Appendix 2.1 VLČEK, Tomáš and Filip ČERNOCH. The Energy Sector and Energy Policy of the Czech Republic. Brno: Masarykova univerzita, 2013. 237 p. ISBN 978-80-210-6523-9. doi:10.5817/CZ.MUNI.M210-6523-2013. pp. 131-151 CHAPTER 6: THE NUCLEAR SECTOR I 131 Chapter 6: The Nuclear Sector Tomáš Vlček 6.1 Nuclear Power Plants in the Czech Republic There are two nuclear power plants running in the Czech Republic using a total of six pressurized reactors cooled and moderated by light water. The Dukovany nuclear power plant is located in Southern Moravia with four VVER119 V 213 pressurized reactors (after modernization, installed power capacity currently amounts to 4 x 510 MWe), which provided its first electricity in May 1985, while the Temelin nuclear power plant is located in Southern Bohemia, a set of two VVER 1000 V 320 pressurized reactors (installed capacity equal to 2 x 1,000 MWe, which was completed in December 2000. Both power plants are owned by CEZ. Thanks to the modernization of the technical part of the nuclear blocks, the power plants as of December 31, 2012, reached 4,404 MWe of installed electrical capacity and, therefore, made up a 19.7 % share in the electrical power mix of the Czech Republic (in terms of installed capacity). Tab. 6.1: Review of CEZ Nuclear Power Plants as of December 31, 2012 Locality Blocks marked as Installed capacity (MWe) Type of reactor Total installed capacity (MWe) Total installed capacity (MWt) Start up Distribution company Voltage (kV) Distribution point Dukovany Nuclear 1 510.0 WER 440, V 213 type 2,040 5,500 1985 -1988 CEPS 400 Slavetice Power Plant 2 510.0 WER 440, V 213 type 3 510.0 WER 440, V 213 type 4 510.0 WER 440, V 213 type Temelin Nuclear Power 1 1,000.0* WER 1000, V320 type 2,000 6,000 2002 CEPS 400 Kocin Plant 2 1,000.0* WER 1000, V320 type * In May, 2012, all the blocks of the Dukovany power plant were modernized, so its installed capacity increased from 4 x 440 MWe to 4 x 510 MWe. In 2007, the Temelin power plant underwent a modernization of turbines, so its capacity can range at the level of 2 x 1,020 to 1050 MWe, depending on circumstances (such as, for example, the temperature of the cooling water). Source: Energetický regulační úrad, 2010b, p. 89; revised and modified by T. Vlček. 119 WER means water cooled, water moderated energy reactor (or water - water energy reactor), in Russian Vodo-Vodjanyj Energeticeskij Reaktor. In Western Europe and elsewhere in the world also known as PWR (Pressurized Water Reactor). 132 I THE ENERGY SECTOR AND ENERGY POLICY OF THE CZECH REPUBLIC 6.2 Deposits, Mine Production, Companies and Traders Uranium mining has a long history in the Czech Republic, which is currently the only European country still mining it. Of seven registered deposits, only the Rozna Deposit is still being mined. There is only one company engaged in uranium mining, namely DIAMO, state enterprise120 (until May 1, 1992, known as the Czechoslovakian Uranium Industry, state enterprise). DIAMO, state enterprise, was founded in 1946, and is under the full control of the Ministry of Industry and Trade of the Czech Republic, and headed by Jiri Jez since July 5, 2000. DIAMO provides, among others, mining activities and activities implemented by mining means, specifically, mining, the treatment and processing of radioactive minerals, remediation works, the removal of the consequences and the impact of mining and processing of uranium ores, base metals and coal, and the technical and biological recultivation of devastated properties after decommissioning works (see DIAMO s.p.). DIAMO, with its headquarters in Straz pod Ralskem, comprises of four divisions, while the GEAM division runs the uranium mining. The Czech Republic used to be among the most important world producers of uranium. A historical total production of almost 111 thousand tonnes of uranium in the form of sorted ores and chemical concentrate in 1946 - 2009 made it the 10th biggest producer in the world. Unambiguously the dominant source of uranium is the Rozna deposit in Dolni Rozinka (216 tonnes of concentrate in 2011), while a small percentage of the overall mining comes from the remediation works in the Straz pod Ralskem deposit (25-30 tonnes per year, see MZP / CGS-G, 2010, p. 197) and management of mining waters at six locations in Pri-bramsko (12.58 tonnes of metal in 2009, see DIAMO s. p., 2010, p. 11). The Rozna mine was supposed to be shut down in the mid-1990s, when uranium experienced a sales crisis as the previously important customer, Slovakian Power Plants, refused to purchase Czech uranium and started obtaining enriched nuclear fuel directly. Government Decrees from 1994, 1997, 2000, 2002 and 2005 gradually prolonged the mining period in Dolni Rozinka, while the Government by passing Decree No. 565 from May 27, 2007, extended the mining and processing of uranium in the Rozna deposit for as long as mining remained economically effective121, and the termination of mining is tied to the results of a profitability assessment122, currently set for 2018. Given that one of potential deep geological repository localities is at the Dolni Rozinka site (Kravi hora), should it be selected, moving the employees from uranium mining to the construction of a deep geological repository is being considered. 120 The term DIAMO is an abbreviation for ammonium diuranate, in Czech D/'uranat a/wonny. 121 According to its methodology, the International Agency for Atomic Energy considers economically efficient such mining as does not exceed a cost of 130 USD per to mine 1 kg of uranium. 122 DIAMO, state enterprise, carries out a mining profitability assessment every half year, and when it reaches negative figures, activity will be immediately terminated. Mining can be ended in several months on a regular basis, while remediation can, however, last for a decade. CHAPTER 6: THE NUCLEAR SECTOR I 133 Tab. 6.2: Deposits, reserves and mine production of uranium in the Czech Republic 2005 2006 2007 2008 2009 2010 2011 Deposits - total number 7 7 7 7 7 7 7 - exploited 1 1 1 1 1 1 1 Total mineral reserves 135,990 135,812 135,729 135,553 135,425 135,361 135,276 - economic explored reserves 1,655 1,671 1,677 1,545 1,426 1,416 1,406 - economic prospected reserves 19,411 19,476 19,435 19,428 19,420 19,427 19,402 - potentially economic reserves 114,924 114,665 114,617 114,581 114,579 114,518 114,468 - exploitable (recoverable) res. 596 677 643 503 377 374 338 Mine production 420 383 322 290 286 259 252 Production of concentrate 409 358 291 261 243 237 216 Note: reserves, mining and the production of uranium concentrate expressed in tonnes, the production of uranium concentrate resulting from remediation works is not included in these values. Source: Ministerstvo životního prostředí / Česká geologická služba - Geofond, 2010, p. 185; Ministerstvo životního prostředí / Česká geologická služba - Geofond, 2012, p. 102. Since clean uranium in the Czech Republic at the present accounts for an average of 0.16 % of uranium ore123, first it needs to be cleaned of waste rock. Cleaned up ore is then ground and, following chemical treatment with sulphuric acid, processed into uranium concentrate - triuranium octoxide U308 (or yellow cake124). DIAMO's intermediate product was purchased predominately by a single customer, namely CEZ.125 In 2009, it bought a total of 270.4 tonnes of concentrate (see DIAMO s. p., 2010, p. 2). CEZ has been in the last 15 years almost the exclusive user of uranium concentrate (the production surplus was at the beginning of the 1990s sold on the world market). Domestic production, however, did not satisfy CEZ's demands as the use of uranium concentrate in the Dukovany and Temelin nuclear power plants ranges between 600 and 700 tonnes per year (MZP / CGS-G, 2010, p. 197). CEZ, therefore, either buys additional supplies on the world market or it directly purchases enriched fuel. At the start of 2000, domestic mining covered approximately 93 % of domestic demand. Currently, however, it is only a third of consumption as a result of the inhibition program, while the remaining supplies are bought on the world market in the form of concentrate of already enriched fuel (see MZP/CGS-G, 2010, p. 200). Since the end of 2009, when the Russian company OAO TVEL began supplying fuel for both Dukovany and Temelin nuclear power plants, CEZ has been purchasing only the final product, enriched fuel, while DIAMO sells the domestic products on the market. 123 In the mid-19th century when the uranium mining was first initiated, uranium ores consisted of 65 % uranium (see Majer, 2004, p. 183). 124 Yellow cake does not always necessarily have a consistent chemical formula U308 and a yellow colour. It got the name based on the look of uranium concentrate from the early mining and production period. Yellow cake is nowadays rather brown or black. U308, for example, has an olive-green colour. Chemical formulae of yellow cake can take forms such as: U308, U02, U03, (NH4)2U207 n H20 or Na2U207 -6 H20. Yellow cake is transported in blue barrels. 125 Other customers were France, Germany, Canada and Russia. 