Russian nuke station offers discount prices as demand sags – with a few ecological pitfalls

Inside reactor no 1 at the Kola Nuclear Power Plant. (Photo: Wikipedia)
Inside reactor no 1 at the Kola Nuclear Power Plant. (Photo: Wikipedia)

Publish date: August 27, 2015

Written by: Charles Digges

Russia’s Kola Nuclear Power Plant has been forced to offer power it produces to prospective buyers at a 10 percent discount electricity because of a surplus on the local market, the Russian business daily Kommersant reported.

But the fine print of the new contracts offering the bargains are skewed toward prolonging use of the plant’s oldest reactors and forcing companies to use more nuclear produced electricity than they need.

Bellona has long opposed record-length extensions to engineered reactor lifespans at the Kola NPP, as well as a push from Russia’s state nuclear corporation Rosatom to build a second nuclear power plant on the Kola Peninsula for environmental and economic reasons.

Nils Bøhmer, Bellona’s executive director and nuclear physicist, and Andrei Zolotkov, Director of Bellona Murmansk in the Region where the Kola NPP is located have both long said the plant produces far too much electricity than is needed.

knpp2mockup A model of the Kola Nuclear Power Plant. (Photo: Anna Kireeva/Bellona)

Rosenergoatom, Russia’s nuclear utility, told Kommersant it’s been forced into offering discounts on the electricity pumped into the grid by the Kola NPP.

Atomenergosbyt, a daughter company of Rosatom that’s a nuclear energy retailer, is putting out long-term non-regulated energy contracts to the Murmansk Region’s biggest consumers, the company told the newspaper.

The non-regulated contracts, offered through regional authorities, have been suggested to the Zvezdochka Naval Shipyard, the Severstal mining and enrichment combine, the Murmansk Commercial Port, the Murmansk Fishing Port and many other big clients.

According to the non-regulated contracts on offer through Atomenergopromsbyt – itself a daughter company of Atomenergosbyt – would offer at least three years of special prices on electricity on conditions of expanded power production and a guarantee that the companies will increase their demand for electricity, said Kommersant.

In other words the non-regulated contracts are only offered if companies agree to use more power.

As Ruslan Travnikov, Atomenergopromsbyt’s executive director, told Kommersant, non-regulated contracts are usually offered at market prices and encompass only special payment periods. But the non-regulated contracts will offer the 10 percent discount on what electricity cost the day before they’re signed.

The average cost of energy in the Murmansk Region in 2014 was 870 rubles ($13) per megawatt hour, the paper reported.

A plug for dangerous extended use of old reactors

Beyond obligating customers to use more electricity, Travnikov also said the non-regulated contracts require that demand collectively be high enough to guarantee an lifetime extension to Kola NPP’s No 2 reactor.

Like all reactors at the plant, the No 2 unit, built in 1974, is already operating on two engineered lifespan extensions that have staved off its shut down date to 2018. Whether or not yet another extension will be granted is still unclear.

Kola NPP supplies 60 percent of the Murmansk Region’s power, the paper reported. But the drop in demand for this power are illustrated by the statistics: for 2014 output for the region as 16.4 billion kilowatt hours, but fell by year’s end to 12.3 billion kilowatt hours.

This is also reflected in operational time ratio at the Kola NPP, which is, according to Kommersant, two times less than nuclear power stations in other regions of Russia.

This, said Natalya Porokhova, director of economic policy at Gazprombank, can be explained by certain system limits imposed for the aging local grid in the Murmansk Region.

She told the paper that the load supplied by a nuclear power station doesn’t depend on demand because they operate on base load generation.

In Porokhova’s analysis, the discount contracts offered by utilities, and the conditions that apply to them, will not effect Rosenergoatom’s bottom line.