COMMENT: A dream cut short: Europe snubs Russia’s ‘do-gooder’ plan to flush it with dirt-cheap energy from Baltic reactors

Publish date: May 28, 2013

Written by: Vladimir Slivyak

Translated by: Maria Kaminskaya

MOSCOW –Moscow’s resigned willingness to consider reduced capacity for the future Baltic Nuclear Power Plant is testimony to the Russian nuclear industry’s failure to overcome criticism it has been facing in the European market, convince potential customers of the reliability of its technologies, or attract foreign investors so it could get a foot in Europe’s door.

Last week, a report by the Russian news agency Interfax said, a decision was made during a meeting at Russia’s State Atomic Energy Corporation Rosatom to “explore the possibility” of building small- and medium-capacity reactors at the site of the Baltic Nuclear Power Plant (Baltic NPP). This is a new Rosatom station already under construction in Neman, a town in Russia’s westernmost exclave of the Kaliningrad Region, close to the border with the European Union member nation of Lithuania.

In other words, the project that provided for two 1,200-megawatt VVER-1200 units to produce power for export to the European Union has been effectively suspended. Rosatom is putting up a brave front, insisting that the smaller units will be built in addition to – rather than instead of – the large ones. Apparently, Rosatom’s rationale is that for the time being, as there is no demand for the future station’s massive output, the large reactors are not a necessity, but they will come in handy later, when demand picks up. It looks, however, as if the very expensive equipment – for which, furthermore, orders have already gone out – might not be needed after all. The plant’s project documentation, which must also have cost a pretty penny and has already cleared all stages of approval, no longer fits the new scheme and seems headed for the trashcan. Rosatom will have to start from scratch.

In fact, the very words “explore the possibility” of building some other type of reactor at the Baltic NPP sound quite odd, as all the nuclear corporation currently builds practically everywhere it pursues a new commercial reactor project is the VVER-1200s. With no investors or power consumers in Europe lining up at Rosatom’s door, the project as we know it is dead – or, if not dead, then in a deep coma.

Environmentalists are celebrating an intermediate win, a reward for six years of fighting against a nuclear power plant whose energy was supposed to go to Europe and profit to Moscow – while the region would be stuck with the nuclear waste and a risk of another Chernobyl on its hands.

It’s a small wonder that, according to every opinion poll, Kaliningrad Region’s population holds Rosatom’s project in Neman in dim view.

The Baltic NPP’s dubious roots

The project’s story started in 2007, when a new nuclear power plant was first briefly mentioned in a development strategy for the region. This sparked public protests, and the idea was withdrawn. A construction agreement, however, was quietly prepared and then signed by Rosatom and the Kaliningrad Region government in April 2008. In early 2008, Moscow approved an ambitious Rosatom program that envisioned building 26 new reactors before 2030.

But the Baltic Nuclear Power Plant was not included into the Russian government’s nuclear construction plans until late 2009. Rosatom was successful in insisting on its addition to the state program by promising that it would secure a European investor to cover half of the station’s cost. But the corporation’s intensive search and negotiations of the past three years have yielded none.

No interest in plant’s export energy

The region today does not require additional energy. A new gas-fired station was built in Kaliningrad just two years ago, and it well covers the existing demand. So Rosatom’s ultimate goal with the new nuclear plant was exporting its future power supply to the European Union – to Lithuania and Kaliningrad Region’s southern neighbor Poland, primarily. Possibly, to other countries as well. But both Lithuania and Poland refused to guarantee future purchases of the Baltic NPP’s power or provide it access to the European grids. Rosatom held negotiations with almost all major European energy companies in Germany, Italy, and France. Yet none of them would accept Rosatom’s offers of cooperation. Environmentalists were instrumental in achieving this result, having made it very clear that companies that agree to buy energy from the Baltic NPP will have serious trouble going forward: Protest actions and a sizable dent in reputation, which just may not be worth ruining over getting into bed with the nuclear industry.

Loans were requested for the construction in Neman from such banking heavyweights as Italy’s Unicredit, Germany’s HypoVereinsbank, and France’s Société Générale, among others. Here, too, environmentalists made sure they had their say and that the financiers had all the information they needed about the new nuclear project and its many problems. Last month, Germany’s HypoVereinsbank declined to participate. Just before that, the French bank BNP Paribas had turned Rosatom down. Italy’s Unicredit and France’s Société Générale have said they are expecting their own experts’ evaluations of the Baltic NPP project before deciding whether or not they would grant the nuclear corporation’s credit requests. It seems, though, that the very issue of Rosatom even needing these loans is now up in the air. 