134 l THE ENERGY SECTOR AND ENERGY POLICY OF THE CZECH REPUBLIC Tab. 6.3: NYMEX Uranium Futures Price of Uranium Concentrate (U308) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 21.16 22.71 34.17 46.30 82.67 165.35 171.96 110.23 93.70 158.73 114.64 97.01 Note: Values always as of January of the particular year. Data indicated in USD per kilogram. Source: UraniumMiner; calculated by T. Vlček. At the point when CEZ started to employ exclusively a purchased concentrate, following the shift to uranium hexafluoride UF6 it had to search for sorting plants on the world market, i.e. for enrichment services. These can be obtained only in seven countries in the world126, and CEZ went to buy in France. Enrichment plants are capable of enriching supplied uranium hexafluoride according to the client's requirements. Uranium has a constant ratio of isotopes: it consists of 99.284 % of 238U, 0.711 % of 235U and 0.005 % of 234U. However, it is isotope 235U that has been so far almost exclusively employed for fission reactions and use in the nuclear industry. Enrichment is a process during which uranium gets a greater concentration of the 235U isotope, which is for Czech nuclear purposes 3.6 to 4.4 %.127 From the point of mining through to enrichment, the volume of exploitable uranium in that manner rapidly declines. For initial processing, it is only 0.16 % of mined material that is employable, while during the enrichment process at the level of approximately 4 % 235U, the volume of material lessens eight to eight and a half times (650-680 tonnes of concentrate for Czech nuclear power plants turn into approximately 80 tonnes of U02fuel, see MZP / CGS-G, 2010, p. 200). In the case of uranium this is nevertheless an enormous energy density, where 1 kg of nuclear fuel generates 2,100 GJ of energy, compared to 0.033 GJ in the case of coal128 (see "Fyzikální aspekty, " 2008, p. 24). Enrichment is followed by the process of fabrication, where fuel gets processed into pellets (1 cm in diameter and height) which are then fitted into fuel rods129, a specific number of which are then placed into fuel cassette (segments, assemblages). In the active zone of each reactor in the Dukovany nuclear power plant, there are 312 fuel cassettes, each weighing 215 kg and consisting of 137 kg U02in 126 fuel rods, while the Temelin nuclear power plant has 163 fuel wrappers (cassettes130) in each reactor, each weighing 766 kg and consisting of 563 kg U02 in 312 fuel rods (each rod consists of approximately 370 pellets). In the active zone of the Dukovany nuclear power plant, there is, therefore, 42.7 tonnes of U02fuel, and 91.8 tonnes in the Temelin nuclear power plant. The fuel made in this manner is then supplied to the client, to CEZ. The long-term and permanent fuel supplier for the Dukovany nuclear power plant is the Russian company OAO TVEL. From 2002, when the plant was launched, to the end of 2009, fuel for the Temelin nuclear power plant was supplied by the American company Westinghouse Electric Company, LLC131. 126 Sorted by capacity, the order is: Russia, the USA, France, Canada, the Great Kingdom, China and Brazil. 127 The Dukovany nuclear power plant has been during its entire operation period using fuel supplied by the Russian company OAO TVEL, which went through major development changes. Initial fuel with 3.6 % 235U enrichment was employed in a three-year cycle, with an average calorific value of 30 MWd/kg U. A gradual improvement brought the plant to the zone of a low neutron spillage and 3.8 % 235U enrichment. In the further phase, enrichment was lifted on 4.25 resp. 4.38 % 235U, while a burning absorber started to be used in fuel cassettes (see CEZ, a. s., 2010b, p. 31) lowering fuel reactivity. 128 Calculated by T. Vlček. 129 A length of a fuel rod for WER 440 reactor is 242 cm. 130 Cassette is a Russian term for a fuel wrapper. 131 It is known that fuel rod buckling takes place in the active zone of reactor, because American nuclear reactors have four-squared fuel cassettes, while the Russian ones are six-squared. Six-squared cassettes for Temelin were initially provided by Westinghouse Electric Company, LLC and caused fuel rods torsion, which resulted in forced operational interruption, limited production and inability to produce electricity to its full capacity. CHAPTER 6: THE NUCLEAR SECTOR I 135 In 2010, a selection process for a new supplier took place, which was won by the Russian OAO TVEL by submitting a financially unbeatable offer. OAO TVEL will be until 2020, therefore, the exclusive fuel supplier for both Czech nuclear power plants. Fuel used to be delivered to the Czech Republic by air from the USA or Russia132, while it is presently also transported by air from the Russian Federation and then by wagons to the target power plants133. 6.3 Spent Fuel and the Nuclear Waste Repository Fission chain reactions exclusively consume the uranium isotope 235U. Spent fuel contains approximately a quarter of the original value of that isotope, which means that it remains enriched at a level of 1 % 235U. Spent fuel consists of more than 96 % of uranium dioxide (U02) and of newly emerged ingredients of plutonium(IV) oxide amounting to approximately 1 % and other compounds (3 %), whereas the majority of fission products are radioactive isotopes (see Laciok, Marková & Vokál, 2000, p. 190; Otčenášek, 2005, p. 536). Fuel assemblies with spent nuclear fuel that are removed from reactors look like fuel assemblies with fresh fuel. There are nuclear reactions taking place even after fuel is discharged from a reactor, as well as the release of alpha, beta and gamma radiation, neutrons and heat which must be exhausted. The Dukovany nuclear power plant initiated its operation on the basis of a three-year fuel cycle. The increase of 235U share in cassettes enabled it to reach a full five-year cycle (while even a six-year cycle is being considered). Nowadays this means that during the annual refuelling, only 1/5 of spent fuel is replaced out of the overall charge, i.e. 72 fuel assemblies (see CEZ, a. s., 2010a, p. 31). The active zone in the Temelin nuclear power plant includes 163 fuel assemblies, while the power plant's operation is set on a four-year fuel cycle, which means that 1/4 of spent fuel is replaced each year, i.e. 41-42 fuel cassettes (see CEZ, a. s., n.d.a). After removal from the reactor, three phases of fuel deposition follow. The first phase includes the collection of waste after its release from the primary circuit and subsequent processing until reaching treatable form preventing any further release of waste. The second phase includes safe transport to the location of final waste deposition. The third phase, deposition, is understood as the final operation, which is why the depository needs impenetrable protection shields (see Marek, 2007, p. 4). In the first phase, fuel cassettes are actively cooled in a pool next to a reactor. After at least five years, they are moved into dry containers and then passively cooled in the interim storages. After removal from a reactor, the thermal capacity of spent nuclear fuel in the Dukovany power plant is 223.5 kW and then drops to 1 kW over the course of only one year (see Nachmilner, 2002, p. 12). The Dukovany power plant uses CASTOR 440/84134 containers, supplied by the German Consortium GNS Gesellschaft fur 132 In the 1990s, transport by sea via the Polish port Gdansk (from Russia) and then by railway to the final destination was also considered. 133 In Dukovany's case, for example, a cargo plane lands at Brno Turany International Airport, goes through the requisite customs and technical inspections and it is then reloaded onto the wagon and transported to the power plant under the police escort. 134 Or modernized Castor 440/84M. 136 I THE ENERGY SECTOR AND ENERGY POLICY OF THE CZECH REPUBLIC Nuklear-Service mbH and RWE Nukem GmbH, which can be filled with 84 fuel cassettes.135 A simple calculation based on the above-mentioned data can bring us to the conclusion that the Dukovany power plant produces less than a container of spent fuel per year. An empty container weights 93.7 tonnes and 116.1 tonnes when filled. There are two interim storage facilities for spent fuel at the site of Dukovany nuclear power plant. The total capacity of the original Dukovany storage, opened in 1995, amounts to 600 tonnes of spent fuel stored in 60 CASTOR 440/84 containers. After filling this storage to its full capacity, in 2006, new storage was set up. Its capacity is 1,340 tonnes of spent fuel. In comparison to the first storage, the new one, therefore, incorporates approximately a two times larger area. The storage part of the facility can receive 133 CASTOR 440/84M containers, therefore, altogether allowing the Dukovany nuclear power plant to store spent fuel for 50 to 60 years, that is, for a period exceeding the lifespan of the power plant itself36 (see ČEZ, a. s., n.d.d; Marková, 1996, p. 626-627). The Temelin nuclear power plant uses CASTOR 1000/19 containers from the same German supplier137. They are 5.5 metres tall and when filled weigh approximately 116 tonnes. The Temelin power plant produces two full containers and 3-4 fuel assemblies of the third container of spent fuel per year. In 2010, a new interim storage facility was launched, with a capacity of 1,370 tonnes (152 CASTOR 1000/19 containers).138 The capacity of a dark wet pool for spent fuel is 680 fuel assembly places and 25 places for hermetic cases. Spent fuel could be, therefore, stored in the pool for ten years, which is why wet interim storage did not prove necessary before 2010. After its removal from a reactor, the thermal capacity of spent nuclear fuel is 964 kW and then drops to 5 kW in the course of only one year (see Nachmilner, 2002, p. 12). The Skalka central dry storage of nuclear fuel in the vicinity of Bystrice nad Pernštejnem was built as backup storage with an overall capacity of approximately 2,900 tonnes of fuel. The second phase, transportation, is currently by rail, while it is subject to a very strict monitoring by the State Office for Nuclear Safety. While it is likely that spent fuel will also be transported by rail for a few decades, if deposited in deep geological repositories. This, however, cannot be claimed with certainty because it will depend on available technologies as well as the locality and access to the future deep geological repository. Fuel is stored in dry interim storage for a period of approximately 80 years. The final deep geological repository {thirdphase) is for that reason in the Czech Republic scheduled not before 2065. There are four surface repositories in the Czech Republic, namely the Radioactive Waste Repositories Richard near Litoměřice, Brotherhood near Jáchymov, Dukovany and Hostím near Beroun. These repositories store institutional radioactive waste, emerging during the processes of medical, industrial, agricultural and 135 Spent nuclear fuel from the Dukovany nuclear power plant used to be transported to the interim storage at the site of the Jaslovske Bohunice nuclear power plant in Slovakia. From this location, it was meant to be gradually used up on the basis of the interstate agreement with the Soviet Union. Following the demise of the Soviet Union, the Russian Federation, however, withdrew from these commitments. After 1993, nuclear fuel from Dukovany was brought back to the country and placed in interim storage in Dukovany power plant. 