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Finland’s startup of nuclear reactor comes at opportune time for Europe
Finland connected its Olkiluoto-3 (OL3) nuclear reactor to the power grid on 12 March, the first new reactor in Europe in nearly 15 years and the first in Finland in more than 40 years.
By July, when it's expected to reach 100% output, OL3 will be Europe's largest nuclear complex, according to Teollisuuden Voima Ohj (TVO), the operator of the facility.
The 1,650-MW reactor plus the two other reactors that are operating at the same site have a total capacity of 3,340 MW, TVO said.
"OL3 is a significant addition to clean electricity production in Finland, the share of which will rise to over 90%. At the same time, the need for the import of electricity will decrease to below half," said Marjo Mustonen, TVO senior vice president of electricity production, in a statement.
"This output is considerable," he continued. "Approximately 3 to 4 terawatt hours (TWh) during the test production phase, which corresponds with approximately 10% of Finland's electricity demand. The power output [will] vary considerably during test production."
According to the Nuclear Energy Agency (NEA), 104 nuclear reactors are operating in the EU, with 101 GW of installed capacity. "Nuclear power accounts for 25% of the share of the total electricity produced in the EU and 50% of the low-carbon electricity," NEA told Net-Zero Business Daily.
The International Energy Agency said that nuclear power generation in Europe in 2021 rose by 8% compared to 2020, nearly recovering from the 11% falloff in due to COVID-19.
Years in the making
While the facility entered into service at a time when European nations are looking for alternatives to natural gas from Russia, this project has been years in the making. Construction began in 2005 and was expected to be completed in 2009 as the demonstration of a new model known as the European Pressurized Reactor (EPR), designed to be safer than models such as the reactors at Chernobyl, Ukraine.
French firm Areva and German firm Siemens were the primary partners on the project, and they had said the project would cost €3 billion ($3.27 billion), but instead it reached nearly €11 billion, according to the latest estimates.
The first two EPRs in the world entered commercial operation at China's Taishan plant starting in 2018.
Finland's net imports of power averaged 13 TWh over the last few years, primarily from Norway, Sweden, and Russia. This should drop by around half, due to OL3, Mustonen said.
French firm EDF is building separate a reactor using EPR in France, Flamanville 3, which is currently expected to begin commercial operation in in 2024, and it's a partner with China General Nuclear Power Group on two EPR units at Hinkley Point C in Britain, now expected to be online in 2026 and 2027.
"Schedule delays and costs overruns have been mainly caused by the attrition of supply chain capabilities following long period of no nuclear construction, as well as low levels of design maturity at the time of construction starts," NEA explained. "More recent projects, such as the Hinkley Point C nuclear power plant ... suggest that lessons have been learnt which can be applied with favorable results to future projects."
Nuclear power remains controversial in Europe, and the EU's announcement in February that it plans to label certain nuclear power investments as aligned with the EU's net-zero policy received mixed reviews. With that designation, nuclear projects would be eligible for the approximately €1 trillion in funding that will be available to support energy transition projects.
"Half of the [EU] members generate electricity with fission reactors, and a few others firmly oppose it," wrote Mark Hibbs, nonresident senior fellow at the Carnegie Endowment for International Peace, in February. Germany and Austria have threatened to raise legal disputes with the EU over the inclusion.
The World Wide Fund for Nature called the EU taxonomy "greenwashing" due to the radioactive waste produced by nuclear power.
France, which has 56 power reactors, by far the most in Europe, is planning to build new reactors to replace those reaching their end of life, according to Hibbs. France's energy plan, released in 2050, calls for a 50-50 mix of nuclear and renewable energy by 2035.
However, the last two years marked the closure of seven reactors in Europe. Four closed due to reaching the end of their commercial lives: two units in France, and one each in Russia and Sweden in 2020; and three closed in Germany in late 2021 as part of that country's phaseout of nuclear power.
Construction progressed in the last two years on the EPRs described above, as well as other designs in Bulgaria, the Czech Republic, the Netherlands, and Poland.
NEA said that a number of European countries have shown a renewed interest in nuclear power in the last few years as a climate change mitigation strategy. "Highly volatile energy markets in recent months have amplified this trend as policymakers are reminded of the value of nuclear power as an affordable and reliable source of electricity to support climate change mitigation as well as long-term security of supply," it said.
Hibbs identified Austria, Denmark, Luxembourg, and Portugal as strongly anti-nuclear, but he said other opponents are wavering. Italy, which closed its three reactors a few years ago, is considering restarting them, he added.
Further indicative of the shifting sands on this issue, Germany's association of nuclear plant operators, Nuclear Technology Kerntechnik Deutschland, said on 15 March that operation of three German nuclear plants, which was planned to end on 31 December 2022, could be extended in order to cover the country's energy demand for winter 2022-2023. That's a decision widely seen as reflecting Germany's intention to reduce its reliance on imports of natural gas from Russia.
Update: Belgium's current plan had been to close all seven of its nuclear plants by the end of 2025, which is half of its energy production. But on 22 March, the Energy Ministry announced that two of its reactors will operate through 2035, providing 2 GW of capacity, and cited energy imports as the chief concern.
Globally, as well as in Europe, the International Energy Agency says that nuclear power investment is lagging below the level needed for the world to reach Paris Agreement ambitions. Using IEA's "Net Zero Emissions by 2050" Scenario, nuclear capacity would need to reach 730 GW, but IEA projects it will be 582 GW instead.
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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