Nicholas Watson, David O'Byrne and Ben Aris -
Perhaps the starkest sign of how Emerging Europe's response to the nuclear disaster in Japan will be markedly different to that of Western Europe is that even though Latvian President Valdis Zatlers witnessed firsthand the horrors of Chernobyl while a young Red Army medic, he still insists his Baltic nation will press ahead with its nuclear plans. "It will take some time, but people will trust nuclear power again," Zatlers told reporters while on a visit to the US in April.
Contrast this with German Chancellor Angela Merkel, who was forced into an embarrassing about-face as the full scale of the problems at the Fukushima Daiichi power plant became apparent, reversing a plan she had forced through six months earlier to delay the closure of nuclear power plants to 2036 by ordering that all 17 reactors should close within a little over a decade. '"We all want to get out of nuclear power as soon as possible," said a chastened Merkel.
Most of Western Europe's leaders find themselves in a similar position, and regardless of the final outcome at the Fukushima plant - on April 12, Japanese authorities raised the severity rating of the nuclear crisis at the Fukushima plant to the highest level, on a par with the 1986 Chernobyl disaster - analysts like those at Frost & Sullivan say the future of nuclear in much of Western Europe "is once again in significant doubt."
Not so in the former Soviet Union and Eastern Bloc. While new stringent safety features and design will probably speed up the decommissioning of existing older plants and kill the less-economically viable projects on the drawing board, those that are being built for more strategic reasons will still go ahead - albeit perhaps with some delays.
Take the Czech Republic, for example. The giant state utility CEZ is currently in the process of tendering for two new reactors at its nuclear power plant of Temelin. CEZ is supposed to pick the winner of the tender in 2013 - out of Areva, Westinghouse, and a Russian-Czech consortium of Atomstroyexport, Gidropress and Skoda - in order for the project to be completed in 2025. However, that date is itself five years later than first planned and few analysts expect the tender to be competed before 2016, if at all.
Then there's Bulgaria, whose attempt to build a second nuclear plant at Belene has been a tortuous affair, even by the nuclear industry's standards. The latest move in this saga was the Bulgaria's government hiring of the UK bank HSBC in mid-April to advise it on the feasibility of the project. Although HSBC will reportedly receive €2m in consultancy fees and an additional 0.95% on any external funding raised for the project, raising concerns about the bank's vested interest in concluding it's a goer, it's hard to see how the bank can economically justify the plant's construction.
Razvan Grecu of Candole Partners cites a report by the Institute for Market Economics (IME), one of the oldest and most reputable think-tanks in Bulgaria, which shows that the plant will be profitable only if it sells electricity at €0.140-0.147 per kilowatt hour (kWh), because the total price of the plant will not be €6.3bn, as suggested by Rosatom, Russia's state nuclear holding whose subsidiary Atomstroyexport has been chosen to build the plant, but €11bn when insurance and infrastructure are added. The report also refutes the conventional wisdom that electricity demand will grow, predicting that demand will be flat over the years despite GDP growth, because the energy intensity of the economy will improve. Demand from abroad will also decline, IME says, because Serbia will start minimising imports after 2015 and Romania is expected to continue with the expansion at its Cernavoda plant.
However, that Romanian plant is also now in doubt because of government incompetence and the global economic crisis. The €4bn project was initially planned to be financed mainly by foreign players, but driven by economic nationalism, the government finally decided in 2008 to keep a majority stake (51%) in the newly created special purposed vehicle, EnergoNuclear, while the remaining 49% would be divided among Enel, CEZ, GDF Suez, RWE, Iberdrola and ArcelorMittal. However, the crisis made this financial scheme unsustainable and the delay and confusion has now forced first CEZ, then GDF Suez and Iberdrola and RWE to withdraw from the project. In March, the economy ministry drafted a decision to reduce its shares in the project to 40% and call for a feasibility study to be completed by 2013. But "the government's indecision means that the project is blocked and construction of the reactors postponed. It is unlikely that the stalemate will be resolved any time soon," reckons Grecu of Candole Partners.
So much for the waverers; others, though, insist they are pressing ahead with their nuclear plans.
Chief amongst those is, of course, Russia, which has a huge nuclear industry and is set to be one of the principal beneficiaries of the region's nuclear renaissance.
Russia is among Europe's most reliant on nuclear power. Nuclear energy already accounts for 16% of the country's produced power, and Russia is planning to double its nuclear capacity over the next 20 years.
