Five years after announcing that it had chosen Pyhäjoki, in northern Finland, as the site for a new Russian-designed 1200 MW nuclear reactor, Finnish company Fennovoima is within sight of a 2018 construction start date. No, this is not the notorious Olkiluoto-3 EPR being builty by Areva– this is Hanhikivi 1, to be built by Rosatom. Journalist Eric Marx travelled to Finland to find out why Fennovoima is succeeding where other new nuclear projects in Europe are struggling.
The largest construction site in Finland juts out into the Bay of Bothnia, a rocky outcrop that is known as the Hanhikivi Peninsula. Busy with large earthmoving diggers, and replete with concrete batching plants and a steep embankment rising 4.6 meters above sea level, in ten years’ time this open patch of land will be home to Finland’s third nuclear power plant and sixth reactor.
Roughly 700,000 cubic tons of rock have been excavated, explains Jouni Sipiläinen, the construction director of Fennovoima, the company owned by a consortium of Finnish companies and municipalities that aims to build and operate the VVER-1200 reactor designed and supplied by Rosatom, the Russian nuclear energy company.
Electric and waste water lines have been laid and over a thousand workers have already passed the required training for project construction. The Russian company Titan-2, which is the main building contractor, has its offices in the area. A two-meter high security fence now rings the entire 555-hectare site, while over there, says Sipiläinen, pointing to two large craters filled with muddy water, is where the reactor and turbine halls will sit.
All that’s needed now is a construction license.
“Hanhikivi will be the most modern, the safest and best plant there is in the world,” proclaims Matti Soronen. The mayor of Pyhäjoki, a municipality of 3,207 inhabitants, Soronen views nuclear power in terms of economic growth. He believes in the technology and is proud of the strong safety record of the country’s four existing nuclear reactors.
If all goes according to plan, Hanhikivi 1 could start producing electricity from 2024. That is welcomed by the industry and energy companies as well as small municipalities across the country, like Pyhäjoki, which are susceptible to sharp increases in electricity prices as a result of costly imports. One of the chief benefits of the plant for Fennovoima’s owners will be the opportunity to purchase dependable and competitively priced energy.
“Hanhikivi will be the most modern, the safest and best plant there is in the world”
Pyhäjoki is one of 57 Finnish owners which comprise of municipalities, industrial companies and power companies that own a piece of the power plant as shareholders in Voimaosakeyhtiö SF, which owns 66% of Fennovoima. The shares don’t equal dividends, but resemble a cooperative, or what’s referred to in Finland as the “mankala” business model. The shareholders finance the project. In turn, they are entitled to tax-free power at producer prices, in proportion to their holdings.
The rest of the shares (34%) are owned by Rosatom through its Finnish subsidiary RAOS Voima. As several dozen municipal utilities are included among the Fennovoima shareholders, this has made for wide-ranging dialogue in town councils across Finland about their participation in the project. Notably, in 2014 the project’s home municipality of Pyhäjoki voted 18 to 3 to host the project. In Finland, the support of the host municipality is indispensable for a nuclear power plant, because the local municipality has the right of veto.
“The problem in northern Finland is we have been losing inhabitants,” says Soronen. The nuclear power plant will employ an estimated 450 to 500 people after it’s built. Some 3,000 to 4,000 will be involved during construction.
In Raahe, a town some 20 kilometres up the coast, the leadership of the SSAB Ruukki steel plant also supports the plans. With 2,800 employees the plant is hungry for cheap electricity. Its iron and steel production consumes one percent of all electricity in Finland. It relies partly upon wind power, but cannot at present expand without more predictable energy flows, especially in winter during peak usage periods.
Along with forestry and farming in the dairy and pork industries, the steel plant is one of Pyhäjoki’s big employers. The Hanhikivi 1 project will change the landscape of the municipality. “We want to build residential buildings and provide new services,” says the mayor. “It’s only natural that we want growth.” According to a poll held in December 2015, two-thirds of the residents of Pyhäjoki are in favour of the project.
The Fennovoima board compared several potential plant suppliers and chose Rosatom because of two deciding factors: familiarity with VVER technology and attractive commercial terms.
“The people of Finland have not lost belief in nuclear itself as we have four good reactors which are all still running today,” says Jussi Lehto, head of Kerava Energy and also the CEO of Voimaosakeyhtiö SF.
Of the four existing reactors in Finland, the two power plant units in Loviisa (to the east of Helsinki) are of the VVER-type. In operation since 1977 and 1980, the units have since been modernized, with their operating permits extended through to the end of the next decade. Currently some 18 VVER units from Russia operate safely in five EU countries.
