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Facts about FIN5 / Olkiluoto-3 financing

Teollisuuden Voima Oy (TVO) chose Framatome ANP to supply the EPR (European Pressurized Water Reactor) nuclear island for the 1600-MW unit, with Siemens AG supplying the conventional island. The fixed price contract is for 3,2 billion euros. The EU commission is now investigating the legality of the subsidies involved.

According to TVO Managing Director Mauno Paavola the fixed-price contract includes the costs of the nuclear and non-nuclear islands and related construction, financing costs, some of the unit’s waste management costs and the first fuel core. Excavation is the only thing for which Framatome is not responsible (Nucleonics Week- Volume 45 / Number 1, January 1, 2004). However, the details of the contract have not been published. Therefore the expected price per MWh for the electricity produced is not available for the public, but it is estimated to be less than 25 EUR / MWh2.


TVO’s shareholders will provide about 25% of the financing, 20% in cash and 5% through a loan. The remainder will be borrowed, from individual banks and through a banking syndicate. The main organizers for a syndicated loan were Bayerische Landesbank, BNP Paribas, Handelsbanken, JP Morgan and Nordea. This syndicated loan is for 1,95 billion. The marginal of the banks in the syndicated loan is approximately 0,5 %. According to 2 months euribor, TVO got it’s loans for a price of 2,6 %. In addition to the syndicated loan, bilateral loans worth 550 million EUR have been negotiated. TVOs Standard & Poors credit standing in long-term financing is BBB (Kauppalehti 22.1.2004).


TVO is a consortium of forest industry and public energy companies. TVO produces electricity for its shareholders and doesn’t sell any electricity directly. The shareholders will get electricity according to their shares for the price of the production – meaning that TVO itself as a company isn’t aiming at making profit.

The biggest owners of TVO are Fortum (a public energy company), UPM Kymmene and Stora Enso, the latter two being international forest industries.

FIN5 a special case – can not be used as an example

Teollisuuden Voima got the plant for a special price. The project is strategically so important for the whole nuclear industry that the nuclear manufacturers had basically nothing to loose – only to win. Not only was it about the first reactor ordered to an EU country in more than a decade, but it was also about getting a prototype up and running. Most companies that took part in the bidding had new NPP designs to offer. It was crucial to any of them to win the deal to get a showcase of their reactor type. The tough competition between the manufacturers lowered the price of the whole project down to 3,2 billion euros (which still exceeded the maximal cost assumed during the political debate by 700 million).

Framatome ANP is now planning to build a similar plant to France but it looks like the costs for the same plant in France are estimated to be 25 % higher (Nuclear News Flashes – Tuesday, May 25, 2004). This is another proof showing that Framatome and Siemens sold the EPR for Finns for a special price. Furthermore, it has become clear that the EPR in France needs heavy government subsidies (500 million EUR) to be implemented (Nuclear News Flashes – Thursday, May 27, 2004).

TVO and Framatome ANP made a fixed price contract, meaning that if the total costs exceed 3,2 billion, which is quite likely as it is a new design with a very ambitious timeline (and taking into account the previous experience Framatome had with EPRs predecessor N4 – see the box below), it will be Framatome and Siemens who pay the exceeding costs. Already now there are signs indicating that the total costs will be exceeded significantly [Tekniikka & Talous 19.5.2004 (Technology & Economy): Teraksen hinta uhkaa ydinvoimalan rakentajaa (The Price of Steel Threatens the Constructor of the Nuclear Power Plant)].

Because of the fixed price, which means that there’s no financial risk on TVO if the project fails, TVO got a very cheap loan, (with an interest rate only 2,6 %). Had there not been the fixed price contract, which takes the risk away from TVO, the interest rate would have been totally different – especially taking into account the rating of TVO.

It has been claimed that the deal is fully commercial with no government subsidies involved. This is not true. There are several subsidies involved, such as a 610 million EUR export credit (COFACE) from the French government. This seems to be one explanation to why Framatome ANP could afford a fixed price contract with a low price.

There are four N4 reactors in operation and they are all in France. The early life of the N4 units was marked by a series of design-related problems. The reactors suffered delays in commissioning (from three to six years) and numerous shutdowns because of the novelty of their overall design, electronic control and components.

The first of the N4 reactors, Chooz-B1 was connected to the grid in August 1996, Chooz-B2 in April 1997, Civaux-1 in December 1997 and Civaux-2 in December 1999.

The first problems appeared with Civaux 1 before the plant was even taken into commercial operation. On May the 12th 1998 three hundred square meters of radioactive water leaked from the primary circuit into the reactor building because the heat removal system (RHS) failed. It happened because of a mistake in the technical design of N4’s heat removal system. Because of this design flaw the operator had to unload the reactor’s fuel. The fuel had to be removed in the other N4 reactors, Chooz B2 and Chooz B1 as well. The cracked section of the RHR was eventually redesigned and replaced in each N4 reactor.

In the following year (1999) a cracked weld was discovered in the residual heat removal pump bypass line at Civaux 1. Again the problem was caused by thermal fatigue. In each N4 reactor this section of piping was replaced but not first redesigned.

The problems with Civaux 1 didn’t stop there. Eventually it wasn’t until the 17th of August 1999 before the plant was restarted. The reactor had been offline since 12 May 1998. Chooz B1 and B2 were put back on line in March 1999.

In 1996, EDF officials estimated the two Chooz B units had cost already 23-billion French francs (3.5-billion euros) and the two Civaux units FF 21-billion. What the final costs after all the technical problems and delays where is not known by the author.

– Finon, Dominique: The mitigation of the French nuclear option New industrial realism and technical democracy learning, Institut d’economie et de politique de’energie, 2002.
– Nucleonics Week, 17 Oct. ’96, 17