Ukraine's government recently announced that it wants to sell a huge stake in its nuclear power holding and upgrade its capacity with foreign investment. However genuine interest is on both sides for modernization, the prospects for major expansion are dulled by lack of financing and technical limitations.
Fear of natural gas shortages and loss of vital coal mines in the war-torn southeast have spurred interest in further developing Ukraine’s large nuclear power industry for the sake of covering the projected energy shortages. On Sept. 3, Prime Minister Arseniy Yatsenyuk stated at a Cabinet meeting that he expected deals to be signed for the construction of new power blocks by the end of the year. Then, on Sept. 22 the government registered a bill in parliament that proposed to sell 40 percent of Energoatom, a state-run enterprise operating all four nuclear power stations, to a foreign investor.
Analyst Alina Leuska of Pro Capital Investment values Energoatom at $15 billion, making 40 percent of the holding worth around $6 billion.
A number of experts and politicians have stated that the U.S.-based firm Westinghouse would be interested in the strategic asset, especially considering that the company has been working on the Ukrainian nuclear power market since the 1990s and recently inked an extension of its fuel rod supply contract in April.
However, vice president of strategy in Europe, Middle East and Africa at Westinghouse Michael Kirst hasn’t confirmed this to the Kyiv Post. “We are a service provider,” he said, “although we would be interested in participating in the modernization of Ukraine’s nuclear power industry.”
Energoatom operates 15 nuclear reactor blocks at four power stations, which produce 13.8 gigawatts of electricity, nearly half the country’s needs. All of the reactors are the Russian VVER type, including the partially built blocks at the Khmelnytskiy station in western Ukraine. “To add a single gigawatt of power, it would cost $300 million to extend the operating life of one block or $5 billion to build a brand new one,” argues Olha Kosharna, a specialist at the industry organization Ukrainian Nuclear Forum.
Constructing new blocks is not likely in the short term. In addition to the enormous expense involved, which Ukraine simply cannot afford, “the projects themselves take 5-7 years to complete,” said Westinghouse’s Kirst. This leaves upgrading as the only realistic option, and it is here where Westinghouse might expand its impact in Ukraine. “If Ukraine wants to sell its electricity to Europe, it has to meet European standards, which it agreed to do years ago when it signed the EU energy cooperation agreement,” says Kirst.
As they stand, the Russian-designed VVER reactors do not meet the criteria.
The controversial question is who will do the work and who will pay for it. At the most recent U.S.-Ukraine Energy/Security Fusion Dialogue, nuclear power expert from the National Academy of Sciences Viktor Shelest argued that only a Russian company could modernize old and complete new power blocks because “Western companies will not touch Soviet-era technology.” Also, the industry buys almost all of its fuel from Russia, “which is impossible to replace in any meaningful way,” Shelest added.
Westinghouse’s Kirst said that this is “utter nonsense,” and explained how his company’s safety systems are already in all of Ukraine’s nuclear power plants and had done modernization work at the Temelin plant in the Czech Republic in the 1990s and early 2000s, which involved the same VVER reactors. Also, until its cancellation this past April, Westinghouse was a finalist in the tender for comprehensive modernization at Temelin.
Energoatom chairman Yuriy Nedashkovsky confirmed the plans for loading the Westinghouse fuel in December, adding that supplies of Russian fuel rods are on schedule. “From Russia this year the delivery of 12 units is planned, of which 10 were supplied on time, and we expect that another two units will arrive in November,” he said on Sept. 24. “We hope that there will be no force-majeure.”
Last year’s controversy about the reliability of the Westinghouse fuel rods seems to be a thing of the past. As the Kyiv Post wrote last year, the State Inspectorate for Nuclear Regulation found that the Westinghouse rods used at the Southern NPP were damaged during operation and had to be withdrawn. Russian rival TVEL said the rods were bad, although Westinghouse denies this and Kosharna of Ukrainian Nuclear Forum confirms that the TVEL rods were actually at fault. First Deputy Head of the State Inspectorate for Nuclear Regulation Mykhailo Hashev announced on Sept. 24 positive findings on the Westinghouse fuel and all permits had been signed.
Kyiv Post business journalist Evan Ostryzniuk can be reached at [email protected].
