Baltic NPP debacle: Construction reported halted, possibly mothballed


Publish date: May 30, 2013

Written by: Andrey Ozharovsky

Translated by: Maria Kaminskaya

MOSCOW – Two subcontractors for Kaliningrad Region’s Baltic Nuclear Power Plant (Baltic NPP) say works at the site are being stopped and a two-year freeze is expected on the construction. Hitting a wall of uniform rejection after years of courting energy importers and investors in Europe, the project has Moscow attempting a last-ditch look at a limited pool of smaller reactor designs – but reeks of a prompt demise

Representatives of two companies subcontracted at the site of the Baltic NPP – a nuclear power plant that Russia is building in the town of Neman in the westernmost exclave of Kaliningrad Region, near the border with the European member nation of Lithuania – have told Kaliningrad-based news outlet RUGRAD.EU (in Russian) that works at the station have been halted and, one of the sources said, “the station will be mothballed, the many workers will be put on leave.”

The other source told RUGRAD.EU that “construction is being frozen for two years, no idea what to do with the migrant workers.”

The Baltic NPP is recieving no joy from the public either: A poll conducted between May 15 and 21 by the independent Kaliningrad Monitoring Group showed 48% percent of local residents opposed to the plant’s construction, while only 30% percent support it, according to the Ecodefense environmental group. 

All of this taken together sparks doubt that the station as the Russian State Atomic Energy Corporation Rosatom planned it – a two-unit plant built to a latest Rosatom design known as AES-2006 (NPP-2006), based on the VVER-1200 reactor – may be completed at all.

On May 24, reports were carried by the Russian media saying Rosatom was considering reducing reactor capacity for the Baltic NPP. A story on the Novy Kaliningrad website (in Russian) said an instruction was issued by Rosatom head Sergei Kiriyenko to explore the option of using reactors of smaller capacity than was earlier planned at the site. Instead of two units of 1,150 megawatts each, 640- and 40-megawatt reactors may be under discussion, the story said, citing a report by the Russian news agency Interfax, which relied on information from industry sources.

The total capacity of the Baltic NPP, where construction has already started, may thus be cut by more than three times – from 2,300 to 680 megawatts.

Novy Kaliningrad cited Interfax and its source as saying that the issue is that of looking into the possibility of building at the Baltic NPP site “firstly” units of smaller capacity, and putting online the large-capacity reactors “upon the availability of contracts for consumption and a power delivery scheme.”

This means, in effect, that five years forward since a construction agreement was signed with the government of Kaliningrad Region in August 2008, there are still no power purchasing contracts for the future station’s output, nor any clarity as to how this power would be delivered to the grid.

However, according to one of Interfax’s sources, Novy Kaliningrad said, equipment is still being produced for the 1,150-megawatt units.

Export hopes spurned

Kaliningrad Region – Russia’s territory wedged between the Baltic Sea to the west, Lithuania to the north and east, and Poland to the south, with Belarus lying further to the east – is currently energy sufficient: Kaliningradskaya Thermal Power Plant 2 was built there just two years ago. But it lacks the necessary modern transmission and distribution lines needed to accommodate a 2,300-megawatt nuclear power plant with either export or internal power consumption as the intended goal of future production.

Rosatom’s search in the past three years for partners in Europe has failed to deliver either future energy buyers or potential shareholders willing to pledge funds to the project – a first in which the Russian nuclear industry has made 49% equity available to a foreign investor. Rosatom has also been unable to secure any loans for construction from European banks. This makes the predominantly export-oriented project – one that, furthermore, has been criticized hard for lacking ecological and safety assurances – economically indefensible, something that both experts and environmentalists have stated for years.

Additional pressure against the project has been provided from Kaliningrad’s immediate neighbor Lithuania, which has repeatedly voiced its disapproval of the Baltic NPP and expressed concerns about its safety.

In an earlier story of May 14 (in Russian), linking to a Russian-language report on the Lithuanian website Delfi.Lt, Novy Kaliningrad quoted Lithuanian President Dalia Grybauskaitė as saying “Lithuania, just like the entire [European Union], can only purchase electric power from those sources that are safe […]” in response to a question about the prospects of Vilnius buying power supplies from the Baltic NPP.

… but Rosatom keeps grasping at straws

Furthermore, Reuters’ Russian edition report cited on May 23 an unnamed industry source familiar with the Baltic NPP’s latest developments as saying that Rosatom wants to build smaller reactors at the site because of Russia’s Baltic neighbors’ plans to pull the plug on their grids’ operation within the unified power network of the former USSR.