136 The present power plant is licensed only until 2025. An application was submitted to prolong this license until 2035, while the prolongation until 2045 is also considered, but, as previously indicated, its shut down is predicted for 2045 at latest. 137 CASTOR 440/84 and CASTOR 1000/19 containers are presently produced in the Czech Republic as well. Their licensed producer is Skoda JS, a. s. 138 In addition to the Dukovany and Temelin power plants, a high-activity radioactive waste repository is operated also by the Nuclear Research Institute Rez, pic, where there are two research nuclear reactors operating (LVR-15 and LR-0). The capacity of the high-activity radioactive waste repository in Rez is substantially lower, as the Nuclear Research Institute produces only about 15 spent fuel segments per year. In 2007, all waste was transported to the Russian Federation, so this repository is currently empty. CHAPTER 6: THE NUCLEAR SECTOR I 137 research activities, therefore, waste containing natural radionuclides and low-activity radioactive waste from nuclear power plants. One deep geological repository is planned as well. In 1990-2005, the Radioactive Waste Repository Authority139 originally selected 27 potential localities for building a deep geological repository of radioactive waste. It narrowed them down to 13, then to 11 and finally to the current 7: Březový potok near Pacejovo, Certovka near Lubence, Horka near Budisov, Hrádek near Rohozna, Čihadlo near Lodherov, Magdalena near Bozejovice and Kravi hora near Moravské Pavlovice. In recent years, the Authority has been checking the possibility of using military areas, while it was the Boletice military area that was positively valued in terms of its site, therefore, qualifying as an eighth possible appropriate location. Since 2010, these localities have been undergoing a basic land survey, consisting of three phases: the first research phase until 2015, the second exploratory phase in the period 2015-2025 and the third detailed exploratory phase in the period 2025-2050. The exploration of at least four localities is anticipated, as the company is expected not to receive an exploration permit for all localities. By 2018, two candidate localities should be chosen, one of which will be then chosen as the winner. After obtaining enough data proving the locality's safety, the submission of the application for construction permit of a deep geological repository will follow, which should take place in the period 2050-2065 (see Správa úložišť radioaktivních odpadů). After this period expires, it will also be decided whether to process spent fuel from nuclear power plants and to use it as energy material for production of new fuel or if it is to be finally stored in a deep geological repository.140 Processing is nowadays technically, energy and financially a very costly process, which only a few countries in the world141 can afford, but the technology and initial costs can in the next 50 years however undergo such changes that it might become an entirely common practice. A deep geological repository is meant to be a final repository of spent nuclear fuel. It is questionable whether it should be technologically implemented so as make it impossible for already deposited waste to ever be picked up again or to enable deposited waste to be extracted and processed in the far future. Even though experts are rather inclined to the second alternative, because spent nuclear fuel represents a very valuable material which can be used as fresh fuel after being processed or even as fresh fuel without previous processing142, economic reality suggests the first alternative. The most expensive feature of a repository is its operation, which makes it economically unreasonable to keep a repository open for decades. This means it is better to store spent fuel on a long-term basis in interim storages and only when so decided, to deposit high-activity radioactive waste rather at once, and to do it finally (opening and using it again would be impossible). A deep geological repository is constructed under the assumption it will work for the next hundred years. The owner of spent nuclear fuel in the Czech Republic is CEZ. It is responsible for storage only, while the final deposition is the state's responsibility. This was the purpose for founding the Radioactive Waste Repository Authority, which is on the basis of The Atomic Act responsible for the treatment of spent or ra- 139 Due to the transience of private companies, the final radioactive waste repository is not under CEZ's but the state's responsibility, specifically through the means of the Radioactive Waste Repository Authority (Czech: SURAO - Správa úložišť radioaktivních odpadů). 140 Constructing a deep geological repository is a very complicated process which requires confident data regarding its locality. In terms of its radioactivity, spent fuel becomes safe at least 300 years after its removal from a reactor, which is accordingly the period for which a repository must function without difficulty. We can in that relation mention an interesting aspect of a nuclear sector, namely that spent fuel also alone protects itself against abuse, because its removal from the protection containers would, during this period, mean a deadly dose of radiation. 141 In 2011, it was only China, France, the Great Britain, India, Japan, Pakistan, Russia and the USA. 142 Some of the current fourth generation reactor projects plan to use previously spent fuel as a fuel. 138 I THE ENERGY SECTOR AND ENERGY POLICY OF THE CZECH REPUBLIC dioactive fuel into a form adequate either for deposition or for further use. The point when to deliver spent nuclear fuel to the state is exclusively CEZ's decision. So far, it is not radioactive waste but potentially exploitable material that is involved (see Laciok et al., 2000, p. 190-191). Tab. 6.4: Scheme of the End of the Nuclear Cycle in the Czech Republic Spent fuel dwell App. 5-13 years App. 80 years Permanently or until potential re-processing Location Pools of spent fuel in the Dukovany and Temelin nuclear power plants Storage in the Dukovany and Temelin nuclear power plants, backup repository Skalka Deep geological repository Responsible CEZ, a. s. SURAO Supervised by State Office for Nuclear Safety Financial means Corresponding budget CEZ, a. s. Nuclear account (CEZ, a. s. contributions) Source: Otčenášek, 2005, p. 540; modified by T. Vlček. CEZ finances the deposition of spent fuel from its own budget, while the Radioactive Waste Repository Authority (SURAO) finances its activities from the nuclear account kept in the Czech National Bank, administered by the Ministry of Finance. The nuclear account is a financial account contributed to by all producers of radioactive waste in the amount laid down by Government Order No. 416/2002 Coll., which establishes the amount of the levy and the manner of its payment by the agents of radioactive waste to the nuclear account and the annual amount of the contribution for the municipalities and the rules for its granting. CEZ for example pays 50 CZK for each MWh produced in nuclear power plants, while other producers of radioactive waste pay 30,694 CZK for each barrel of 2001, which is the basic depositing unit in repositories. In 2013, there was approximately 19 billion CZK on the nuclear account. Besides payments to the nuclear account, each operator of a nuclear facility in the Czech Republic runs an individual financial reserve for dismantling and remediation of that facility, as prescribed by The Atomic Act.143 The warrant of temporary depositing of spent fuel is, therefore, provided by CEZ until its delivery to the Radioactive Waste Repository Authority. Then the state takes over responsibility. 6.4 The Regulatory and Safety Framework of the Nuclear Industry Unambiguously the key document for the Czech nuclear sector is the Act of January 24, 1997, on peaceful use of nuclear energy and ionizing radiations (The Atomic Act) and on amendments and alternations to some acts (see "Zákon ze dne 24. ledna 1997"), which has been amended already ten times, then Act No. 19/1997 Coll., Act No. 281/2002 Coll. as well as Act No. 44/1988 Coll. on the protection and utilization of mineral resources (The Mining Act) (see "Zákon č. 44/1988 Sb."). 