Contract with Rosatom for Finnish reactor scrapped

May 5, 2022, 6:59AMNuclear News
An artist’s rendering of the Hanhikivi plant. (Image: Rosatom)

Finnish energy company Fennovoima has terminated, effective immediately, its engineering, procurement, and construction (EPC) contract with RAOS Project Oy, a subsidiary of Russia’s Rosatom, for the delivery of a 1,200-MWe VVER-1200 pressurized water reactor at the Hanhikivi site in Finland’s Pyhäjoki municipality.

In a May 2 press release, Fennovoima cited “significant and growing delays during the last years,” adding that the ongoing war in Ukraine and the international sanctions against Russia as a result have exacerbated project risks, which RAOS has been unable to mitigate.

The decision was not a particularly unexpected one. On February 22, just prior to Russia’s invasion of Ukraine, Finnish Prime Minister Sanna Marin and Minister of Economic Affairs Mika Lintilä called for a stricter risk assessment of the project. And early last month, Fennovoima announced that it was assessing the impact of the Russian sanctions on the Hanhikivi project.

What they’re saying: “Unfortunately, the termination of the EPC contract is estimated to have a significant employee impact on Fennovoima and is expected to impact also the supply chain companies and the Pyhäjoki region,” said Joachim Specht, Fennovoima’s chief executive officer. “Our main objective is to support our employees by keeping them informed and to work in close cooperation with both our employees and employee representatives. In addition, we focus on preserving the site.”

Esa Härmälä, chairman of Fennovoima’s board of directors, said, “The decision to terminate the EPC contract with RAOS Project is not made lightly. In such a large project there are significant complexities, and decisions are made only after thorough consideration. We fully acknowledge the negative impacts and do our best to mitigate those.”

The Fennovoima press release did not speak to the possibility of a replacement partner for the project. Härmälä did, however, provide the following to the press: “I think there will be need for nuclear power also in the future, but that’s only my personal opinion.”

Rosatom responds: “We are extremely disappointed that Fennovoima Oy has taken the decision to terminate its EPC contract with RAOS Project,” Rosatom declared in a statement on its website. “The reasons behind this decision are completely inexplicable to us. The project has been progressing, and we had established a good working relationship with our client, which Fennovoima’s CEO had repeatedly communicated to shareholders and in the media. . . . We reserve the right to defend our interests in accordance with applicable contracts and laws.”

Background: In December 2013, Fennovoima and Rosatom subsidiary Rusatom Overseas signed a plant supply contract for Hanhikivi-1, to be managed by RAOS. Fennovoima submitted an application for a construction license to the Finnish government in December 2013 but was forced to update the application in April 2021 due to “developments in the plant project and the boundary conditions that affect it,” according to Fennovoima. At that time, the company estimated that it could obtain the construction license by the summer of 2022 and that construction of the power plant could commence in the summer of 2023, with commercial operation starting in 2029.

Hanhikivi-1 was to be Finland’s sixth power reactor. Fortum’s Loviisa plant houses two 507-MWe PWRs, and Teollisuuden Voima Oyj’s Olkiluoto plant is home to two 890-MWe boiling water reactors and a 1,600-MWe EPR, which is scheduled to enter commercial operation later this year.

Hanhikivi-1 was expected to supply approximately 10 percent of Finland’s electricity needs.

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