Finnish energy company Fortum has completed a feasibility study investigating the prospects of constructing a new NPP in Finland. It found that this would require growing energy demands by customers, strong private and public partnerships as well as an overall positive market outlook.
Fortum President & CEO Markus Rauramo said it is also a question of funding. He said one prerequisite for building a new reactor would be to bring Finnish electricity prices in line with those in Europe which are almost double those in Finland. “That’s the price level needed from customers for a new nuclear power plant to be built,” Rauramo said.
Fortum began investigating the feasibility of building new nuclear in Finland and Sweden more than two years ago looking at conventional large NPPs as well as small modular reactors (SMRs). “We will continue to develop new nuclear as a long-term option to meet projected customer demand growth and with view to replacing existing assets at the end of their lifetime,” Fortum said. “A successfully executable new nuclear project requires use of proven technology, licensing and in-depth planning prior construction,” the company added.
During the next few years, Fortum will focus on further developing project economics and partnerships as well as continuing discussions with potential customers on how to best meet their needs. Fortum will also deepen its engagement with selected technology providers including EDF and Westinghouse together with Hyundai for large scale NPPs and GE-Hitachi for SMRs. It will also continue discussions with regulators and political stakeholders.
“Fortum will now continue to develop its capabilities to have new nuclear as an option to meet future customer demand in the Nordics in the longer term. In addition, Fortum sees the development work as a step in preparing for the eventual replacement of the existing nuclear capacity.”
According to Rauramo, decarbonisation of industries and societies through electrification is expected to significantly increase power demand in the Nordics by 2050. “Meeting such a demand increase with intermittent renewables only could lead to a very volatile power system with limited predictability in terms of availability and price, which would not be desirable for our customers or society. We at Fortum believe it makes sense to keep all low-carbon production technologies in the toolbox also in the future and that’s why we will continue to develop our nuclear capabilities as a long-term option.”
He added that, in the next 5-10 years, new demand will be primarily met with new onshore wind and solar power coupled with flexibility and storage solutions as well as lifetime extensions of existing NPPs. “To prepare for the growing needs of our customers, we are developing a ready-to-build renewables pipeline, exploring pumped hydro, and extending the lifetime of our Loviisa plant. New nuclear could provide new supply to the Nordics earliest in the second half of the 2030s, if market and regulatory conditions are right.”
Fortum said new nuclear requires visibility on income, a solid financing framework and technology-neutral treatment in regulation. “Most large industrial customers value a stable electricity supply profile and want to secure deliveries with long-term contracts, which nuclear power already today provides.” At the same time, “the main risks of new nuclear projects relate to the long construction times, high capital requirements, and market price of electricity post commissioning”.
Fortum concluded that, based on the current power market outlook, “new nuclear is not economically viable on a merchant basis only”. However, based on its analysis and on newbuild projects ongoing in other western countries, “new nuclear projects can be manageable with a solid risk sharing framework … when matched with increased customer demand”.
Petra Lundström, Executive Vice President, Nuclear Generation at Fortum said that, despite having a competitive advantage through broad expertise in nuclear power, Fortum “will need strong partners for future projects”. She added: “As a next step, we will continue to develop a business case and actively pursue partnerships to test interest in co-developing and co-investing in a new nuclear newbuild project with us.”
Fortum said an important part of de-risking new nuclear is also regulatory harmonisation and political stability beyond electoral cycles on both EU and national levels. Crucially, nuclear power should be treated on equal footing with other clean production technologies when it comes to financing. “In addition, maintaining a sound operating environment for existing nuclear operations is essential for anyone considering future investments.”
Laurent Leveugle, Vice President, New Nuclear at Fortum noted: “From a project execution perspective, it is essential to ensure the maturity of the technology, limit the country-specific requirements and verify the vendor’s competencies already in the pre-investment phase. Our plan is to collaborate with three plant suppliers to mitigate project risks before we would consider an investment. De-risking the licensing of a plant design as far as possible before construction is a must to reduce the likelihood of costly design changes, which can lead to delays in project execution.”
Fortum operates Finland’s first NPP, the Loviisa plant with two Soviet-supplied VVER-440 reactors, which provides more than 10% of the country’s electricity. Loviisa 1 began commercial operation in 1977 and unit 2 in 1981. In March, the company applied to operate both units until the end of 2050. The current operating licences expire at the end of 2027 and 2030. Fortum also holds stakes in units 1&2 of Finland’s Olkiluoto, as well as in units 1-3 of the Forsmark NPP and unit 3 of the Oskarshamn NPP in Sweden.