143 The annual reserve for the Dukovany nuclear power plant is set at 650 million CZK and 370.7 million CZK for the Temelin nuclear power plant (see Duda, 2002, p. 47). CHAPTER 6: THE NUCLEAR SECTOR I 139 The Atomic Act regulates basically all aspects of not only the nuclear industry, but of ionizing radiation in general, which is, among other things, the regulation of the method of utilizing nuclear energy and ionizing radiation, and conditions for the performance of practices related to nuclear energy utilization and radiation activities, conditions for safe management of radioactive waste, performance of state administration and supervision within nuclear energy utilization, within radiation activities and over nuclear items, etc. The Atomic Act is very severe, as the strict limits which it has laid down induced problems during the construction of interim spent fuel storage on nuclear power plants sites. In May 2011, already the eleventh revision of The Atomic Act was discussed, which among other things introduced the possibility to provide compensations from the nuclear account also to communities whose cadastral area is subject to exploratory work related to a deep geological repository or in which such repository already existed. The Mining Act, on the other hand, treats uranium mining and, as in the case of coal, it is the Czech Mining Authority and District Mining Authorities who watch over mining activity, observance of working conditions, the management of mining waste and supervise adherence to Acts Nos. 44/1988 Coll., 61/1988 Coll. and 157/2009 Coll. and other regulations (see Státní báňská správa České republiky). Section 3 of The Atomic Act commissions the State Office for Nuclear Safety (SUJB) to perform the activities of public administration and supervision of nuclear energy and ionizing radiation use in the field of radioactive as well as in the field of nuclear, chemical and biological protection. The SUJB is the central organ of public administration subordinated to the Government, which makes the regulatory role in the field of nuclear industry held only by these two organs, the Government and the SUJB. The SUJB implements the regulation process through decrees, addressing the fields of physical protection of nuclear materials and facilities; then the field of quality during activities related to nuclear energy use and activities leading to radiation, the field of criteria for facilities and the distribution of selected facilities across safety categories or criteria for placement of nuclear facilities or of sources of significant ionizing radiation. It, furthermore, treats the issue of radiation protection; emergency preparedness of nuclear facilities and workplaces exposed to sources of ionizing radiation. The SUJB is responsible for the functioning and organization of the National Radiation Monitoring Network. Organization of the National Radiation Monitoring Network as amended by Decree 27/2006 Coll. currently consists of 420 different monitoring points (early warning network, thermoluminescent dosimeter networks, air contamination monitoring points network), 12 laboratories and a range of mobile groups (see Státní ústav radiační ochrany, v. v. i.). 140 I THE ENERGY SECTOR AND ENERGY POLICY OF THE CZECH REPUBLIC Tab. 6.5: Regulatory and Safety Organs for the Czech Nuclear Sector and Their Role Organ State Office for Nuclear Safety (SUJB) Headquarters Prague, Senovazne namesti 9 Web www.sujb.cz Role Its scope of authority, given by The Atomic Act No. 18/1997 Coll., Act No 19/1997 Coll. and by Act No. 281/2002 Coll., among others embraces the performance of state supervision of nuclear activities, nuclear items, physical protection of nuclear facilities, radioactive protection and emergency preparedness in the premises of a nuclear facility or of a workplace with sources of ionizing radiation; issuing authorizations for activities governed by Act No. 18/1997 Coll., for example, to placing and operating a nuclear facility or a workplace exposed to sources of high-level ionizing radiation, management of sources of ionizing radiation and radioactive waste, transport of nuclear materials and radionuclide emitters; approving documentation with reference to nuclear safety and radioactive protection set by The Atomic Act, to limits and terms of nuclear facilities' working process, means for assuring physical protection, emergency rules for transportation of nuclear materials and particular radionuclide emitters, internal emergency plans of nuclear facilities and workplaces exposed to sources of ionizing radiation; monitoring the level of radiation capturing residents and workers operating with sources of ionizing radiation; a competent cooperation with the International Atomic Energy Agency; coordination and security of activities while meeting the imperatives resulting from Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction within the meaning of Act No. 19/1997 Coll. and from the Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on their Destruction within the meaning of Act No. 281/2002 Coll., as well as the performance of the function of the national authority according to The Comprehensive Nuclear Test Ban Treaty, from Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction and Convention on the Prohibition of the Development, Production and. Stockpiling of Bacteriological (Biological) and Toxin Weapons and on their Destruction. Organ The National Institute for Nuclear, Chemical and Biological Protection (SUJCHBO) Headquarters Milin, Kamenná 71 Web www.sujchbo.cz Role The National Institute for Nuclear, Chemical and Biological Protection is the public research institution founded by the State Office for Nuclear Safety on the basis of Act No. 281/2002 Coll. aimed at providing research and development activities in the field of chemical, biological and radioactive substances and safety of technical support of supervision and inspection activities performed by the Office in the areas of radioactive protection and monitoring of the ban on the development, production, stockpiling and use of chemical and biological weapons. Research activity aims at identifying and quantifying radioactive, chemical and biological materials, assessing their impact on people and the environment, including the assessment and development of individual and collective means of human protection from these substances, decontamination and safety research as part of the fight against terrorism as well as against severe industrial accidents. Organ National Radiation Protection Institute (SURO) Headquarters Prague, Bartoškova 28 Web www.suro.cz Role The main subject of the Institute's activity is research into protection from ionizing radiation, including the arrangement of the infrastructure of this research, specifically in the fields of safety research, research of the Radiation Monitoring Network and research into exposure to artificial sources of ionizing radiation (nuclear facilities, in the first place), research into medical exposure and research into exposure to natural sources of radiation. Other activities include support to state supervision and monitoring of prevention, support to the inspectors during their monitoring activities in the fields of radiation protection, emergency preparedness, including departures and interventions, ensuring the laboratory activities for founders, performing the function of an analytical and conceptual workplace for analysis of impacts following nuclear and radioactive accidents and preparing the drafting of measures, advisory and consulting services, education and public enlightenment, etc. Organ Radioactive Waste Repository Authority (SURAO) Headquarters Prague, Dlazdena 6 Web www.surao.cz, www.rawra.cz CHAPTER 6: THE NUCLEAR SECTOR I 141 Role The Authority's major tasks and activities are the preparation, construction, operation initiation, operation and shutdown of radioactive waste repositories and the monitoring of their environmental impact; ensuring the processing of spent or radioactive nuclear fuel to a form adequate for depositing or further use; keeping a record of received nuclear fuel and of its producers; managing levies of radioactive waste authors to the nuclear account; preparation of proposals with reference to the establishment of payers' levies to the nuclear account; management of radioactive waste which was brought to the Czech Republic from abroad and cannot be returned, etc. Since 2000, it has been regulating all radioactive waste repositories in the Czech Republic: Richard, Brotherhood, Dukovany and Hostim. It coordinates all work aiming at preparation and construction of a deep geological repository of high-activity radioactive waste and spent nuclear fuel, the launch of which is estimated in around 2065. Sources: Zákon 458/2000; Zákon ze dne 24. ledna 1997; Státní úřad pro jadernou bezpečnost; Státní ústav radiační ochrany, v. v. i.; Správa úložišť radioaktivních odpadů; composedby T. Vlček. The SUJB is the founder of two public research institutes, namely the National Institute of Nuclear, Chemical and Biological Safety (SUJCHBO) and the National Radiation Protection Institute (SURO). Their role is not a regulatory one, but they have great importance in terms of protection against ionizing radiation. The Radioactive Waste Repository Authority (SURAO) has a similar protective role. The important agents at the level of the supranational legal framework are the European Atomic Energy Community (EURATOM) and the United Nations mediated by the International Atomic Energy Agency (IAEA). EURATOM was founded on March 25, 1957, in Rome and it has its headquarters in Brussels. Given that nuclear safety, naturally, represents one of the priority fields of EURATOM, this organ issues a vast number of directives and recommendations aimed at unifying the practice of radiation protection in all member states, whereas the directives cover this radiation protection in a comprehensive manner; from the basic principles and medical use of radioactive materials through to transport of radioactive substances. These directives were implemented in the Czech legal framework on the acquis communautaire basis either through The Atomic Act amendments or SUJB decrees. The most complex legislative changes imposed from the outside took place as a result of the accession negotiations of the Czech Republic to the European Union, on which occasion a White Paper of the European Commission on Preparing the Associated Countries of Central and Eastern Europe for Integration into the Internal Market of the Union was adopted in 1995 (see Commission of the European Communities, 1995). A White Paper brought several important