Plagued by Faulty Materials, Industry Upheaval, Finnish EPR Nuclear Unit Steers Toward Completion

Olkiluoto 3, a much delayed first-of-its-kind EPR nuclear plant project under construction in Finland, has begun hot functional tests and should begin generating electricity in May 2019, according to Finnish utility Teollisuuden Voima Oyj (TVO).

TVO on December 19 said hot functional tests underway at the reactor, which are part of commissioning, are expected to take several months. The tests essentially operate the reactor cooling system and auxiliary systems together for the first time without fuel, simulating operating pressure and temperature. If they are successfully completed, TVO said "it will be possible to obtain an operating license for [the EPR] and continue the project towards nuclear commissioning."

On December 21, TVO meanwhile said shareholders agreed to a loan commitment of a150 million ($178 million) that its board of directors had proposed in November to maintain an equity ratio needed to complete the EPR project.

The Long Road to A Defining Milestone

An AREVA-Siemens consortium began construction of Olkiluoto 3 in 2005 under a a3 billion fixed-price turnkey contract signed with TVO in 2003. However, while completion of the project was originally scheduled for 2009, the project has suffered several setbacks.

Delays initially racked up owing to faulty materials and planning problems. In 2008, a dispute erupted between TVO and the AREVA-Siemens consortium about who was responsible for the schedule delays and cost increases. In July 2012, an international arbitration court ordered the Finnish utility to release a125 million of withheld payments to the consortium, funds that included accrued interest and legal expenses. In November 2016, TVO said it received a partial award from the court addressing the early period in the project, and in July 2017, the tribunal granted it a second partial award that TVO said "finally resolved the great majority of the facts and matters in favour of TVO. Conversely, it has also rejected the great majority of the supplier's contentions in this regard."

Over the past decade, meanwhile, both Siemens and AREVA have been reshaped by market forces. Siemens in 2009 sold its reactor-making arm to AREVA (a company formerly known as Framatome) with which it developed the EPR in the 1990s, and in 2011, prompted by the German government's decision to phase out nuclear power by 2022, it quit the nuclear business entirely. Siemens this November, meanwhile, also moved to consolidate its three power-related divisions, citing a "disruption of unprecedented scope and speed" that is afflicting the power generation industry worldwide.

In November 2016, AREVA moved to restructure its business, after years of financial hemorrhage attributable in part to delays and cost overruns at Olkiluoto 3. The restructuring created a new company-New NP-that combines AREVA Group's activities relating to design and equipment manufacturing of nuclear reactors, fuel design, and assemblies manufacturing and services.

Earlier this December, the boards of directors of both AREVA SA and French power giant EDF signed definitive binding agreements to confer 75.5% of New NP's a2.47 billion capital to EDF. Japan's Mitsubishi Heavy Industries will hold a 19.5% share, and French engineering services and consulting firm Assystem will take the remaining 5% share.

The contracts for Olkiluoto 3 and the resources required to complete the project-as well as certain contracts relating to components forged in AREVA's scandal-ridden Le Creusot steel forging plant-will stay within AREVA's scope.

A Project of National Significance

TVO this October revealed that the supplying consortium had updated a previous schedule provided in September 2014, which projected a start date at the end of 2018. The new schedule will see grid connection in December 2018 with startup of operations in May 2019-putting it 10 years behind its initial schedule.

Completion of the project is backed strongly by the Finnish government, which intends to replace coal's 8% share of power generated in 2016 by 2030. Until Olkiluoto 3 is commissioned, however, the country will continue to face shortages, especially during dry years, when production of hydropower is low.

The bulk of Finland's power production during 2016-about 26.2%-came from its four existing nuclear units: TVO's Olkiluoto 1 and 2, two 880-MW boiling water reactors that were completed in 1980; and Fortum's two 496-MW VVER-440 units, built between 1977 and 1980. Hydro contributed 18.4%, and the country imported another 22.3%, with the remainder coming from biomass, coal, oil, natural gas, and wind.

Operating licenses for TVO's Olkiluoto 1 and 2 units are set to expire at the end of 2018. The utility in January 2017 submitted an application to extend their operating licenses to 2038.

Meanwhile, Fennovoima Oy-a company owned by Finnish firm Voimaosakeyhtii SF and Rosatom subsidiary RAOS Voima Oy-has plans to build Hanhikivi 1, a greenfield 1,200-MW AES-2006 unit. Commercial operation for that project is slated for 2024.

-Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)

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