Escalating a dispute between the companies as to who is to blame for the schedule slippage, Areva said Monday it will not proceed with work on the delayed Olkiluoto nuclear reactor project in Finland until Finnish utility TVO makes unspecified changes to the project.
Areva, the French government-owned nuclear giant, made that disclosure in a financial statement for the first half of 2009.
Ouch. That is from Energy Daily (subs. req’d). The Financial Times story begins:
The financial risks of nuclear power were cast into sharp relief on Monday as Areva, the French state-owned group, revealed new provisions on its troubled Finnish reactor project that virtually wiped out interim operating profits.
Double ouch!
The ongoing saga between Areva and Finland is now more like an episode of Desperate Housewives than a sitcom, however. Or maybe Law and Order: Nuclear Intent.
Last September, I reported that “Finnish plant’s cost overruns to $6.66 billion.” Then in February we had a radioactivity-free kind of meltdown:
Areva made clear in May it wasn’t going to keep swallowing the price escalation risk — see “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.”
And things got so bad for the French nuclear giant that for Canada, “Areva’s bid came in at $23.6 billion, with two 1,600-megawatt reactors costing $7.8 billion and the rest of the plant costing $15.8 billion. It works out to $7,375 per kilowatt,” but even that bid — not the highest! — was “deemed non-compliant, however, likely because Areva wouldn’t guarantee the price” (see Nuclear Bombshell: $26 Billion cost “” $10,800 per kilowatt! “” killed Ontario nuclear bid).
Here’s more from the Energy Daily story:
Areva also revealed that it is setting aside $788 million in additional funds to cover recently incurred and potential future losses at Olkiluoto…..
Delays at Olkiluoto have been unfortunate for the nuclear industry as a whole, which has watched the Finnish project with interest as the first new reactor to be built in a western country in years. It is also a high-profile project for Areva as the first commercial deployment of its EPR reactor, although France’s national utility, EDF, has since begun to build another EPR in Flamanville, France.
Areva and TVO have blamed each other for various aspects of delays at Olkiluoto, which began when a contractor had problems pouring cement to specification. But the two companies signed a new agreement in June 2008 revising their respective roles under a plan to accelerate the project.
But on Monday Areva said “the specific measures for speeding up the work, agreed upon and jointly announced in June 2008, have for the most part not been implemented by TVO.
“Furthermore, additional modifications imposed unilaterally by TVO and carried out by AREVA are not backed up by the requisite contract amendments,” Areva continued.
In order to make TVO “face up to its responsibilities,” Areva said it has proposed “methods of execution for the final phases of the project that are in accordance with standard industry practices for the construction of turnkey power plants.
“AREVA will only commence the final phases of the construction when TVO has agreed upon the proposals that have been made or issued contract amendments that provide for the requested modifications, both in terms of costs and time lines,” the French company said.
TVO could not be reached late Monday for comment.
All this makes one look forward to what might happen if a truly litigous country had a major nuclear Renaissance — say, 100 nukes costing, say, $1 trillion fueled by, say, taxpayer money (see “The nuclear bomb in the Senate stimulus plan” and Lamar Alexander (R-TN) calls nuclear “the cheap clean energy solution,” renews GOP call for 100 new nukes, which would cost some $1 trillion).
- What do you get when you buy a nuke? You get a lot of delays and rate increases”¦.
- An introduction to nuclear power
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TVO is strangely nonchalant with the matter. Today they said briefly that Areva didn’t actually threaten them with stoppage and the work will continue as planned. The project leader said yesterday that Areva only used colorful language.
TVO maintains that Areva is the only one responsible for delays and additional costs. There’s a contract of one ready-to-use nuclear power plant with a fixed cost and Areva is the one to bear the burden of cost overruns. It’s ironic that ultimately the FRENCH taxpayer could bear the financial burden of a problematic Finnish nuke.
Elsewhere on the Finnish news, our government wants to give away only one permit for a new nuke plant after this one, not all of the three (!) permits that had been applied for by three different utilities.
