The prospect from uranium prices are massive, but you need a line of credit to build new reactors...in the west that will be a problem going forward...
The cracks are showing in the latest atomic showpiece, writes James Kanter.
AS THE world fights climate change by seeking cleaner sources of energy, governments would do well to consider this cautionary tale of a new-generation nuclear reactor site.
The massive power plant under construction on the Finnish island of Olkiluoto was supposed to be the showpiece of a nuclear renaissance. The most powerful reactor built to date, its modular design was supposed to make it faster and cheaper to build. And it was supposed to be safer, too.
But after four years of construction and thousands of defects and deficiencies, the reactor's €3 billion price tag ($A5.2 billion) has climbed at least 50 per cent. And while it was meant to be finished this northern summer, Areva, the French company building it, is no longer willing to say when it will go online.
While the US nuclear industry has predicted clear sailing after its first plants are built, and the debate about nuclear power is returning to the agenda in Australia, the problems in Europe suggest big obstacles ahead.
A new fleet of reactors would be standardised down to the carpeting and wallpaper and that standardisation would lead to big savings, the theory goes. But early experience suggests these reactors will be no easier or cheaper to build than those of a generation ago, when cost overruns — and then accidents at Three Mile Island and Chernobyl — ended the previous nuclear construction boom.
In Flamanville, France, a clone of the Finnish reactor is also behind schedule and over budget. In America, the European experience is causing concern.
"A number of US companies have looked with trepidation on the situation in Finland," said Paul Joskow, a professor of economics at the Massachusetts Institute of Technology. "The roll-out of new nuclear reactors will be a good deal slower than a lot of people were assuming."
For nuclear power to have a high impact on reducing greenhouse gases, an average of 12 reactors would have to be built worldwide each year until 2030, according to the Nuclear Energy Agency at the Organisation for Economic Co-operation and Development. Right now, there are not even enough reactors under construction to replace those reaching the end of their lives.
And of the 45 reactors being built, 22 have encountered construction delays, according to an analysis prepared this year for the German Government by Mycle Schneider, an energy analyst and a critic of the nuclear industry. He added that nine did not have official start-up dates.
Most of the new construction is in China and Russia, where strong central governments have made nuclear energy a national priority. India wants new nuclear technologies to reduce its reliance on imported uranium.
The US generates about one-fifth of its electricity from 104 reactors, most built in the 1960s and 1970s.
France gets about 80 per cent of its power from 58 reactors, but has not completed a new reactor since 1999.
After designing an updated plant with German participation in the 1990s, the French had trouble selling it at home because of a saturated market and opposition from Green Party members in the government.
So Areva, the largely state-owned energy company, turned to Finland, where utilities and energy-hungry industries such as pulp and paper had been lobbying for 15 years for more nuclear power. The project was initially budgeted at $A4.9 billion and Teollisuuden Voima, the Finnish utility, pledged it would be ready in time to help Finland meet its greenhouse gas targets under the Kyoto treaty.
Areva promised electricity could be generated more cheaply than from natural gas plants. Areva also said its model would deliver 1600 megawatts, or about 10 per cent of Finland's power.
In 2001, the parliament narrowly approved a reactor at Olkiluoto, an island on the Baltic Sea. Construction began four years later. Serious problems arose over the vast concrete base slab for the foundation of the reactor building, which the country's Radiation and Nuclear Safety Authority found too porous and prone to corrosion. Since then, the authority has blamed Areva for allowing inexperienced subcontractors to drill holes in the wrong places on a vast steel container that seals the reactor. In December, the authority warned Areva that "the lack of professional knowledge of some persons" at Areva was holding up work on safety systems.
Areva has acknowledged that the cost of a new reactor today would be as much as €6 billion, double the price offered to the Finns. Areva announced a steep drop in earnings last year, which it blamed mostly on mounting losses from the project.
In addition, nuclear safety inspectors in France have found cracks in the concrete base and steel reinforcements in the wrong places at the site in Flamanville. They also warned the utility building the reactor that welders working on the steel container were not properly qualified.
On top of such problems come the recession, weaker energy demand, tight credit and uncertainty over future policies, said Caren Byrd, an executive director at the global utility and power group at Morgan Stanley in New York.
"The warning lights now are flashing more brightly than just a year ago about the cost of new nuclear," she said.
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