directives with reference to the nuclear energy field, which are the Directive on shipments of radioactive waste No. 92/3/EURATOM, supplemented by Directive No. 93/552/EURATOM (both were then altered by Directive No. 2006/117/EURATOM), Directive on basic safety standards No. 96/29/EURATOM, referring to maximum permissible doses of radioactive contamination of food arising after a radioactive emergency (accident), the import of agricultural products following the accident in Chernobyl or shipments of radioactive materials. Beside the White Paper, the Czech Republic also adopted a string of directives addressing the radioactive protection of the public, workers, patients as well as the information standard of residents. The IAEA emerged on June 29, 1957, in Vienna, which is also its current location. The former Czechoslovakia was a member from the Agency's founding, while the Czech Republic joined on January 1, 1993. The Mission of the Agency is to enforce the safe and peaceful use of nuclear technologies. Unequivocally the key carrier of this mission is The Treaty on the Non-Proliferation of Nuclear Weapons, NPT), which entered into effect on March 5, 1970, and it was in 1995 prolonged for an indefinite period. With respect to energy safety, one of the goals of the Treaty is monitoring and cooperation during peaceful nuclear activities (see Zavesicky, 2005, p. 132). IAEA is the exclusive monitor in the field of peaceful use 142 l THE ENERGY SECTOR AND ENERGY POLICY OF THE CZECH REPUBLIC of nuclear energy, resting on a unique monitoring mechanism based on the political will of states to make their nuclear facilities available to this monitoring. By doing this, a state demonstrates that it has fulfilled its obligation resulting from the Non-Proliferation Treaty and its additional protocols. By its mandate given by the Articles of Association/Statute, the IAEA is obliged to promote the peaceful use of nuclear energy and to control whether secret abuse for military purposes does not take place. A special type of inspector was established for this monitoring function, which on the basis of bilateral agreements of member states with EURATOM, Safeguard Agreements, execute regular inspections of all declared nuclear facilities in the countries not possessing nuclear weapons and non-military facilities in countries which do possess the weapons (see "Stála mise, " 2010). Until 2009 the initial agreement between IAEA and Czechoslovakia from March 1972 was in charge, while the Czech Republic on October 1, 2009 approached a Trilateral Safeguard Agreement (INFCIRC/193 or also 78/164/EURATOM). The Czech Republic, therefore, accepted the commitment to approach trilateral agreements between EU member states not possessing nuclear weapons, EURATOM and IAEA as part of the IAEA safeguard system (see SUJB, n.d.a). Based on the Trilateral Safeguard Agreement and within the meaning of Commission Decree No. 302/2005/EURATOM from February 8, 2005, on implementation of EURATOM safeguards, starting from 2005, inspections of nuclear facilities are performed by both IAEA and EURATOM inspectors. When speaking of supranational regulation, the European Nuclear Safety Regulators Group, (ENS-REG) should not be understated, as an independent body initiated in 2007 resulting from a Decision of the European Commission. The ENSREG consists both of EU members and officials from national nuclear safety offices, radioactive waste management offices and radioactive protection offices of all EU member states. The ENSREG's goal is reaching mutual understanding and development in the fields of nuclear safety and management of radioactive waste (see The European Nuclear Safety Regulators Group). 6.5 Demand Forecast According to forecasts, power use will increase in the Czech Republic, while the country is accordingly limited by the current setting of the energy mix with a predominant share of the coal sector. Table 6.6 displays a comparison of goals declared in the State Energy Concept and its revisions with reference to consumption of energy sources by 2050. It is evident that the role of the nuclear sector in the Czech power industry will most likely improve to make up a third of all energy sources in the Czech Republic. In terms of installed capacity of nuclear power plants, scenarios also count on the increased capacity of existing blocks, whereas the actual installed capacity of nuclear power plants was 4,404 MWe as of December 31, 2012 (see table No. 6.1), and in the case of Temelin's completion, installed capacity will by 2030 be approximately 6,440 MWe (excluding the potential construction of the new block in the Dukovany power plant). CHAPTER 6: THE NUCLEAR SECTOR I 143 Tab. 6.6: The Shares of Solid, Liquid and Gas Fuels in Energy Resource Consumption According to the State Energy Policy of the Czech Republic from 2004 and Its Revisions from February 2010 and August 2012 (in %) Type of Fuel Level in 2000 Level in 2005 Level in 2008 Long-Term Goal (SEP 2004) by 2030 "Green" Scenario (SEP 2004) year 2030 Revised SEP (2/2010) Scenario by 2030 Revised SEP Scenario (2/2010) by 2050 Revised SEP (8/2012) Target Values by 2040 Solid 52.4 42.5 45.3 30-32 30.5 24 20 12-17 Gas 18.9 21.6 15.7 20-22 20.6 20 21 20-25 Liquid 18.6 15.7 20.9 11-12 11.9 20 19 14-17 Nuclear 8.9 16.5 15.3 20-22 20.9 25 25 30-35 Renewables 2.6 5.4 2.9 15-16 15.7 11 15 17-22 Source: Státní energetická koncepce, 2004, p. 11-12, 40-49; Ministerstvo průmyslu a obchodu, 2010a, p. 77-92; Český statistický úřad, 2008; Ministerstvo průmyslu a obchodu, 2012, p. 20-21. According to the 2/2010 Revision, the mining of uranium should be "supported should it provide full compliance with the requirements of nature and landscape protection, applications for exploration areas should not be blocked, while mining should from now on be run by a state company. Continuation of uranium mining should be ensured by opening a new deposit already during the active operation of the Rozna Mine, in order not to lose the valuable know-how of the Czech uranium industry, whereas reversing the declining trend of the domestic production of uranium concentrate is also a requirement" (see MPO, 2010a, p. 31, 40). Revision even mentions the possibility to "support the potential construction of uranium concentrate processing plants in the Czech Republic with regard to enhancing energy security of the country (and for production for the Central European market) and screen the potential construction of the spent fuel processing plants" (see MPO, 2010a, p. 31). The Government has several times declared its clear stance on the development of the nuclear sector (and completion of the Temelin nuclear power plant), while the Prime Minister, Petr Necas, declared at the 11th Energy Congress of the Czech Republic that the Czech Republic "intends to continue to run the Temelin and Dukovany nuclear power plants and to continue the process that will lead to the construction of additional nuclear units" (see Nečas, 2011, p. 199). The Dukovany nuclear power plant also has a much greater potential, as there is, according to its chairman, Tomas Zak, "producing potential at the site of Dukovany, given by the exterior conditions, around 3,000 to 3,500 MW by applying existing technologies, while there are more possibilities than that" (see Cieslar, 2010e). Confidence in nuclear energy and interest in its development and completion is in a relatively stable manner demonstrated by the Chamber of Deputies. In May 2008,190 deputies voted for completion of the Temelin nuclear power plant, in June 2010, it was 186 of them, and in April 2011, it was 181 out of a total of 200 deputies who supported this project (see Pravec, 2011, p. 44-45). As of the latter, the decision of the remaining four deputies was associated with events related to the Japanese Fukushima Daiichi nuclear power plant. In 1980, Ludvik Kopačka wrote that "nuclear energy is truly becoming a developing energy source in the Czechoslovak context, which will gradually assume the role of covering increasing energy demand and gradually the increasing consumption of primary sources as well" (see Kopačka, 1980, p. 214-215). This idea basically remains applicable even in the second decade of the third millennium. The Paces Commission argues that "in the course of around 2020-2030, the lifespan of the existing nuclear power plants 144 I THE ENERGY SECTOR AND ENERGY POLICY OF THE CZECH REPUBLIC should be prolonged for at least 60 years, while the increase in energy consumption in the Czech Republic and the replacement of gradually closing coal-fired power plants in terms of their basic capacity should be covered by building new nuclear power plants, reaching the share in power production today already existing in France, for example (77 %)", and "in the course of around 2040-2050, to initiate the construction of fast reactors" (see UVCR&NEK, 2008, p. 108-109). Based on this information, it is rather evident that the Czech Republic has a firm position regarding the development of nuclear industry, that this sector is not indifferent to it and that it has a very important potential for energy and supply safety of the Czech Republic and that the Czech Republic counts on the increasing use of this sort of energy both in the short and long term. We can say that state energy policies as well as the State Energy Concepts and their revisions support the development of the nuclear industry, while the intensity of this support grows with every new legislative or conceptual document. Table No. 6.9. clearly displays the increasing interest in nuclear energy, where every new document affords it a gradually broader share in primary sources consumption, specifically from 20 % in the 2004 State Energy Concept up to 35 % in the revised version of State Energy Policy (8/2012). Unlike coal and natural gas, there is no legal obligation to keep reserves