A renewed focus on Ukraine’s nuclear power sector

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According to the World Nuclear Industry Status Report 2020, for the first time in history (in 2019), non-hydro renewables such as solar, wind and biomass generated more electricity than nuclear power plants – 2.4 gigawatts of new nuclear plants installed compared to 98 gigawatts of solar and 59.2 gigawatts of wind. The world’s operational nuclear power capacity has declined by 2.1 per cent by the middle of 2020. The stagnation of the sector continues. 

The share of nuclear energy in global electricity production has fallen from 17 per cent in 2000 to 10 per cent in 2020. It cannot, therefore, be viewed with optimism. The International Energy Agency (IEA) foresees a huge decline of energy investments globally due to the coronavirus pandemic. The IEA forecasts a decrease of 20 per cent (nearly $400 billion) in 2020. While some of the world’s leading economies (the United States, France, Japan, and Canada) are actively using nuclear generation, others like Germany, Italy, Switzerland are beginning to abandon it by developing and investing in renewable sources. Even in Australia, which ranks first in the world with uranium reserves (the main material for nuclear fuel production) and possesses around 30 per cent of the world’s known reserves with tremendous potential for nuclear power generation, with public support of almost 50 per cent, the government is still postponing the construction of the first nuclear power plant.

European context

In Europe, France has the biggest nuclear energy sector, around 70-73 per cent of its electricity is generated by nuclear power. Yet, Électricité de France S.A. (EDF) announced a reduction of its 2020 nuclear outlook to 300 terawatt hours due to a disruption of the maintenance schedules caused by the COVID-19 pandemic and the reduced power demand. The EDF estimated that for 2021 and 2022, the range of usage will be between 330 TWhs and 360 TWhs annually. In its quarterly financial report published in March 2020, the EDF noted a “slowdown of projects under construction” due to the pandemic.

Poland has announced intentions to start building its first nuclear plant. According to Stefan Taczanowski, a leading energy expert from Kraków’s University of Science and Technology: “The plan to build six power plants/reactors with a total capacity of six gigawatts can be considered. In addition, it must not be forgotten that the consequences of this choice will last for at least 80 years and, given the construction and decommissioning time of power plants, may exceed the mid-22nd century.”

In the United Kingdom, the issue of building new nuclear plants is periodically raised as a counterbalance, first of all, to the significant reduction in pollution and smog reduction. However, according to their experts, the nuclear infrastructure, in the process of operation and utilisation of spent nuclear fuel, can still have a negative impact on the environment.

In Ukraine, meanwhile, the forecast balance of electricity of the United Energy System of Ukraine (UES) for 2021 was presented at the ministry of energy. The president of the state enterprise National Nuclear Energy Generating Company Energoatom (Energoatom) confirmed that the expected production will be on the level of 75.233 billion kilowatt hours. This is exactly 50 per cent of all electricity generation of which is planned for 2021. The then acting minister of energy, Olha Buslavets, had directed an optimisation of the schedules of the 2020-2021 repair campaign. This increased the expected volume of electricity production by Ukraine’s nuclear power plants by 2.9 billion kilowatt hours (from 72.3 to 75.2 billion kWh). This will improve the financial condition of the state energy generating enterprise and will help ensure a sustainable operation during the heating season.

Energoatom is in fact the most important player on the electricity generation market, though legally it is not. The main problems of the market in Ukraine have been accumulated over the past 25 years: cross-subsidisation, growth of debt, low investment attractiveness, high regulation, and a monopoly in generation and supply markets. However, Ukraine has recently adopted a new law on the electricity market (in 2017), which changed the market formation mechanism and introduced new mechanisms. In particular, it makes Energoatom an independent player in the electricity generation and trading sector. Energoatom operates four nuclear power plants: Zaporizhzhya, Rivne, South-Ukraine, Khmelnytsky with 15 power units (as of December 30th, eleven units are operating and four are under reconstruction). All reactors are Russian VVER types. The total installed capacity is 13,835 megawatts.

Modernisation and new technologies

Ukraine is the eighth country in the world in terms of nuclear power plant capacity. Energoatom provides about an average of 55 per cent of Ukraine’s need for electricity, and during the autumn-winter periods this figure reaches up to 70 per cent. In the first half of 2020, the installed capacity utilisation rate of the plants was 65.2 per cent, which is 5.8 per cent less than the same time period in 2019. At the same time, the coefficient of readiness to carry a nominal electric load of Ukrainian nuclear plants in the first half of 2020 amounted to 74.6 per cent – 9.4 points higher than the installed capacity utilization rate. In other words, the nuclear power plants’ capacity was not limited administratively and electricity production in the first half of 2020 could have increased by 5.3 billion kWhs.

In August 2019, Energoatom embarked on a significant modernisation programme for all 15 reactors to be completed over the years 2020-2024. The programme involves the replacement of turbine capacitors as well as turbine upgrade work. As the managing director of Westinghouse Electric Sweden AB recently stated in Kyiv: “We are convinced that nuclear generation should continue to be an important component of the global energy industry in general and the Ukrainian energy mix in particular in the future.” At the same time, he noted that the power units of Ukraine’s plants “are gradually aging, and the time will come when they will have to be decommissioned.”