Lithuania – just like the other two ex-USSR republics, Estonia and Latvia, still connected with Russia by a unified transmission grid – is preparing to withdraw in accordance with Europe’s plans, the Reuters story said, with the need to develop the European energy market as a stated priority.

Reuters quoted its source as saying that this “may result in that the Kaliningrad Region grid will have to operate in an isolated mode, and reactors of a smaller installed capacity will in this case provide for a better reliability of electric power supplies.”

Rosatom will study replacement reactor candidates within the month, Reuters’ source told the agency.

The nuclear corporation, according to the story, nonetheless does not completely reject the idea of the large VVER-1200 reactors and plans to continue its search for customers for export supplies.

No official confirmation has yet come on stopping construction in Neman, where concrete placement for the containment building foundation was completed last December at the site of the first reactor unit, and a core catcher – a device designed to catch the molten reactor core in case of a meltdown – was installed. A construction pit has been prepared for the second unit’s reactor building.

In a March 28 press release by Rosatom’s Nizhny-Novgorod-based engineering company NIAEP, which designs and manages construction of nuclear power plants, NIAEP head Valery Limarenko said: “At the moment, the construction needs some 2,000 workers. By mid-year, 3,000 people should be working at the two units, and by the end of the year, 4,000.”  

But in a climate so unfavorable to Rosatom’s doomed brainchild, a decision to halt the construction would seem the only logical option left. And with no time-consuming and expensive project documentation yet prepared for smaller-capacity reactors, there is hope that the region will remain nuclear-free for at least a foreseeable future.  

Small reactors first

According to the cited Interfax report, a number of Rosatom enterprises have been asked to study the possibility of “expanding the range of capacities of reactors” intended for the Baltic NPP: the St. Petersburg-based Atomenergoproekt (SPbAEP), Podolsk’s OKB Gidropress, Afrikantov OKBM in Nizhny Novgorod, and Russia’s nuclear power plant operator company Rosenergoatom.

The possible candidates are 640-megawatt reactors of the type VVER-640, designed by SPbAEP and Gidropress, and Afrikantov OKBM’s 40-megawatt KLT-40C, based on marine reactor designs.

The Baltic NPP’s general contractor, Nizhny Novgorod’s NIAEP, and Rosenergoatom, the project’s construction management company, have been instructed to “develop the unit launch priority order” taking into account that a decision may be made to build the smaller-capacity units on a first-priority basis.

But the Baltic NPP cannot count on any smaller capacity units already prepared for construction, and works will unlikely resume at the site according to a revised plan within the next 18 to 24 months, if at all.

In the meantime, Rosatom will have to assess whether it can fit a new reactor into the foundation already built at the site or the NPP-2006 project in Neman will have to be mothballed and new construction will have to start from scratch at a different location.

KLT-40C: Built for a floating NPP

The KLT-40C was developed by Afrikantov OKBM in the 1990s based on reactor designs for marine propulsion systems and is meant for operation on board of the non-self-propelled berth-connected vessel Akademik Lomonosov, currently under construction in St. Petersburg. The vessel, essentially a barge, will have two such reactors on board and is slated for service as a floating combined heat-and-power nuclear power plant to supply electricity and heat to a remote submarine base in Russia’s Kamchatka Region. Rosatom has been looking to expand the project to a series of such floating nuclear plants, with potential prospect of selling future units to customers abroad.

The KLT-40C is of the same class of pressurized water reactors to which the larger VVERs belong. It has a thermal capacity of 150 megawatts. Based on the project design, the floating nuclear power plant’s reactor will supply around 40 megawatts in electric power and 146 gigacalories per hour of thermal energy, consuming uranium fuel with a fissile uranium concentration of up to 18.5% – an enrichment level quite high for commercial nuclear reactors, which typically run on uranium enriched to 3% to 5%.

More detailed information about the KLT-40C reactor and the floating nuclear power plant project is available in Bellona’s 2011 report Floating Nuclear Power Plants.

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The floating nuclear power plant project, floundering along now for over a decade, is yet to see completion. Clearly, adapting the project for ground-based operation will necessitate significant additional development.

Furthermore, where the reactor’s electric output of 40  megawatts presents no problem, one of the issues that will need solutions is what to do with the reactor’s thermal output of 146 gigacalories per hour. One assumption is that this heat will be released into the environment via the station’s cooling towers, just like the VVER-1200-based project provided for, but this is likely to further degrade the already lamentable economics of a KLT-40C unit.

VVER-640: A blast from the past?