of uranium (OECD Nuclear Energy Agency / IEAE, 2008, p. 171), not even resulting from the membership in IAEA or EURATOM. One of many objectives declared in the so far applicable 2004 State Energy Concept is the generation of "nuclear fuel strategic reserves in a form adequate for filling up the reactor" (see "SEK", 2004, p. 27), which is, however, not binding. With regard to the high density of nuclear power plant fuel, the relative stability of its price and the vast number of active producers of uranium concentrate as well as the substantial number of processing institutions, it is possible to stock up for a decade in advance. The Revision of the State Energy Concept from February 2010, however, includes a reference to considering the possibility "to create strategic reserves of uranium concentrate relative to the increasing share of production in nuclear power plants and development of mining" (see MPO, 2010a, p. 29). Based on the following tables, it is evident that such thinking is definitely substantiated. Tab. 6.7: Forecast of Uranium Concentrate Production in the Czech Republic (tonnes per year) 2005 (level) 2007 (level) 2009 (level) 2010 2015 2020 2025 2030 409 291 243 200 50 50 40 30 Source: OECD Nuclear Energy Agency, 2009, p. 42-43; Ministerstvo životního prostředí / Česká geologická služba - Geofond, 2010, p. 199; modified by T. Vlček. Tab. 6.8: Forecast of Uranium Concentrate Demand in the Czech Republic (tonnes per year) 2007 (level) 2010 2015 2020 2025 2030 2035 772 860-870 670-680 675-880 830-1000 830-1000 830-1000 Source: OECD Nuclear Energy Agency, 2009, p. 44-45. CHAPTER 6: THE NUCLEAR SECTOR I 145 Revision of the State Energy Concept (2/2010) intended to ensure energy security of the country by setting a legal framework which would oblige nuclear power plant operators to keep reserves of nuclear fuels (fuel rods)144. The period of maximum use of a specific nuclear power plant, which obligatory reserves will be requested for, should be set so as to, in case of a supplier's delivery failure (failure to meet commitments resulting from agreement or impossibility of their enforcement) realistically ensure the provision of a supplementary supplier without jeopardizing the operating process, while considering the development of conversion and processing capacities, supplier's experiences and competition in the world market (see MPO, 2010a, p. 73). This idea also persisted in the Revised State Energy Policy 8/2012, where one of the strategies for increasing energy security and resilience of the Czech Republic was the "keeping of reserves of fuel rods by nuclear power plant operators, warranting facilities' full operating capacity for three years, potentially also by means of reserve contracts on reserving capacity for fuel supplies or by keeping corresponding reserves of enriched uranium and processing fuel on their own within the territory of the Czech Republic" (see MPO, 2012, p. 27). 6.6 Completion of the Temelin Nuclear Power Plant On August 3, 2009, CEZ released the announcement about opening a call to tender for two new nuclear blocks for the Temelin nuclear power plant. To some extent it was based on the investment plan for the construction of the Temelin power plant with 4 x 1,000 MWe of installed capacity, adopted in February 1979, replicating the construction site itself and some already existing auxiliary systems. Some options which were exclusively in CEZ's interest were originally also a part of the tender, specifically to build three additional nuclear blocks in other potential localities in Europe, (see CEZ, a. s., 2009a) Currently CEZ, however, does not count on these options and is preparing a separate tender for building the fifth block in Dukovany, which was one of these options. Although it is still not specified where, it will most likely involve the fifth block in Dukovany and two blocks in Slovak Jaslovicke Bohunice. Total capacity of the new nuclear plant has not been finally specified so far, while the propositions embraced the variants 2 x 1,200 MWe or 2 x 1,700 MWe (see Vnouček & Kasembe, 2000, p. II-III). Following the elimination of AREVA SA from the tender, only 2 x 1,200 MWe remained as an option. It is not just the project that is part of the tender, but the construction works itself, which makes the entire endeavour, therefore, a turnkey power plant. After it is awarded, the overall administrative tender process will last for roughly 7 to 8 years (together with the construction, 15 years), which means that the connection of new blocks is estimated for around 2024. The tender's finale and the signing of the contract by its winner was set at the end of 2011, in October 2010 it was, however, decided that selecting the construction works' supplier must be postponed until 2013 due to the unpreparedness of suppliers, which will naturally lead to a delay in the entire process. According to recent updates, construction is meant to last for 12 years from the day of the tender's awarding. Should the tender truly be awarded in 2013, the power plant would emerge in 2025 (see Zelenka, 2011, p. 28). The deadlines are, however, impossible to meet without altering the applicable construction and permit legislation. The role of the Government's Commissioner for the CEZ, a. s. nuclear tender was given to Vaclav Bartuška, Special Envoy for Energy Security of the Czech Republic. 144 These reserves should be covered by an operator. 146 I THE ENERGY SECTOR AND ENERGY POLICY OF THE CZECH REPUBLIC Three entities applied to the tender. It was a Consortium of the companies SKODA JS, a. s., from the Czech Republic, Atomstroj export, a. s., from the Russian Federation (a daughter company of the Russian company ZAO Atomstroj export145) and OKB Gidropress, a. s.146 from the Russian Federation, offering the project MIR 1200 (Modernized International Reactor) with 1,198 MWe of capacity147. The French company Areva SA148 offered the EPR™ (European Pressurized Reactor) with 1,700 MWe of capacity149 and finally, the American Company Westinghouse Electric Company, LLC150, offering the project API000 with 1,200 MWe of capacity. All cases refer to the reactors of the III, III+ generation. Tab. 6.9: Technical Characteristics of the Projects Proposed by Single Nuclear Tender Applicants Company Westinghouse Electric Company, LLC Areva SA SKODA JS, a. s.,Atom-strojexport, a. s., OKB Gidropress, a. s. Project AP1000 EPR™ MIR 1200 (AES 2006) Thermal capacity(MWt) 3,415 4,590 3,200 Electrical capacity (MWe, net / gross) 1,117/1,200 1,590/ 1,700 1,113/1,198 Efficiency (%) 33 36 33.7 Capacity factor (%) 93 90.3 >98* Number of cassettes in the active zone 157 241 163 Number of rods in cassettes 264 265 312 Number of steam generators 2 4 4 * Such a high value results from shorter maintenance and refuelling breaks and prolonged fuel campaigns. Source: Bílý, 2011, p. 268; Company's official documents; selected and modified by T. Vlček. 145 3AO ATOMCTporoKcnopr is the leading Russian organization building nuclear power plants abroad and accordingly engaged in their modernization. It is supervised by the Federal Agency for Nuclear Energy, Rosatom (®eflepajn>Hoe areHTCTBO no aroMHon 3Hepnni Pocchh, PocAtom). A larger part of the shares (50.2 %) of ZAO Atomstroj export belongs to the companies VPO Zarubezatomenergostroj (44 %; BcepoccnncKoe npon3BOflCTBeHHoe o6i>eAHHeHHe "3apy6e5KaroM3HeprocTpoH") and OAO TVEL (6.2 %; OAO "TB3JI"), which Rosatom controls on behalf of the state, and 49.8 % Gazprombance (OAO 'Ta3npoM6aHK"). 146 A daughter company of the Russian company OAO OKB Gidropress (OAO OKB 'TnTrponpecc"). 147 Based on talks with the Russian side, it is interesting that the tender should have included a seriously intended offer to build a manufacturing plant in the Czech Republic, i.e. a plant for assembling fuel cassettes out of single pallets. According to the Russian calculation, that sort of plant proves profitable for the state if there are at least eight reactors, which is the number the Temelin power plant will reach after completion. This is accordingly an opportunity for fuel fabrication for the Russian type of power plant in Slovakia and elsewhere. The paradox is that in this manner the most frequent comment on the Russian project, i.e. intensification of Czech energy dependence on Russia, to some extent ceases to be logical. 148 The ownership structure is as follows: 73.03 % Commissariat a l'energie atomique (technological research institution financed by the French Government); 10.17 % French state; 4.82 % Korean car industry Kia Motors and the remaining 11.98 % other companies, employees and publicly traded stocks. 149 The great advantage of this reactor may be found in the high rate of capacity maneuverability. 