Small modular reactors (SMRs), which generate nuclear power on a smaller scale, are gaining popularity today. However, to construct small modular reactors, a detailed analysis and time is needed. In June 2019, the Ukrainian Module Consortium – a consortium between the American company Holtec, Energoatom, and the State Scientific and Technical Centre for Nuclear and Radiation Safety (SSTC NRS) – announced intentions to build six small modular reactors at the Rivne nuclear power station site. Energoatom has considered deploying such units more widely to complement intermittent renewables. In February 2020, SSTC NRS and NuScale Power, an American private company that designs and markets SMRs, signed a memorandum of understanding regarding collaboration on the regulatory and design gaps between the US and Ukrainian processes for the licensing, construction and operation of a NuScale power plant in Ukraine.

However, as of November no SMR with a capacity of 100 MWs or more has been commissioned in the world. Most of them are still in the planning, development or study stages, in the US, Canada, Japan, South Korea, Denmark, France, the Czech Republic and the UK. The exceptions are the Chinese SMR ACP100 with a capacity of 125MWs (the construction of which began in 2019) and the Canadian SMR ARC-100 with a capacity of 100MWs, the previous phase of construction of which was approved in December 2019.

Nevertheless, the advantages of small modular reactors are that they require less investment and the probability of an accident is several times less, and they have a smaller impact on the environment. The disadvantage is that they can meet only the needs of small individual settlements and the operation of a small production infrastructure.

Diversification

Ukrainian nuclear power units operate fuel from two different manufacturers: Westinghouse (Sweden) and the Russian-based TVEL. The process of diversifying sources of nuclear fuel supply for Ukrainian plants has been taking place over 20 years now, but very slowly. Although Russia’s aggression in Ukraine has been going on for almost seven years, the real diversification has only started a few years ago. The procedure of “validation”, which does not allow Ukraine to switch from Russian nuclear fuel immediately, has been the biggest barrier. It should be gradually replaced. As representatives of Energoatom reported: “In the next five to seven years, TVEL can be completely replaced by Westinghouse fuel.”

Generally speaking, Ukrainian uranium concentrate is sent to the Russian Federation to produce nuclear fuel. The Russian company undertakes a procedure of fabrication, conversion and enrichment of this concentrate, and after this cycle, nuclear fuel is imported to Ukraine as Russian produced. In 2019, Ukraine purchased nuclear fuel for a total of 396 million US dollars, which is 24.1 per cent more than in 2018. Russian-made fuel was bought for $240 million (60.7 per cent) and Swedish fuel for $156 million (39.3 per cent). In January 2018, Energoatom extended its contract with Westinghouse to 2025. The company stated that seven of the country’s 15 nuclear reactors will use Westinghouse fuel by 2025.

Ukraine still spends about $200 million each year to its aggressive neighbour for the storage of spent nuclear fuel service as the Central Spent Fuel Storage Facility (CSFSF) for Ukrainian NPPs is still under construction. In his investigation on the construction of this extremely important facility, Ukrainian journalist Oleksandr Chornovalov found that “the CSFSF, which has already cost Energoatom almost $53 million, needs more money to complete its construction. Energoatom has announced a new tender for the completion of construction for $23.5 million”.

Corporatisation and transparency

Energoatom has attracted financing from European institutions including the European Reconstruction Bank and Development (EBRD) and Euroatom. According to agreements signed back in 2013, the EBRD has provided a 300 million-euro loan to Energoatom. Another loan agreement for 300 million euro was signed with Euroatom (also in 2013). All the agreements were ratified by the relevant laws of Ukraine.

The goal of the financing consists of two pillars: First, the implementation of the complex (consolidated) safety upgrade programme with the purpose of the further improvement of nuclear safety, ensuring efficient and reliable performance in the energy branch, bringing safety of Ukrainian nuclear power plants to the level that meets international standards; and second, the corporatisation of Energoatom in compliance with the roadmap developed by the corporatisation consultant in compliance with best international practice.

According to the agreements, corporatisation is defined as “the transformation of the Borrower [Energoatom] into a fully state-owned joint-stock company, including the creation of a management structure that is suitable for such a company. For the avoidance of doubt, the term ‘corporatisation’ does not mean the privatisation of the borrower.” It was important to stress the definition as the issue of Energoatom’s corporatisation in political and professional environment is very sensitive.

Despite the fact that the Energoatom’s corporatisation is still being discussed in Ukrainian society, such a process should take place as soon and as transparently as possible. Messages that corporatisation will contribute to the privatisation of Energoatom are weak as counter-arguments, as the Ukrainian people, represented by the Cabinet of Ministers of Ukraine, will be the sole owners of the newly created state joint-stock company (probable as public joint-stock company).

As for transparency, the supervisory board of Energoatom should be created with the most meticulous approach to its members, as it involves an army of 34,000  professional and highly skilled workers who need to be protected and always motivated by market wages, it is also one of the pillars of energy independence and security in Ukraine and one of the main budget-forming enterprises of the domestic economy.

The criterion of many years of experience in the nuclear energy sector should not be the main one when selecting candidates. First, it is necessary to pay attention to which private or state-owned companies, and in what countries, potential candidates have worked in. Under no circumstances should people be allowed to covertly lobby the interests of influential owners of private companies or countries that are in open, or hidden, unfriendly relations with Ukraine. This should be the basis for selection.

A preference should be given to Ukrainian citizens (with detailed verification of the person, place of birth, acquisition of citizenship and jobs), who will be able to justify the importance of their mission to the supervisory board. All this will help to form an appropriate controlling collegial body that will contribute to the sustainable development of the nuclear sector of Ukraine and will clearly comply with the legislation and specific the interests of Ukraine.

Mykola Voytiv is the head of energy projects at the Kyiv-based NGO, New Generation Management.

nuclear power, Ukraine