If David JC MacKay is to be believed in his book ‘Sustainable Energy – without the hot air’, the UK simply cannot survive on home-grown renewables (wind, wave, tide etc.) alone. Presumably other countries with a similar population density are in a similar position. The only other choices are nuclear, and buying renewable power from other countries which have (or could have) a surplus. Don’t we need nuclear in order to have some degree of energy security, even if it *is* more expensive?
Icarus, the UK has more than enough offshore wind potential to supply the country’s entire energy needs. If this is cheaper to develop than nuclear power, then it makes sense to use it in preference to nuclear. If the UK is interested in energy security then the first step it should take is to reduce oil imports. This is likely to result in the electrification of a great deal of transport which should have the side effect of reducing the problem of variability from wind power. Nuclear power also has energy security disadvantages over wind and other renewables. Nuclear fuel is imported, but a greater problem is that many components are souced from overseas as is a great deal of expertise.
Reporting only about Areva and Olkiluoto III is some kind off sherry piking. There are 50 nuclear plants under construction in the world. How are they proceeding? I dont’b believe they all are in problems like this one.
And please calculate what is the price of 1600 MW off off-shore wind power. You could be suprised.
Of course ridiculous all this mess. All sides are a little bit arrogant. But now we have no more need for much energy, our energy consuming industry is going out rapidly.
And we have timber to warm our houses and summer cottages. That is enough for say fifty years. Very ridiculous.
More delays will automatically increase total project cost (in real current dollars) due to the significance of interest paid during construction. Ironically this will make the entire project less attractive which could lead to further delays with investors trying to get out of the deal…
MacKay has an interesting book full of useful calculations, but some are a bit static (ie there is little attempt to capture the dynamics of innovation) which makes his future conclusions somewhat pessimistic. He also makes a number of arithmetic errors regarding wind energy potential and sometimes uses the same rhetorical conclusions that he criticizes in the popular media (lots of non-numerical assumptions in his conclusions). Overall, a good book, but not objective enough to warrant it’s title…
Kaj has a point. AREVA obviously low balled the price and leveraged its reputation to get the Okiluto job. The reactor is (along with Flammanville) a first of its kind, clean sheet of paper, Gen III, and the cost overruns are staggering. There was also some really stupid sub-contractor stuff, like not pouring concrete to specification.
Please compare Toshiba-Westinghouse-Shaw as it is working with a proven GenIII design, is building a world-wide supplier base for modular components, and is building most of those 50 new reactors.
Certainly nuclear power brings its own set of problems but as far as I can tell from my limited reading it’s the only viable home-grown source of non-fossil-fuel energy for a country like the UK with high population density.
MacKay calculates that covering the 40,000 sq km of the UK’s shallow coastal waters with 130,000 3MW wind turbines could only deliver at most one third of our current power consumption, and points out that the actual area of sea bed we could use would be substantially less than that, for a variety of reasons, thus reducing the potential output to not much more than 10% of our current consumption (even if was practical to build them). Is he right?
Icarus – you might want to check and see what database was used for MacKay’s calculations. Many/most estimates of available wind have been taken close to the ground and not at the height of current wind turbines.
Archer and Jacobson measured the wind at those elevations and found that available wind measurement greatly under estimate the power available.
“Global wind power potential for the year 2000 was estimated to be ~72 TW (or ~54,000 Mtoe). As such, sufficient wind exists to supply all the worlds energy needs….”
And they specifically state that the upper UK region is one of the best wind areas in the world. Perhaps MacKay is using a very undersized estimate of what the UK could harvest from wind.
http://www.stanford.edu/group/efmh/winds/global_winds.html
The UK also has a lot of wave (and tidal?) potential. There is wave energy harvesting ongoing off the coast of Scotland at the moment.
Then there is importing. Does the UK eat only the food grown its fields?
Might it not be cheaper to use the under-design European Super Grid and purchase hydro from Northern Europe, solar from Spain, Portugal, and North Africa, geothermal and hydro from Iceland, …? And sell off some of the UKs surplus when the wind is really cranking.