A VVER-640, a step in the series of evolving VVER designs, has a thermal capacity of 1,800 megawatts and an electric capacity of 640 megawatt. Work on developing a nuclear power plant design based on a VVER-640 V-407 reactor started in the late 1980s. These reactors were considered for replacing the aging capacities of the Leningrad and Kola Nuclear Power Plants, near St. Petersburg and in Russia’s far northern Murmansk Region, respectively, but the projects never came to fruition.

VVER-1200s are currently under construction at the site of the second line of Leningrad NPP.

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The VVER-640 design is almost a quarter-century old, and has never been realized in practice. This means that its feasibility studies and safety and performance characteristics are based on theoretical calculations only. There is no real life data that would support the solutions proposed in the design, and the various isolated modeling experiments at test facilities do not paint a comprehensive picture of future operation – especially where either design-basis or beyond-design-basis accident scenarios are concerned.

A press release (in Russian) on the website of the VVER-640’s developer, SPbAEP, announcing that the VVER-640-based medium-capacity NPP design is “ready for construction in principle,” says that “no more than 18 months will be needed for the updating, licensing, and preparation of documentation.”

This seems a rather optimistic assessment, given that, as the statement explains, project updating is understood to include bringing the project in line with the existing regulatory system, taking into account the latest efficient technical solutions for VVER-based NPP designs, and other necessary stages.

SPbAEP’s head of public relations Yekaterina Putronen told Bellona in a telephone conversation that the reactor’s developer “had no information” on a possible decision to build a VVER-640 station in Kaliningrad Region.

“A decision on which project will be sited for Kaliningrad Region belongs to Rosenergoatom’s purview. If they approve our project, we’ll start the work,” Putronen said.

Putronen explained that the project was initially developed for a second Leningrad Nuclear Power Plant, LAES-2 in its Russian acronym.

“But later a decision was made to increase the capacity of LAES-2. The [VVER-640] had by then been licensed, but it has been more than ten years. Requirements have changed in the legislation in the meantime, and licensing requirements. Besides, new layout solutions have been proposed that it would make good sense to incorporate in the project,” Putronen said. “So if a decision is made to resume the project, then this is the work that will have to be done.”

The formerly six-billion-euro question

The VVER-1200-based design for the Baltic NPP had a price tag of EUR 6 billion, excluding the cost of building the needed transmission and distribution networks, which comes to another EUR 3 billion.

The costs suggested by either of the replacement – or complementary, in Rosatom’s version – reactors for the site, for which expensive designing and preparatory work has already been implemented for the VVER-1200s, remain to be determined. But the economic benefits of using the alternate designs are less than obvious.

For the KLT-40C reactor, the economics of operating this design at a ground-based station must be at least comparable with those of a floating nuclear power plant – and they are effectively prohibitive.

Bellona’s 2011 report The Economics of the Russian Nuclear Power Industry calls the small-capacity floating nuclear power plant “in fact one of the most expensive alternatives there may be to gas-powered plants” and quotes the economist German Gref, former head of the Russian Ministry of Economy and Trade, as saying during a government meeting in 2007: “The cost of one kilowatt of installed capacity of the floating nuclear power plant is $7,200. […] this will never pay off. It’s seven times as high as in thermal generation.”

Looking at the economics of a station with medium-capacity reactors, these, too, appear quite unpromising. With the capital costs approximately on par with those of the current, VVER-1200-based design, a plant with a VVER-640 will produce about twice as little power. The fuel component accounts for some 30% of the price of a nuclear power plant’s electricity, with the equipment and construction costs making up the bulk of the cost of generation. One can thus expect the prime cost of power produced by a VVER-640-based plant to be 1.5 to 1.7 times in excess of that provided for in the current project.

When Russia and Turkey negotiated in 2009 building a nuclear power plant in Turkey’s Akkuyu, the same NPP-2006 project with VVER-1200s, the generation costs mentioned then were within the range of $0.17 to $0.22 per kilowatt-hour, depending on the agreed schedule for loan repayment. One can assume the cost of energy produced by an NPP with VVER-640 reactors to range between $0.255 to  $0.374 per kilowatt-hour – spelling a much higher cost than both that of power generated at Kaliningradskaya Thermal Power Plant 2 and the electricity price for the end consumer.

Having analyzed in detail the economic performance of Russian nuclear power plants, Bellona’s experts made this conclusion in their 2011 report:

“[…] the power produced by nuclear power plants already now costs more to the Russian consumer than the electricity generated by power plants running on gas, while the electricity tariff is still far below the level needed to cover the true expenses of the nuclear energy industry. The deficit is compensated for by the state, which essentially provides cost-free capital to the industry, bears liability for those nuclear risks that are not covered by insurance premiums, and participates, to a significant degree, in direct subsidization of the nuclear fuel cycle.”

