Nuclear power is not a good business anymore
Recent news show nuclear power is not a good business anymore. After Fukushima accident, more projects have been cancelled around the world, but Finland seems to go on with new nuclear plants.
The Fennovoima project may have problems in financing, experts say. The biggest shareholder, E.On (34%) has already stepped aside from all nuclear projects and says it will concentrate on renewables. Small investors might have problems if the construction starts. Plant prices have risen about 100% from the beginning of the project. Making profit with new nuclear means electicity prices must rise.
A new nuclear power plant is planned to be built at Pyhäjoki, northern Finland. The Fennovoima company is a new player in the field. But in the aftermath of the Fukushima accident investors are calculating the costs to build new plants, and these calculations give nuclear power a new name: “corporate killer”.
Even before the Fukushima accident warnings have been published about new nuclear plants. After a break of 25 years, restarting new plant construction has proven difficult, the costs are climbing as projects go on. The most advanced project, the Olkiluoto-3 is currently about 100% over budget and 4 years behind schedule. The plant automation is not yet accepted. Olkiluoto is used as a warning by the financial giant Citi-group, which already in the autumn of 2009 specifically warned its customers from investing in nuclear power. Financing nuclear power is classified in the lowest category, interest rates in accordance.
German utilities E.On and RWE recently withdrew from two major projects in England: new reactors for Wylfa and Oldbury are likely not to be constructed, finding new partners for funding might be impossible. Reason for withdrawal is commercial: the construction of renewable energy gives faster returns than nuclear power. E.On is now closing all the nuclear projects abroad, the Fennovoima (with 34% shares by E.On) is the last one remaining.
The new nuclear plant construction bids are trade secrets, but the estimates published are based on quotations of the cancelled projects. November 2010, EPR reactor was estimated 9.6 billion dollars (7.2 billion Euros: U.S. Calvert Cliffs unit 3). The most recent price data comes Britain, 7 billion pounds, which equals 8.7 billion Euros.
In the spring 2012 small utilities "Jyväskylä energy" and the "Åland Energy" announced sale of their Fennovoima shares. Earlier “Korpelan voima” was trying to sell its shares to Sweden, Skellefteå Kraft. The Skellefteå City Council said NO.
There’s a growing doubt on small shareholders' investment possibilities in Fennovoima. In particular, municipal utilities with no own power production may not be able to invest the necessary millions of euros, let alone to make guarantees to power plant construction lending. This question was raised in a newspaper article a few weeks before Jyväskylä and Åland dropped their part in Fennovoima. There is a holding company between Fennovoima and 10 small utilities in the north. Sum of the investment required from the shareholders exceeds their annual revenue. The owners of these utilities might be required to guarantee the loans. Are the utilities making these investments on their own, without the permission of the owner?
A peculiar case is the "Rovakairan tuotanto" company. It has 26.08% of the shares in the "pohjois-Suomen voima Oy". It was originally formed as a holding company for hydropower shares of Rovaniemi, Sodankylä and Kittilä, and its business is based on the "Mankala principle": the company does not make profits but sells all the energy to the owners at production cost. Rovakaira’s investment in Fennovoima will be 7 times the company’s 1.9 million in annual sales! Are the citizens of Rovaniemi etc. willing to pay this price?
Experts say, construction based on a moderate 6.6 billion price-estimate will make zero percent nuclear power, if electricity prices rise to 78 Eur / MW. This calculation does not include nuclear waste repository. As can be seen from the earlier price estimations, nuclear power is not a good business anymore.
Matti Adolfsen, Kemi