One of the main reasons that the Baltic NPP project has run aground is that neither investors nor energy importers that Rosatom has approached in Europe have agreed to come on board.

Plant built on untested reactor design

In fact, Kaliningrad Region’s neighbor Lithuania has been vigorously protesting the construction, voicing not just political complaints but also concerns regarding the future station’s safety. For instance, the Lithuanian government has charged that the VVER-1200 reactors that Rosatom planned to build at the site have never been subjected to safety tests in accordance with the criteria adopted in the European Union. And safety concerns are far from frivolous or irrelevant here. Let’s take a moment to look at the technology improvements that we are told have been implemented in the design.

The VVER-1200 reactor, on which the project of the Baltic NPP was based, includes a novelty called a “core catcher.” This contraption is meant to mitigate the consequences of an accident that evolves according to a Chernobyl or Fukushima scenario – namely, leads to a core meltdown. For one thing, the very presence of a core catcher would imply that such an accident is possible in principle. For another, all a core catcher can do is simply “catch” the highly radioactive mass of a molten reactor core as it burns through the bottom of the reactor vessel. What it cannot do is help contain the accompanying massive release of radioactivity of the kind that poisoned the environment far and wide during the catastrophe at Chernobyl. So what would be the meaning of this expensive new enhancement? Put a tick next to a budget item called “That new fancy gizmo we have – our reactors are the best!”?

It would be funny if it weren’t so sad: VVER-1200s are being built at the second Leningrad nuclear station, near St. Petersburg, and at the new Novovoronezh site, in Central European Russia, and are being planned for a number of other sites across the country – not to mention the export reactor projects in Belarus, Vietnam, Turkey, and other foreign states. 

Power infrastructure not suitable for export

There are other problems with the Baltic NPP. Its price tag was estimated at around EUR 6 billion, and that’s not counting the very costly transmission networks that the plant would badly need. The very electricity export idea was not duly thought through: Kaliningrad Region lacks the modern and reliable transmission and distribution networks that would be required to carry the station’s electricity to consumers either inside the region or abroad. New power lines could – according to a 2009 estimate by the Russian electricity generation and foreign and domestic power trading company Inter RAO – set Rosatom back by an additional nearly EUR 3 billion, driving the station’s cost up by another 50 percent.

It would make little sense for any investor to pledge such funding with no guarantees in place to see the product sold – yet there aren’t any. It would likewise make little sense to build a nuclear power plant, regardless of the size of reactor, absent a proper long-distance transmission grid to send the power to. Unless Rosatom wants its small nuclear reactors to serve the small but noble purpose of lighting the bulbs and turning on TVs in nearby villages. A nuclear reactor for every village. That certainly needs no big infrastructure. However you slice it, for Kaliningrad Region to have a nuclear power plant at all, Rosatom would need to loosen its purse strings considerably. Apparently, the corporation has opted to defer that decision for the time being.

The story of the Baltic NPP is an illustrative account of Rosatom’s incapability of landing anything other than rebuffs in Europe, earning trust in the safety of its reactor technology, and winning over foreign investors. The latter is especially important. Evidently, Russian and European environmentalists have proven they have more power than one of the most powerful corporations in Russia, and are so far offering strong enough resistance to prevent Rosatom from getting the support it so desperately seeks for its Baltic NPP from private European banks.

There is no doubt that the subject of the Baltic NPP will be brought up time and again at various governmental meetings, and more promises will follow to complete it. But Europe has given a cold shoulder to Rosatom’s brilliant plan to quell its energy security concerns with power streaming from nuclear reactors built in its backyard – and the way this stands now, the project has lost what little sense it had to begin with. Now that Moscow has already spent a considerable amount in state budget funds on a doomed project, Rosatom would be wise to cut its losses and accept a defeat. There are enough problems in the country that urgently need that money, environmental protection being not the least among them. Surely, they deserve higher priority than a dangerous nuclear power plant that no one wants. 

Vladimir Slivyak is an environmental activist and co-chairman of the Russian ecological group Ecodefense!. This comment piece first appeared in Russian on the news website Gazeta.Ru. Slivyak is a frequent contributor to Bellona.