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In Kaliningrad Region, where Kaliningradskaya Thermal Power Plant 2 – a station with two modern, highly efficient combined-cycle gas turbine units of 450 MW capacity each – well covers the existing electricity demand, the idea of spending billions on building any nuclear power plant at all is simply economically untenable.

An insane and senseless gamble

Vladimir Chuprov, head of Greenpeace Russia’s energy program, believes that abandoning Baltic NPP construction today, even if it means accepting certain losses, is still better than continuing to invest money into an a priori losing project:

“After the refusal by [European Union] nations to buy the electric power that will be produced by the future station and the failed negotiations with European investors, it became clear that the Baltic NPP in an energy-saturated region is an insane gamble that makes no economic sense,” Chuprov said in a statement on Greenpeace Russia’s website (in Russian).

“Besides all of the ecological risks, Rosatom has demonstrated it cannot even calculate the economic ones,” Chuprov said. “Construction of the Baltic NPP was already started absent any demand for the station’s electricity. All the while Kaliningrad Region itself does not need such an enormous capacity, especially a nuclear generating capacity, which can only operate in a baseload mode (i.e. is incapable of responding quickly to daylight or seasonal peaks [in consumption]).”

Rosatom has thus revealed its utter lack of economic competence, Chuprov continued, and it stands to reason that the corporation’s foreign ventures may be just as flawed – such as the Belene project in Bulgaria, for which Moscow has likewise been unable to find a co-investor.

The next project that, one suspects, will have to be abandoned, is the four-unit Turkish project in Akkuyu, which Rosatom is planning to build under “very strange economic terms,” said Chuprov.

Dead as we know it

“This has become a three-ring circus. The equipment is already being produced, the project documentation has passed all stages of review. Now none of it is needed, now they are exploring the possibility of [building] different reactors. But Rosatom today only builds one type of ground-based reactor: the VVER-1200. To put it bluntly, the Baltic NPP project as we know it – and the idea of exporting energy to the [European Union] – is on its last breath,” Ecodefense!’s co-chairman Vladimir Slivyak told the Kaliningrad-based Novy Kaliningrad last Friday.

According to Slivyak, the nuclear corporation has tried to secure cooperation with major energy companies in Germany, France, and Italy with offers of partnership or import of power from the Baltic NPP, and major European banks have been approached with requests for loans, but these advances have been rebuffed. Slivyak believes an instrumental role in achieving this was played by environmental organizations, which actively lobbied European banks to deny financial support to Rosatom’s venture in Neman.

“One would assume that if at least one foreign investor had materialized in the past three years, then construction would have continued, but there are no investors or buyers for [the Baltic NPP’s] energy,” Novy Kaliningrad quoted Slivyak as saying.

Experimental test grounds or a nuclear-free region?

That the VVER-1200 project of the Baltic NPP seems as good as expired cannot be construed as anything but good news. But the perplexing idea of turning Kaliningrad Region into a test range to try running the no less expensive VVER-640 or KLT-40C – reactors that have not been proven safe or efficient in practical operation and that still need additional development – is just as dubious as the Baltic NPP venture has been since its start.

Rosatom, out of obstinacy and because of the political support it enjoys in the highest levels of government, may still insist on the project’s implementation. But it has had enough fiascos in the recent years to warrant a critical look at the sense of privilege it has been fueled by and the historic habit of having its way. In March last year, Bulgaria’s government opted against a Rosatom nuclear power plant in Belene, followed by a general referendum in January this year, which, despite a low turnout, still left the country’s government’s decision in place. The Akkuyu project in Turkey seems, too, to be spinning its wheels.

In the Baltic region, opposition to new nuclear power plants is equally strong: Last year, over 90% of voters in a local referendum spoke against a nuclear power plant on the Baltic shore in Poland’s Gmina Mielno (in Russian). And though it had an advisory status, the national referendum in Lithuania last October seems to have sealed the fate of a new nuclear station in Visaginas 

Only Belarus – Europe’s “last dictatorship” – is expected this year to push ahead, despite continuous public protests, with construction at the site of Ostrovets NPP, another Rosatom project, where concrete filling work is scheduled at the foundation of the first reactor building.

The developments of recent years demonstrate, however, that this work, too, may be ceased at any time, with the Ostrovets NPP project running against a freeze or a revision of equally invalidating force that will render the whole venture a mistake – hopefully one prevented in time.

Charles Digges contributed to this report.