NucNet Explainer / Finland’s Olkiluoto-3 Begins Commercial Operation

By David Dalton
2 May 2023

The background and key facts on Europe’s largest nuclear power reactor
NucNet Explainer / Finland’s Olkiluoto-3 Begins Commercial Operation
What is Olkiluoto-3? Reactor number three at the Olkiluoto nuclear power station in southwest Finland is a 1,600-MW EPR (European Pressurised Water Reactor) nuclear plant supplied by the Franco-German Areva-Siemens consortium. It is the largest nuclear power plant in commercial operation in Europe. On 1 May it officially began full commercial operation – almost 18 years after construction began on 12 August 2005. It has been undergoing testing since it was connected to the grid on 12 March 2022.

What’s the background? The story of Olkiluoto-3 began in 2000 when Finnish utilities company Teollisuuden Voima Oyj (TVO) first applied to build a new nuclear power unit in an attempt to wean the country off foreign imports of electricity and supply a new source of low-carbon energy. In 2002, Finland’s parliament granted its permission, voting 107-92 in favour of the new unit. And in December 2003, Finland became the first country in Western Europe to order a new nuclear reactor since 1988. Areva NP, then a joint venture owned 66% by Areva and 34% by Siemens, was contracted to build Olkiluoto-3 for TVO under a fixed-price turnkey contract. A turnkey project is one which is designed, developed and equipped with all facilities by a company under a contract. The plant is handed over to the buyer – TVO in this case – when it is ready. The company responsible for building a turnkey project does it for the cost as agreed in the contract.

What are the benefits of Olkiluoto-3? Proponents say nuclear reactors generate baseload electricity with no output of carbon. Olkiluoto-3 is seen as a key component in Finland’s plans to reduce greenhouse gas emissions by 80% by 2050 and end reliance on foreign imports of electricity – more so since Russia’s war in Ukraine led to energy price rises throughout Europe. TVO said the plant will provide a low-carbon source of electricity for at least 60 years and will reduce Finland’s import of electricity by about 60%. Generation will cover approximately 14% of Finland’s electricity demand. According to the International Atomic Energy Agency (IAEA), in 2021 – before Olkiluoto-3 began operating – nuclear was already providing almost 33% of Finland’s electricity generation. The reactor will produce 12 TWh of electricity a year, enough to heat 5.2 million apartments or charge 3.6 million electric cars. It will increase Finland’s self-sufficiency in clean electricity – the country’s share of carbon-free electricity production will rise from 89% to about 93%.

Why has it taken almost 18 years to begin operation? The Olkiluoto-3 project has illustrated the complex nature of building a new nuclear power station. In 2006, because of problems with construction and the sourcing of components, Olkiluoto-3 fell 12 months behind schedule. Areva admitted in 2006 that its net profit had fallen 19% in the first half of the year, mainly because of cost overruns at Olkiluoto. The project has seen a number of delays. The latest, in January, saw the schedule for commercial operation put back when TVO said it would install more robust impellers in all four of the plant’s feedwater pumps. Among the main reasons for delay noted in a presentation given by Jukka Laaksonen, director-general of Finland’s Radiation and Nuclear Safety Authority (Stuk), in 2010, were too ambitious original schedule for a plant that is first of its kind and larger than any nuclear plant built earlier. Other reasons were inadequate completion of design and engineering work prior to the start of construction; a shortage of experienced designers; lack of experience of parties in managing a large construction project; and worldwide shortage of qualified equipment manufacturers. According to Statista, nuclear reactors connected to the grid in 2021 had a median construction time of 88 months.

How much has Okiluoto-3 cost? According to TVO, the original budget for the project was around €3bn. The company said in its Q1 interim report that its “total investment” will be approximately €5.8bn. TVO bought the plant at a fixed price from Areva-Siemens and went to arbitration to settle a dispute over cost overruns. An industry analyst in Finland told NucNet the cost for the suppliers, Areva-Siemens, is likely to bring the total to around €10bn. Bloomberg has put the figure at around €8bn. In 2018, TVO agreed a settlement with Areva-Siemens in a long-running dispute over cost overruns and delays at Olkiluoto with Areva-Siemens agreeing to pay TVO compensation of €450m. The agreement was amended in 2021. TVO and Areva-Siemens were claiming billions of euros from each other due to the delays. The parties agreed to withdraw all ongoing legal actions related to the project, including International Chamber of Commerce arbitration. Fitch Ratings said Areva-Siemens would be entitled to receive an incentive payment of up to €150m “upon timely completion of the OL3 project”. From 2016 state-controlled Areva was completely restructured and recapitalised in a government backed deal after years of losses wiped out its equity and brought it to the brink of collapse.

What about nuclear waste? Finland is nearing completion of the world’s first geological disposal facility, known as Onkalo, for spent nuclear fuel at Olkiluoto. The repository – scheduled to be operational around 2025 – will hold spent fuel assemblies from all five of Finland’s nuclear plants, encapsulated and placed in the bedrock at a depth of about 400 metres. The IAEA said in addition to the progress at Onkalo, Finland also manages and disposes of low- and intermediate-level waste from the operation of its nuclear power plants, has effectively planned for future decommissioning, and safely manages waste generated from the use of radiation sources in medical and industrial applications.

Support for nuclear power is now ‘higher than at any other time’

What do Finns think about Olkiluoto-3? The operation of OlkiluotSupport for nuclear power is now 'higher than at any other time'o-3 and a national desire to end energy imports from Russia have strengthened support for nuclear power with a record 68% in favour and only 6% against, a survey has shown. Industry group Finnish Energy said support for nuclear power has been measured continuously since 1983 and is now higher than at any other time.

What about other EPR plants? Okiluoto-3 is the first EPR plant to begin operation on the continent. In France, the Flamanville-3 EPR is nearing completion and in the UK there are two EPRs under construction at Hinkley Point C with two more under consideration for Sizewell C. Taishan-1 in China was the first EPR unit to begin commercial operation, in December 2018. A second EPR at Taishan began commercial operation in September 2019.

Is Finland building more nuclear plants? There are none under construction or planned, but Petteri Orpo, likely successor of Sanna Marin as prime minister following recent elections, has called for increased focus on nuclear power. “One of the most important tasks of the future government is to strongly speed up the construction of new nuclear power plants in Finland,” Orpo said in a blog released before the election results. “The coalition wants nuclear power to become the cornerstone of the government’s energy policy.” Negotiations to form a new government have begun with the new administration likely to be in place by June. Nuclear energy consortium Fennovoima had begun early site work on a new Russia-supplied nuclear plant at Hanhikivi in northern Finland. The contract with Russia’s Raos Project was terminated in May 2022. Fennovoima cited “significant delays”, Raos Project’s “inability to deliver the project” and worsening risks as a result of the war in Ukraine.

The Olkiluoto-3 nuclear power plant in Finland. Courtesy TVO.

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