150 Belonging to the Japanese companies Toshiba Corporation (67 %) and Ishikawajima-Harima Heavy Industries Co. Ltd. (3 %), American mechanical companies The Shaw Group (20 %) and Kazakh state company Kazatomprom NAC (Ka3aroMnpoM HAK 10 %). CHAPTER 6: THE NUCLEAR SECTOR I 147 On October 5, 2012, CEZ announced the elimination of the French company Areva from the competition for building new blocks in the Temelin nuclear power plant, because it did not meet the basic commercial and legal terms of the competition (see "CEZ yyfadil AREVU"). Areva submitted an appeal to the Czech Office for the Protection of Competition, which in February 2013, however, found the elimination substantiated. The company intends appeal to the Chairman of the Office, potentially also to forward the matter to the Czech courts. In the first round of the tender, the subjects of evaluation were, for example, technology, price and safety. According to the results from March 2013, the American company Westinghouse Electric Company, LLC, was the first in this aspect, but the lowest price was, however, offered by the Russian-Czech consortium. CEZ is currently working on improving its negotiating position in relation to the tender applicants and also on deciding if the construction will take place in the first place. The API000 reactor is in many aspects a revolutionary one, with an advantage drawing from its modular construction, which, on the other hand, poses a problem in terms that it has not been tried before and that it could, therefore, potentially limit the inclusion of domestic companies in the project. MIR is an evolutionary reactor based on the long history of VVER reactors as well as on Russian experience with breakdowns. It is a tested and cheaper reactor, but, on the other hand, the technologically older one. Although CEZ argues that the construction of new nuclear blocks arises from the applicable State Energy Concept, Policy of Spatial Development and the conclusion of the Paces energy commission (see CEZ, a. s., 2009a), the company has been criticized for its poor communication with the majority stakeholder during the tender's preparation151. It is the greatest tender in the world and, according to Deputy Minister of Industry and Trade, Tomas Huner, the state will have its own part in it so to ensure full control over it: "The state has very strong options. It can change the Statute and it can directly express its opinion regarding the tender, bypassing the General Meeting of Stakeholders, where 70 % of shares are owned by CEZ. It also has the bluntest tool in its hands, that is the ability to even replace the management" (see Rafaelova, 2009). In terms of the nuclear sector, the Government's policy statement is clear. It expresses the state's will to support both the construction of new blocks in the Temelin nuclear power plant and modernization of the Dukovany nuclear power plant, including the accompanying range of buildings so as to achieve a balanced energy mix. The state will, furthermore, proceed with its transparent approach while searching for sites for radioactive waste repositories, including support for other options leading to their decommissioning (see VCR, 2010a, p. 37). The Government, with respect to the development of the nuclear industry, is behaving in a very coherent and conceptual manner, arising from state energy policies as well as from State Energy Concept and its so far unapproved revision. When the Expert Working Group for Energy Security in 2006 submitted its conclusions regarding Czech energy to the Committee for the Foreign Security Policy Coordination, it recommended prolonging the lifespan of the Dukovany and Temelin nuclear power plants, for the state to create the conditions for further quantitative and qualitative development of the nuclear sector and to seek to increase electricity production through the framework of the existing localities - in other words, to complete the Temelin nuclear power plant and, in the further perspective, also the facilities in the originally planned localities (Bla-hutovice152), whereas it is for diversification reasons recommended to have the new technologies supplied 151 The state, however, was informed, although probably indirectly. Already in July 2008, CEZ asked the Ministry of the Environment to assess the environmental impact of the intended completion of the Temelin nuclear power plant. 152 General Director of CEZ, Martin Roman, in May 2011 indicated the possibility of building a nuclear power plant in Blahutovice as "the very distant future", which would get its turn only after completion of the Temelin and Dukovany power plants, therefore not before 2040 (see "Otázky Václava Moravce", 2009). 148 I THE ENERGY SECTOR AND ENERGY POLICY OF THE CZECH REPUBLIC from EU countries (see Odborná pracovní skupina pro energetickou bezpečnost [OPSpEB], 2006, p. 14). The document also recommends "the restoration of uranium mining, because for the major construction of nuclear sources in the Russian Federation and, in parallel, unchanging capacity of nuclear fuel production, there could be a shortage of that fuel. A country capable of supplying its own uranium and asking only for its processing into fuel will be unambiguously at an advantage in comparison to those who asking for the complete purchasing of fuel" (see OPSpEB, 2006, p. 8-9). The discussed revision of The Atomic Act also advocates the development of uranium mining, which should enable the allocation of funds from the nuclear account also to municipalities subject to mining exploration related to a deep geological repository, which could be a good way to reach a consensus between the state's and municipalities' interests while searching for a proper locality for building this deep geological repository. "Preparation of and proceeding with a schedule of a supplier selection process for the completion of Temelin nuclear power plant has been approved, and I hereby wish to confirm that this plan has stayed unchanged. The Government wishes and, through the means of its share in CEZ will achieve having a winner known by the end of 2013", are the words of Prime Minister, Petr Necas, at the 11th Energy Congress of the Czech Republic (see Nečas, 2011, p. 199-200). CEZ has been preparing very seriously for the Temelin project. Among these, on April 1, 2009, a new division, Construction of Nuclear Power Plants, emerged, coordinating the preparation of nuclear projects not only within the Czech Republic (Temelin and Dukovany), but also abroad (Jaslovske Bohunice - Slovakia) (see CEZ, a. s., 2010b, p. 5). The inclination of the Czech residents to the nuclear sector is not just a relic of an open attitude towards heavy mechanical industry and a centralized power industry in past years, but also the success of CEZ's public relations policy. Large coal power plants in the Czech Republic, Poland and Germany will be gradually shut down in forthcoming years due to age (after 2020, this is the scenario awaiting all Czech coal-fired power plants, aside from the new Ledvice and modernized Tusmice and Prunerov), the Czech Republic presently has difficulties with building any larger blocks (only the Pocerady combined cycle power plant and Ledvice power plant are in the building process), problems with integration of renewables are forcing the state to search for strong investments into regulatory energy and regulatory management, the political decision to depart from nuclear energy in Germany153, all of these pose a serious threat of a power shortage from 2015 approximately to the period of expected completion of Temelin (while the situation on the market has already confirmed this threat following the disconnection of the German nuclear power plants after the incident in Fukushima). These circumstances, therefore, partially play into hands of the Temelin's completion with nuclear blocks with 2 x 1,700 MWe of installed capacity, regardless of substantially larger investments necessary for the transmission system than in the case of other two offers.154 Former Minister of Industry and Trade, Martin Kocourek, however, points to a particular deceleration of nuclear energy development tied to the accident in the Fukushima Daiichi nuclear power plant. "The security of these devices will be, without doubt, discussed in a comprehensive and rational manner, while the engineers will have to invent better ways of handling operation under emergency conditions" (see Kocourek, 2011, p. 11). This event together with the opposition of some organizations in the Czech Republic 153 After the accident in Fukushima Daiichi, Germany immediately suspended the operation of its eight older nuclear power plants, while the expert commission assessing their re-launch in May 2011 recommended leaving them closed. The Ethics Commission then decided to shut down all nuclear power plants by 2021, resp. 2022. The departure from the nuclear industry is not new for Germany, as it had six nuclear reactors closed within the territory of German Democratic Republic immediately after the unification of Germany in 1990, while the construction of five reactors already in the building process (Stendal nuclear power plant) was postponed and then entirely terminated a year after. 154 For more details, see the Chapter about the electric power industry. CHAPTER 6: THE NUCLEAR SECTOR I 149 will represent the greatest limit of nuclear sector development from now on.155 The strongest protest against the completion of the Temelin nuclear power plant comes from the organizations DUHA Movement, South Bohemian Mothers, Greenpeace, Calla - Association for Preservation of the Environment, Citizens' Initiative for Environmental Protection, Green Circle and the above-mentioned Green Party. The idea common to all these organizations can be summed by the words of Martin Sedlak from the DUHA Movement: "The Czech Republic will make do without additional reactors. Green sources in combination with the enormous potential of increased efficiency can ensure enough energy for Czech households and industry. The new nuclear power plant looks like a mere footnote in comparison to these clean solutions. They, moreover, have an indisputable advantage as the costs of renewables decline and in the course of ten years they will be stepping on atom's toes" (see Jihočeské matky, 2011). The DUHA movement also highlights the incapacity of some tender applicants to meet set deadlines, with a pretext of ongoing projects world-wide (see Polanecký & Sedlák, 2010). Their arguments should definitely be taken into consideration, as one of the pressing issues which organizations are warning about is the limited liability of the operator running the nuclear power plants across the Czech Republic for nuclear damage. "Should a serious accident occur in Temelin, all affected would together receive only six billion CZK. CEZ would in that case, paradoxically, receive 35 billion CZK from the insurance companies," says Martin Sedlak (see Sedlák, 2009, p. 31). According to environmental