Bob Wright – most of the 50 plants under construction are being built in China and Russia. I doubt that there is going to be access to the numbers and I doubt that market forces have been operating to pick the most affordable source of new power in those countries.
We can get some hint as to Westinghouse’s ability to build affordable by looking to recent events in Canada. Ontario asked for “guaranteed no-overrun” bids. The only bid they received was so high that they walked away from nuclear.
Westinghouse was involved in the bid process. If they were capable of building “cheap”, don’t you think they would have submitted an acceptable bid?
As for the “stupid sub-contractor stuff”, that’s indicative of the problems of restarting nuclear construction in the west and one of the reasons why prices are so high. The folks who knew how to build and operate these plants are retired. Starting up once more would involve training a new set of workers and engineers.
And “stupid sub-contractor stuff” happens in all construction at some level. It’s a real part of the cost. It’s just more likely to be a problem with reinventing the nuclear wheel as the processes are more critical and complex.
Bob Wallace: Can’t disagree. This is a showcase project for AREVA and they are failing at every turn, including subcontractor management. Westinghouse did refuse to bid with the Canadian terms, but they do have the best program going, and if GenIII is to become affordable, they’re in the lead.
Nuclear plants cost a lot because they last 80 years. They are complicated units and nice to have once you have them built. Think what a hydroelectric plant and dam would cost now-a-days.
You will be lucky if you get a wind plant to last 10-20 years. Solar cells last about 10 years( sooner or later the glass in them will darken form the sun). as for high altitude wind. It is experimental so any numbers are also suspect.
A Bugatti Veyron is also nice to have once it’s paid for and sitting in your garage.
Solar modules get 20-25 year manufacturer warranty to be at 80 – 90% of rated Watts.
Apples to apples. You have to compare on a levelised cost basis. Nuclear costs more than wind in the US on a levelised cost basis and the gap is increasing.
Brent: Dude, you’ve got it wrong by a factor of at least two: the average lifespan of a nuclear plant is not 80 years, it’s 40 (per Nuclear Engineering International, http://www.neimagazine.com/story.asp?storyCode=2030047). That’s nominal, planned — reality is, on average, worse: “In total 108 reactors have been permanently shut down with an average age of about 21 years” (NEI, same link). Now ask: how much else of what you think you know about the joys of nuclear power is wishful thinking?
It is of course ridiculous to pit wind, treated as a panacea, against nuclear. A sustainable energy system would consist of a diverse network of solutions, including solar and wind but not limited to them. And no energy technology or sheaf thereof, including nuclear power, has a prayer of displacing coal if demand is not radically constrained by efficiency: do the math (or again, see the NEI link above).
Kaj: Sure, focusing only on failures like the unfolding Finnish disaster would be cherry-picking, but why flounder in mystery when a few minutes of Googling would reveal the global nuclear-power cost figures at margin? See http://a4nr.org/library/economics/may.june-energybiz for an article from EnergyBiz Insider giving some figures — which are grim for the nuke industry and getting grimmer. History is already grim enough: according to http://scitizen.com/screens/blogPage/viewBlog/sw_viewBlog.php?idTheme=14&idContribution=2287, “The Congressional Budget Office reported in May 2008 that the actual costs of building 75 of the existing nuclear power plants in the U.S. exceeded industry quoted estimated by more than 300 percent.” When it comes to nuclear power plants, gigantic cost overruns are not cherries, they are the tree. Unless of course you count cross-our-heart promises about technologies that have not even been built yet, like Integral Fast Reactors. And speaking as an engineer, I do not think promises should count as data. It all looks great on paper.
Nukes work. They churn out electricity, lots. On the other hand, caviar is a nutritious food — but on a limited budget you could starve to death buying it. Resource competition is real. A nuclear building push sufficient to make a global climate/energy difference would drain resources from climate/energy solutions across the board that could provide needed energy end-use services at far less cost and risk. Net result, less climate mitigation, probably even less electricity. We would have to build 1 new reactor every 18 days for the next 20 years just to keep up with anticipated nuke plant retirements (see NEI link). Meanwhile, wind output is growing exponentially. Hm.