In Finland, Nuclear Renaissance Runs Into Trouble

http://www.nytimes.com/2009/05/29/business/energy-environment/29nuke.html?_r=1&sq=nuclear power plants&st=cse&scp=1&pagewanted=all

 

In Finland, Nuclear Renaissance Runs Into Trouble

By JAMES KANTER

Published: May 28, 2009

 

OLKILUOTO, Finland — 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.

 

The massive power plant under 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 Électricité 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.

 

Matthew L. Wald contributed reporting from Washington.

 

A version of this article appeared in print on May 29, 2009, on page B1 of the New York edition.

--~--~---------~--~----~------------~-------~--~----~

Copyright 2009 The New York Times Company