Nuclear Bid to Rival Coal Chilled by Flaws, Delay in Finland

Martin Landtman hunches forward in his shirtsleeves as a June storm on Finland’s Baltic coast drenches the construction site of the world’s most powerful nuclear reactor. As project manager for TVO, the joint venture buying the plant, Landtman has weathered far worse annoyances than rain.

Flawed welds for the reactor’s steel liner, unusable water- coolant pipes and suspect concrete in the foundation already have pushed back the delivery date of the Olkiluoto-3 unit by at least two years.
“Substantial delays, I think you can use that word, yes,” the 54-year-old Landtman says.

Olkiluoto-3, the first nuclear plant ordered in Western Europe since the 1986 Chernobyl disaster, is also more than 25 percent over its 3 billion-euro ($4 billion) budget.

Today at Olkiluoto-3, a behemoth whose excavation site covers the equivalent of 55 soccer fields, the pressure is on the group led by France’s Areva SA that’s building the reactor. At stake is much more than Areva’s bottom line or the cost of electricity crackling out from Finland’s coast. As the ownership of utilities around the world has shifted from state to private hands, the delivery of new reactors on time and on budget has become critical.

Keeping construction costs in check is a vital ingredient in nuclear power’s drive for economic parity with coal and natural gas generation. A new U.S. atomic plant could be 30 percent to 50 percent more expensive to build than a coal-fired plant of the same size, and the margin widens for natural gas, which is the cheapest option.

Nuclear power’s costs balloon partly because plants must be built to more exacting safety standards and stand up to more stringent oversight, leading to lost time and extra expense.

Proponents of nuclear power argue that the higher cost to build is balanced by lower fuel costs. Still, after accounting for construction, fuel, operation, maintenance and transmission costs, electricity from a new U.S. nuclear plant in 2015 would be 15 percent more expensive over the reactor’s life than natural gas and 13 percent more than coal, according to 2007 estimates by the U.S. Energy Information Administration.

“The nuclear industry has put forward very optimistic construction cost estimates, but there is no experience that comes even close to backing them up,” says Paul Joskow, director of the Center for Energy and Environmental Policy Research at Massachusetts Institute of Technology in Cambridge.

Bloomberg