FINLAND: In Finland, Nuclear Renaissance Runs Into Trouble
As the Obama administration tries to steer America toward cleaner
sources of energy, it would do well to consider the cautionary tale of
this new-generation nuclear reactor site.
After four years of construction and thousands of recorded defects and
deficiencies, the price tag on the reactor in Olkiluoto, Finland, has
climbed at least 50 percent.
Inside a water storage tank, above, at the nuclear plant in Olkiluoto, Finland.
construction on muddy terrain on this Finnish island was supposed to be
the showpiece of a nuclear renaissance. The most powerful reactor ever
built, its modular design was supposed to make it faster and cheaper to
build. And it was supposed to be safer, too.
But things have not gone as planned.
After
four years of construction and thousands of defects and deficiencies,
the reactor's 3 billion euro price tag, about $4.2 billion, has climbed
at least 50 percent. And while the reactor was originally meant to be
completed this summer, Areva, the French company building it, and the
utility that ordered it, are no longer willing to make certain
predictions on when it will go online.
While the American nuclear
industry has predicted clear sailing after its first plants are built,
the problems in Europe suggest these obstacles may be hard to avoid.
A
new fleet of reactors would be standardized down to "the carpeting and
wallpaper," as Michael J. Wallace, the chairman of UniStar Nuclear
Energy - a joint venture between EDF Group and Constellation Energy, the Maryland-based utility - has said repeatedly.
In the end, he says, that standardization will lead to significant savings.
But
early experience suggests these new reactors will be no easier or
cheaper to build than the ones of a generation ago, when cost overruns
- and then accidents at Three Mile Island and Chernobyl - ended the
last nuclear construction boom.
In Flamanville, France, a clone of the Finnish reactor now under construction is also behind schedule and overbudget.
In
the United States, Florida and Georgia have changed state laws to raise
electricity rates so that consumers will foot some of the bill for new
nuclear plants in advance, before construction even begins.
"A
number of U.S. companies have looked with trepidation on the situation
in Finland and at the magnitude of the investment there," said Paul L.
Joskow, a professor of economics at the Massachusetts Institute of Technology,
a co-author of an influential report on the future of nuclear power in
2003. "The rollout of new nuclear reactors will be a good deal slower
than a lot of people were assuming."
For nuclear power to have a
high impact on reducing greenhouse gases, an average of 12 reactors
would have to be built worldwide each year until 2030, according to the
Nuclear Energy Agency at the Organization for Economic Cooperation and Development. Right now, there are not even enough reactors under construction to replace those that are reaching the end of their lives.
And
of the 45 reactors being built around the world, 22 have encountered
construction delays, according to an analysis prepared this year for
the German government by Mycle Schneider, an energy analyst and a
critic of the nuclear industry. He added that nine do not have official
start-up dates.
Most of the new construction is underway in countries like China and Russia, where strong central governments have made nuclear energy
a national priority. India also has long seen nuclear as part of a
national drive for self-sufficiency and now is seeking new nuclear
technologies to reduce its reliance on imported uranium.
By comparison, "the state has been all over the place in the United States and Europe on nuclear power," Mr. Joskow said.
The
United States generates about one-fifth of its electricity from a fleet
of 104 reactors, most built in the 1960s and 1970s. Coal still provides
about half the country's power.
To streamline construction, the Nuclear Regulatory Commission
in Washington has worked with the industry to approve a handful of
designs. Even so, the schedule to certify the most advanced model from
Westinghouse, a unit of Toshiba, has slipped during an ongoing review
of its ability to withstand the impact of an airliner.
The
Nuclear Regulatory Commission has also not yet approved the so-called
EPR design under construction in Finland for the American market.
This month, the United States Energy Department
produced a short list of four reactor projects eligible for some loan
guarantees. In the 2005 energy bill, Congress provided $18.5 billion,
but the industry's hope of winning an additional $50 billion worth of
loan guarantees evaporated when that money was stripped from President Obama's economic stimulus bill.
The industry has had more success in getting states to help raise money. This year, authorities permitted Florida Power & Light
to start charging millions of customers several dollars a month to
finance four new reactors. Customers of Georgia Power, a subsidiary of
the Southern Co., will pay on average $1.30 a month more in 2011,
rising to $9.10 by 2017, to help pay for two reactors expected to go
online in 2016 or later.
But resistance is mounting. In April,
Missouri legislators balked at a preconstruction rate increase,
prompting the state's largest electric utility, Ameren UE, to suspend plans for a $6 billion copy of Areva's Finnish reactor.
Areva,
a conglomerate largely owned by the French state, is heir to that
nation's experience in building nuclear plants. France gets about 80
percent of its power from 58 reactors. But even France has not
completed a new reactor since 1999.
After designing an updated
plant originally called the European Pressurized Reactor with German
participation during the 1990s, the French had trouble selling it at
home because of a saturated energy market as well as opposition from
Green Party members in the then-coalition government.
So Areva turned to Finland, where utilities and energy-hungry
industries like pulp and paper had been lobbying for 15 years for more
nuclear power. The project was initially budgeted at $4 billion and
Teollisuuden Voima, the Finnish utility, pledged it would be ready in
time to help the Finnish government meet its greenhouse gas targets
under the Kyoto climate treaty, which runs through 2012.
Areva promised electricity
from the reactor could be generated more cheaply than from natural gas
plants. Areva also said its model would deliver 1,600 megawatts, or
about 10 percent of Finnish power needs.
In 2001, the Finnish
parliament narrowly approved construction of a reactor at Olkiluoto, an
island on the Baltic Sea. Construction began four years later.
Serious
problems first arose over the vast concrete base slab for the
foundation of the reactor building, which the country's Radiation and
Nuclear Safety Authority found too porous and prone to corrosion. Since
then, the authority has blamed Areva for allowing inexperienced
subcontractors to drill holes in the wrong places on a vast steel
container that seals the reactor.
In December, the authority
warned Anne Lauvergeon, the chief executive of Areva, that "the
attitude or lack of professional knowledge of some persons" at Areva
was holding up work on safety systems.
Today, the site still
teems with 4,000 workmen on round-the-clock shifts. Banners from dozens
of subcontractors around Europe flutter in the breeze above temporary
offices and makeshift canteens. Some 10,000 people speaking at least
eight different languages have worked at the site. About 30 percent of
the workforce is Polish, and communication has posed significant
challenges.
Areva has acknowledged that the cost of a new reactor
today would be as much as 6 billion euros, or $8 billion, double the
price offered to the Finns. But Areva said it was not cutting any
corners in Finland. The two sides have agreed to arbitration, where
they are both claiming more than 1 billion euros in compensation.
(Areva blames the Finnish authorities for impeding construction and
increasing costs for work it agreed to complete at a fixed price.)
Areva announced a steep drop in earnings last year, which it blamed mostly on mounting losses from the project.
In
addition, nuclear safety inspectors in France have found cracks in the
concrete base and steel reinforcements in the wrong places at the site
in Flamanville. They also have warned Ãlectricité de France, the
utility building the reactor, that welders working on the steel
container were not properly qualified.
On top of such problems come the recession,
weaker energy demand, tight credit and uncertainty over future
policies, said Caren Byrd, an executive director of the global utility
and power group at Morgan Stanley in New York.
"The warning lights now are flashing more brightly than just a year ago about the cost of new nuclear," she said.
And
Jouni Silvennoinen, the project manager at Olkiluoto, said, "We have
had it easy here." Olkiluoto is at least a geologically stable site.
Earthquake risks in places like China and the United States or even the
threat of storm surges mean building these reactors will be even
trickier elsewhere.
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