Safety scandals
Climate bluff
Cheap nuclear
Next steps
Act now!

Home > Cheap Nuclear?

Economics of nuclear power

The nuclear industry has been using the FIN5 project as an example of nuclear power being competitive in deregulated market place. What they often forget to tell are the special features of this deal, such as a 2,6 % interest rate and 610 million EUR subsidies from the French government in the form of export credits.

Teollisuuden Voima (TVO), got the reactor (European Pressurised Reactor, EPR) for a special price. This is because the project is strategically so important for the whole nuclear industry that the manufacturers were ready to dump their prices to get the deal. Not only was the issue about the first reactor ordered in an EU-country in more than a decade, but it was also about who gets a chance to build a demonstration unit. Most of the manufacturers that took part in the bidding had new NPP designs to offer. It was crucial for any of them to win the deal and get demonstration plant up and running. The tough competition between the manufacturers lowered the price of the whole project down to 3,2 billion euros.

TVO and Framatome ANP made a fixed price contract. This means that if the total costs of the project exceed 3,2 billion, which would be no surprise as it is about a new design and a very ambitious timeline, it will be Framatome and Siemens who pay the exceeding costs. So there’s no financial risk on TVO if the project fails.

Because of the fixed price contract, which takes the economical risk away from the buyer, and because of the French Export credit, TVO got a very cheap loan, with interest rate only 2,6 %.

Unlike TVO claims, the deal is not wholly commercial. There are several arrangements involved that can be seen as subsidies.

At the moment the EU commission is investigating the financing of the Olkiluoto3/FIN5 because of alleged illegal state aids. The process was initiated by the European Renewable Energy Federation who believes that the project has been illegally subsidised. Read more

31.08.2009 Areva threatens halt of Olkiluoto construction
The dispute around enormous financial losses from Olkiluoto reactor project deepened yesterday, when the French nuclear giant Areva published its half-year results. Areva threatened to freeze construction if TVO does not submit to the company’s demands of shouldering a share of the cost. The latest estimate of construction costs reached €5.5 billion, which compares to the price of 2.5 billion originally presented to Finnish public and politicians. >>

28.01.2009 Fight over Olkiluoto losses a cold shower to new projects
The Finnish buyer of Olkiluoto 3 power plant, TVO, is asking for EUR2.4 bln as a reimbursement for the 38 month delay of Olkiluoto 3 reactor. Areva-Siemens is claiming one billion from TVO. The claims from TVO come on top of cost overruns that Areva and Siemens have already incurred, amounting roughly to 1.5 bln. >>

17.10.2008 Olkiluoto 3 three years delayed and three other blows to the nuclear industry
Financial Times reveals that the completion Olkiluoto 3 is expected in 2012, according to a new timetable submitted to TVO by Areva. Originally the plant was supposed to be online by mid 2009, so this means a three year delay on top of the original 4.5 yr construction schedule. >>

31.03.2008 Siemens loses half a billion in Olkiluoto – Problems surface in France
The extra costs of problems and delays in Olkiluoto nuclear project to Siemens can top EUR500 million, the brokerage company CAI Cheuvreux has estimated (1). Siemens, who recently issued a profit warning, have themselves said that the losses are “not insignificant”. Siemens share price has fallen by 25 % in two weeks. >>

11.09.2007 Olkiluoto reactor a 3 billion mistake, say Greenpeace
Delays to the Olkiluoto 3 (OL3) nuclear reactor will cost electricity users in Finland, and other Nordic countries, €3 billion, a heavy industry organization has revealed. >>

11.09.2007 OL3 Undermining Investor Confidence in Nuclear
Recent reports in financial media show that the investment community is heeding the warning from Olkiluoto and getting more conscious about industry promises. Olkiluoto is a clear demonstration that the problems that have always plagued nuclear power are not disappering. >>

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