Finland pulls plug on Russian-backed nuclear reactor project

Hanhikivi A mock up of the Hanhikivi nuclear power plant. Credit: Fennovoima

An energy consortium in Finland has abandoned a controversial plan to build a Russian nuclear power plant in the Nordic country, with Moscow’s invasion of Ukraine dealing the project a fatal blow, the Finnish backers of the project have said.

The Fennovoima group said in a statement on Monday that the planned Hanhikivi plant has encountered significant delays in recent years and that because of the situation in Ukraine, “cooperation with [Rosatom, Russia’s state nuclear corporation] is terminated with immediate effect and both the design and licensing work and works at the Hanhikivi 1 site with [Rosatom] end.”

The Fennovoima project has been mired in controversy since the beginning, with a former Finnish environmental minister telling the Financial Times in 2014 that it represented “Finlandisation” – a laden term that refers to a smaller country adapting policy to suit a larger, more powerful neighbor.

At the root of the controversy was that Rosatom was not just the supplier of the Hanhikivi 1 reactor but also the Fennovoima consortium’s main shareholder. Rosatom owns a 34 percent stake in the company with the rest spread among Finland’s Fortum energy group, steelmaker SSAB and Outokumpu, and local municipalities.

Finland’s government approved Rosatom’s involvement in 2014 – though surveys suggested Finns felt growing unease about the deal following Russia’s annexation of Crimea earlier that year.

“The decision to terminate the…contract with [Rosatom] is not made lightly,” Monday’s Fennovoima statement read. “There have been significant and growing delays during the last years. The war in Ukraine has worsened the risks for the project. [Rosatom] has been unable to mitigate any of the risks.”

The Finnish companies behind the Fennovoima project and local politicians have cast about for ways to terminate the contract since the Russian invasion of Ukraine began two months ago. After Russian forces initiated their attack, Finland’s economy minister, Mika Lintila, had said it would be “absolutely impossible” to grant a construction permit for the project.

Helsinki’s military non-alignment strategy has also frayed in that time. Finland shares a 1,300 kilometer land border with Russian, and local Finnish media have reported that the government plans to announce an application to join Nato, the western defense alliance, as early as May 12.

Rosatom is disappointed with the decision, which it finds “absolutely incomprehensible,” Interfax reported, citing comments from the state-owned company. It said that the decision was taken without detailed discussions with shareholders and that it reserved the right to defend its interests.

Fennovoima’s management said it was too early to speculate on what would happen next and whether it would seek another partner to complete the power plant.

“I think there will be need for nuclear power also in the future but that’s only my personal opinion,” the chairman of Fennovoima’s board, Esa Harmala, told reporters on Monday.

The cost of the planned facility was initially set at 7.5 billion euros and Harmala said the consortium had already spent 600-700 million euros on the facility.