.35 euro-cents per kilowatt-hour over 15 years after commissioning, but there is no similar guarantee for the second pair of reactors. The guarantee mechanism is apparently very complex but that it could correspond to a price guarantee for 70% of the first two reactors’ output and for 30% of the second pair’s output.

The offtake price has been a bone of contention throughout. Previous negotiations over the proposed plant had centered on a consortium of Russia’s Atomstroyexport, utility Inter RAO (controlled by Rosatom) and Park Teknik of Turkey, which had submitted the only bid in a 2008 tender. This tender was based on the level of offtake guarantee they would require to build a station of up to 5000 MW. Other potential bidders requested an extension to the bid deadline, citing problems finalising their bids in the wake of the global financial crisis, but these were disallowed and the Atomstroyexport-led consortium allowed to resubmit its bid after its initial bid of an offtake guarantee of euro-cents 21.16/kWh was rejected as too high. (The current price on Turkey’s infant power market is around 4 to 14 euro-cents per kWh). The consortium’s revised bid of euro-cent 15.35/kWh was still under negotiation when a Turkish court ruling forced the tender to be scrapped (ruled invalid owing to problems it cited with the pricing of electricity from the plant). But the government said it would negotiate with the Russian government for construction of the plant. That strategy has led to speculation that the award to Russian firms may be linked to concessions from Russia on other energy issues, an impression strengthened when .

A previous tender to build a nuclear power plant at Akkuyu was cancelled in 2000, partly because financing proved difficult to arrange.