Outside of the country, Russia's nuclear industry is in the process of building five nuclear power units and another 10 or so such projects are close to getting off the drawing board. Rosatom has a total portfolio of 30 orders for constructing reactors in different countries. According to a source close to the Russian Energy Ministry, the ministry doesn't foresee much impact from Japan on the implementation of those export projects scheduled through 2030.
Public opinion in Western Europe remains wary of Russian-made nuclear power stations following the Chernobyl meltdown, but Russia abandoned the Soviet-era RMBK class of reactors following that disaster and claims that the next generation of nuclear power plants are safer than ever. "We now have a whole arsenal of progressive technological means to ensure the stable and accident-free operation of nuclear power plants," Russian Prime Minister Vladimir Putin said in the middle of March.
Russia has the youngest fleet of nuclear reactors in the world - they have an average age of 19 years, compared with 26 years in Western Europe and 30 years in the US, reports Bloomberg. The Fukushima reactor is 38 years old, making it one of the oldest reactors in the world that's still in operation. "Until now, countries in emerging markets were well out in front of the nuclear industry revival, accounting for a disproportionate share of the expected growth in nuclear energy use. Out of the 62 reactors currently under construction, 48 - or 77% of the total - are being built in China, Russia, India and South Korea," says Sergei Bubnov, who heads Renaissance Asset Managers' utilities fund.
One of the Russian overseas projects is Turkey, which says it remains steadfastly committed to its nuclear programme.
Speaking to bne recently, Turkish Energy Minister Taner Yildiz confirmed that with power demand growing at between 8-9% a year, his government sees no alternative to developing nuclear power in Turkey and its plans for having three operational nuclear power plants by 2023 remain unchanged. "As with every country, we have to ensure security of supply, and we have decided as a government that this is the best solution," he says.
According to the energy policy of the Justice and Development Party (AKP) government of which Yildiz is a prominent member, Turkey's reliance on imported natural gas, which already generates more than half of the country's electricity, represents a serious threat to the country's energy security. They have a point. Three times in the past five years Turkey has suffered gas shortages after Iran, with which Turkey has a contract supplying up to 10bn cubic metres a year (cm/y), cut supplies without warning, with similar shortages experienced twice in the past 12 years due to spats between Russia and Ukraine, through which Turkey receives around half of the 30bn cm/y of Russian gas it has contracts to import.
But critics of Turkey's nuclear programme point out that as current plans for a Russian built 4.8-gigawatt nuclear plant at Akkuyu on the country's east Mediterranean coast involve Russia supplying uranium fuel, together with the gas imports from Japan, it would leave the country dependent on Russia for the primary fuel for half the country's power generation.
And as Turkey has uranium of its own, the planned second nuclear plant of around 5,000 MW at Sinop on Turkey's Black Sea coast for which talks are already underway with Japan's Tepco would also involve imported fuel, as would a third planned plant for which a site has yet to be chosen.
According to Turkey's main political opposition party the Republican Peoples' Party (CHP), alternatives to nuclear power exist that can meet Turkey's growing demand without compromising supply security. "Demand is expected to double by 2023 and we calculate that we can more than meet the increase largely from indigenous resources," says Necdet Pamir head of the CHP's energy commission.
In addition to existing plans for major new gas- and coal-fired plants that have already been licensed, Pamir identifies scope for expanding Turkey's hydroelectric power programme - albeit without causing undue environmental damage, as well as the largely untapped potential for wind and solar power and a huge potential for improving industrial and residential energy efficiency as offering the chance to more than double the volume of power generated. But he stresses that the CHP is not opposed to Turkey's nuclear programme per se, only to the way the current AKP government is developing it, which he says is too expensive and raises too many questions. "We're looking to the coming fourth generation of nuclear plant being developed, which will cost less and be safer to operate," he says.
Not surprisingly given the upcoming elections in June, safety is high on the public agenda with Yildiz having recently been forced to deny reports that a site for the planned third nuclear plant had been chosen at Igneada, close to Turkey's border with Bulgaria. According to Okan Zabunoglu, head of the Department of Nuclear Studies at Ankara's Hacetepe University, fears over the two confirmed sites at Akkuyu and Sinop have been overplayed and both are safe. "There have been some questions over the Akkuyu site," he says pointing to its location 160 kilometres from a minor inactive earthquake fault line. "But it has been studied extensively and there seems to be no good reason for concern."
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