“We will try to make a profit, but we also want to be responsible for Finland and the global environment”
Another deciding factor was the attractive turnkey agreement that Rosatom offered. This obliges the Russian supplier to take on the risk of any budgetary overruns or timetable delays. Rosatom also bought into the deal, becoming a 34 percent owner after German energy company Eon, one of the original shareholders in the project, decided to pull out of nuclear power in 2013.
According to Lehto, owners’ equity will cover €1.7 billion of the estimated €6.5 billion to €7 billion cost of the reactor, with the rest coming from loans which Rosatom is responsible for securing. The ultimate cost of the electricity to be supplied by the new plant will be around €50/MWh. That is much cheaper than, for example, the £97.50/MWh strike price (for 35 years, inflation-proof) guaranteed by the UK government to the owners of the proposed Hinkley Point C nuclear power plant, which is to be built by EDF of France.
According to Lehto, the project terms contributed to the wide buy-in from Finnish society at all levels.
In late 2014 the Parliament in Helsinki approved the deal by a wide 115-74 vote. The Parliament enacted the condition that owners from Finland or the European Economic Area must always hold a majority ownership of at least 60% in the project. As part of the plant supply contract, Rosatom is obliged to deliver nuclear fuel for at least the first ten years. After that the fuel can be freely tendered.
The deal also makes sense for Finland from a macro-viewpoint. The country imports about 20% of its electricity annually and the government and Finnish industry want to reduce that amount. In January this year, during a cold spell, “we were just lucky to cover peak [electricity] demand and avoid a catastrophe,” says Lehto. Estimates are for Hanhikivi 1 to produce about 9 TWh of electricity annually, which is half the total amount of electricity Finland imported in 2014.
“All the companies that are shareholders are now 100 percent behind the project,” says Lehto. “We will build this,” he continues. “We will try to make a profit, but we also want to be responsible for Finland and the global environment.”
Getting a construction licence
Currently Fennovoima’s main priority is the licensing process. There are roughly 8000 regulatory guidance protocols involving design specs for the plant’s safety, construction and operation, as well as requirements for detailed management plans of the organizations of both Fennovoima and the plant supplier. It is a demanding process even for the most experienced technical oganisation, in keeping with the reputation of the Finnish regulator STUK as one of the strictest nuclear supervisory authorities in the world. Of course, safety is key and the company is committed to taking all the time and making all the efforts needed to fulfill all the required criteria.
Finland’s regulatory process involves a single approval for the construction licence application, unlike the multiple steps found in some other jurisdictions. According to Fennovoima CEO Toni Hemminki, the licensing phase needs the full attention of the whole project organisation. Fennovoima is working on tackling all challenges and is confident to receive the construction license in 2018.
Before even a single design plan can be submitted, STUK requires that the design development and management are according to requirements and reviewed in detail. “In this respect the requirement level of STUK has increased,” says Project Director Minna Forsström. It means the plant supplier Rosatom has to align these procedures into a management system and supply chain that already includes 300 companies.
“The people of Finland have not lost belief in nuclear itself as we have four good reactors which are all still running today”
The Fukushima disaster in Japan in 2011 has led to additional safeguards being implemented across the nuclear industry. “Greater efforts to ensure safety in the wake of Fukushima are an absolute priority”, says Janne Nevalainen, the STUK manager of the Hanhikivi project.
As part of its standard procedures, STUK is currently reviewing the reactor’s double containment silos, passive cooling systems and core catcher. The catcher is a special design feature of the VVER that traps and retains molten core material in case of a meltdown. Passive cooling works via a gravity wall tripwire that functions without the use of any electrical power. Concrete silos at Hanhikivi will be of a thickness ratio that prevents possible radiation leakage, but which will also be strong enough to withstand an outside force such as an airplane crash.
Nevalainen says one of the lessons learned from Olkiluoto 3 is that all aspects need to be verified down to the smallest supplier. Rosatom will “have to show who is doing what and when, and they have to show they have certified the quality assurance and quality control. When those are ready and good, Fennovoima then has to audit the supply chain. And when those audits are complete, and we can see that all work is being done according to instructions, then we will have assurance that things are being done in proper order.”
In Russia at the Leningrad II nuclear plant site a VVER-1200 reactor is currently being built, which is scheduled to become operational in 2018, and serves as a useful reference for Hanhikivi 1. One of the strengths of Rosatom is its experience: it has produced more than 50 VVER family reactors. Fennovoima now employs about 300, and over half of them in Forsström’s project department: she has eight teams of engineers and technicians, of which some have more than 35 years experience in working with VVER technology.
“I’m really proud of our team,” says Forsström. “Collectively, my supporting team has more than 200 years expertise working on large scale projects. I can really say nobody has ever before brought together that kind of team in Finland.”