Competitors doubt Fennovoima’s ability to finance new nuclear power plant

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The backstage battle over Finland’s next nuclear power plant is heating up, even though the the government plans to bring the matter before Parliament no sooner than in the spring of next year.
      Fortum, an energy company half-owned by the state, has lately been particularly active, even though it was the last to submit an application to the government for the construction of a new nuclear reactor near the city of Loviisa, to the east of Helsinki. Two 490MW Fortum reactors are already on this site.
      Applications for a new reactor have also been submitted by Teollisuuden Voima (TVO), which is currently building Finland’s fifth reactor on the west coast, in Olkiluoto, where Finland's other two existing reactors (each 840MW) are located, and by Fennovoima, which is offering three possible locations for a reactor: Simo, Pyhjäjoki, and Ruotsinpyhtää.
     
Fortum has recently voiced suspicions relating to Fennovoima’s ability to finance the planned new power plant.
      Similar thoughts have been expressed by former Prime Minister Paavo Lipponen, who currently acts as a consultant for Pohjolan Voima (PVO). TVO is a subsidiary of PVO.
      Both Fennovoima and Fortum have estimated that the price for the new nuclear power plant would range between EUR 4 and 6 billion.
     
The competitors estimate that if Fennovoima builds the new plant the price would be closer to EUR 6 billion, as the company would have to build everything from the beginning, including infrastructure.
      In the prevailing economic situation, Fortum also casts some doubt upon the financial wherewithal of Fennovoima’s majority shareholders, including local energy companies and companies representing industry and the retail sector using electricity.
      For example the City of Porvoo would be obliged to arrange for the project long-term loans amounting to tens of millions of euros.
      In addition, the largest Finnish shareholder Outokumpu should be able to raise for the project as much as EUR 600 million. Given the current economic climate, doubts have been raised over industrial companies' eagerness to invest such sums.
     
Fennovoima’s largest shareholder is the German energy giant E.ON, with a stake of 34 %. The Finnish rivals are now hinting that E.ON could have plans to acquire the majority shareholding in the new nuclear power plant.
      TVO’s prospects do not sound good, as the company’s Olkiluoto III project is already three years delayed and it will not be completed by next spring. Even the final costs of Olkiluoto III are not known yet, as TVO and the French conglomerate Areva building the new plant go about filing competing claims for compensation amounting to billions of euros.
      Initially the new plant - a 1600MW EPR or European Pressurized Water Reactor - was to have started delivering energy to the grid this spring.
     
Fortum has come to the conclusion that in order to be granted permission to build the next nuclear power plant, it has to stress to politicians the strengths of the company’s own application, while underlining the weaknesses of Fennovoima's.
      Lipponen says that it is impossible to imagine that the government could reject TVO’s application, as the company has much better qualifictions to complete the project within a feasible schedule.
     
Another solution would be to grant permission to all three projects, and then follow how the projects will proceed, Lipponen suggests.
      The Confederation of Finnish Industries (EK) has made much the same proposal.
      It is unlikely that the government and Parliament will be willing to accept this idea, as the recent poll commissioned by the Finnish Broadcasting Company YLE indicates that the Finns continue to be sharply divided over the issue of construction of new nuclear power plants.
     
The survey found that 48% are opposed to the building of more nuclear generation capacity, while 37 % of respondents were in favour of more nuclear capacity, and 15 % of those questioned took no stand on the issue.
      In particular young people and women took a negative stand on the proposed new unit.


Previously in HS International Edition:
  COMMENTARY: Talking quietly about nuclear power (17.2.2009)
  Fortum enters nuclear energy race (6.2.2009)

See also:
  Costs of delay in construction of Olkiluoto III approaching price of new reactor (29.1.2009)

Links:
  Fennovoima

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