organizations, CEZ must take a full financial responsibility for nuclear damage, because the current limit of 8 billion CZK is insufficient and does not even correspond to the adopted international conventions (see Jihočeské matky, 2011). Tab. 6.10: Comparison of Some Economic and Environmental Advantages and Disadvantages of Nuclear and Thermal Power Plants Subject of Comparison Nuclear Power Plant Thermal Power Plant Fly ash emissions No Only coal power plants S(X and NO emissions 7 v No Yes Operational spillage of radioactive materials Yes (small amount) Yes (small amount) Ratio of produced energy per mass unit of fuel 2,100 GJ/ kg 0.033 GJ/kg Costs of fuel transport Low High Exhaustibility of fuel sources Yes (later than in the case of fossil fuels) Yes Amount of "ash" resp. of spent fuel Small Great Costs of spent fuel liquidation High (mainly resulting from the High (mainly resulting from great- dangerousness and necessity of er volume) the long term deposition) Risk of a big accident Small Great Consequences in case of big accident Great Small Source: Fyzikální aspekty zátěží životního prostředí, 2008, p. 24; modifiedby T. Vlček. The safety of nuclear power plants is also subject to criticism, and especially in terms of spent nuclear fuel. Table 6.10 clearly illustrates that nuclear power plants are during regular operation much less risky than the thermal ones under conditions of notable energy density. In the event of a great accident, a nuclear 155 On the other hand, the accident in Fukushima Daiichi means work for Czech nuclear physicists as the escalation of monitoring and various tests of existing nuclear power plants will most probably become an interesting business, which the Institute of Nuclear Research in Rez is preparing for at the level of the Czech Republic (for more details see Korbel &Kostka, 2011, p. 30). 150 I THE ENERGY SECTOR AND ENERGY POLICY OF THE CZECH REPUBLIC power plant is, nonetheless, unequivocally the most risky type of power plant and the criticism is here substantiated. The State Office for Nuclear Safety regularly and strictly monitors the existing nuclear power plants156, while testing of both nuclear power plants was scheduled for 2011 even prior to the accident in the Japanese power plant. As a result of the Fukushima Daiichi accident, in 2011 stress tests were carried out. These tests were done in three parts. The first was implemented on individual nuclear plant operators (i.e. CEZ), the other was executed by national regulators (SUJB) and the third involved the monitoring of inspectors from other countries (European Nuclear Safety Regulators Group157, hence the European Commission) (see Macková, 2011; SUJB, n.d.b). This plan was presented and confirmed in April 2011 in Vienna at the Convention on Nuclear Safety Fifth Review Meeting. At the European Nuclear Energy Forum in May 2011 in Prague, Special Envoy for Energy Security the Czech Republic, Vaclav Varuska, said "European nuclear power plants should not undergo uniform stress tests, because there are different types of reactor in Europe and likewise unified tests cannot be implemented on, for example, motor bikes, cars and cargo vehicles" (see Egger & Schweiger, 2011). The Austrian association Atomstopp oberoesterreich immediately reacted with strong criticism of Czech nuclear plants' safety 158 (see Egger & Schweiger, 2011). The Czech Republic has in reality, however, executed the stress tests alone (like France, for example), while their form was delineated by the Ministry of Industry and Trade together with the SUJB. Preparatory work started already in April and the nuclear power plant operator had time to implement them by the end of September. In addition to the impact of natural disasters (for example, a tsunami or earthquake159), the possible effects of extremely high or low temperatures was tested as well (see CTK, 2011). If the European Union orders the execution of further tests, they would be implemented additionally. The final report following the process of mutual evaluation of nuclear plants' resistance by the members of the EU27 both for Temelin and Dukovany power plants was as follows: "No conditions were identified that would require an immediate solution. The power plant is able to safely manage even highly improbable extreme emergency conditions without posing any threat to its vicinity" (see CEZ, a.s., 201 la; CEZ, a.s., 2011b). Although the completion of the Temelin nuclear power plant and further development of the nuclear sector in the Czech Republic is a priority and a conceptual matter for the Czech Government, these goals, however, remain so far uncertain. Aside from the abovementioned problems, the situation is not getting any better also due to the financial insufficiency of the main investor, CEZ, resulting from problematic investments it made in the Balkans in recent years. Martin Roman, former General Director of CEZ however justifies these investments by arguing that it was both a little above a fifth of overall CEZ investments and, accordingly, that foreign investments in the amount of 70 billion CZK have already in the last five years generated a cumulative profit of approximately 40 billion CZK. Investments are allegedly returning faster than expected (see "Otázky Václava Moravce'', 2011). 156 In relation to the character of the accident in Fukushima, it should be added that each Czech block has backup sources of power in the amount of three separate diesel aggregates, which are furthermore secured with batteries. 157 European Nuclear Safety Regulators Group, ENSREG. 158 With regard to the Austrian reaction, we should turn to Vaclav Baran who concludes that antinuclear movements are primarily an ideology in Austria, having little to do with rationality and which "safely know how to free the world from threats" (see Baran, 2002, p. 36). On this basis we can conclude that the Czech Republic will probably never satisfy Austrian criticism, regardless of a vast number of talks and agreements closed. 159 Seismic resistance of nuclear facilities in Czechoslovakia was set by the state standard at five on the Richter scale (see Blažek, 2009, p. 60). CHAPTER 6: THE NUCLEAR SECTOR I 151 CEZ is still at any rate looking for options of how to ensure good conditions for such a high investment. One of the variants is a permanent guarantee of purchase prices from new Temelin blocks provided by the state or a guarantee of the investment's return. According to the latest information, the Ministry of Industry and Trade headed by Martin Kuba disagrees with both options and proposes a short-term system which would provide CEZ with state support in case the market prices go lower than the prices agreed, and, in the opposite case, expect the company to allocate the surplus to the state (see "Kuba je proti trvalé"). We should, therefore, expect long and complicated discussions, where the position of the players involved will change many times. According to Ladislav Blažek, Former Development Deputy of the Federal Ministry of Energy and one of the leading Czech experts in the field of mechanical mine installations, energy and gasworks, the prospects of this sector are entirely evident. "Without developing the nuclear industry, the Czech Republic can only barely make do, if it wishes to achieve energy independence, complete its commitments of emissions reduction and if it does not wish to waste the experience which was gained. No responsible politician can deny the need to construct additional sources of nuclear energy in the shortest period possible, if he or she does not wish to speculatively lower the hard won energy self-sufficiency of the Czech Republic" (see Blažek, 2009, p. 68). Appendix 2.2 JIRUŠEK, Martin, Tomáš VLČEK, Hedvika KOĎOUSKOVÁ, Roger W. ROBINSON, Anna LESHCHENKO, Filip ČERNOCH, Lukáš LEHOTSKÝ and Veronika ZAPLETALOVÁ. Energy Security in Central and Eastern Europe and the Operations of Russian State-Owned Energy Enterprises. Brno: Masarykova univerzita, 2015. 696 p. ISBN 978-80-210-8048-5. doi:10.5817/CZ.MUNI.M210-8048-2015. pp. 73-287, 338-362 74 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Chapter 4 Sector of Nuclear Energy in Central and Eastern Europe 4.1 Country Case Study: Belarus Tomáš Vlček 4.1.1 Introduction Belarus is a landlocked country bordering with Russian Federation, Ukraine, Poland, Lithuania and Latvia. Belarus declared independence at the end of the WWI just to be occupied by Soviet troops shortly after and eventually incorporated to USSR as Belarusian Soviet Socialist Republic from 1919. After the Russian-Polish war the country was divided between these two states. The USSR has taken back the Polish part in 1939 and Belarus was not an independent state until July 1990 when Republic of Belarus was created. In 1994, Alexander Lukashenko was elected president of Belarus; he was reelected again for the second term (2001-2006), the third term (2006-2011) and also the fourth term (2011-2016). The election process especially for the fourth term had been criticized as flawed by most EU and OSCE countries. As a result, Lukashenko and his associates are forbidden to travel to EU member countries. Belarus is also very well known for his authoritative leadership (sometimes called as Europe's last dictatorship), oppression and corruption. Belarusian economy has been steadily growing since 1996 due to socially oriented economic policy of the state, favorable market conditions in the Russian Federation and EU countries for the export of Belarusian goods and an increase in labor productivity (Energy Charter Secretariat, 2013, p. 20). Sector of Nuclear Energy in Central and Eastern Europe 75 76 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Belarusian energy sector is heavily reliant on hydrocarbons, especially natural gas consisting 66% of Belarus' TPES and 97.1% of electricity generation share in 2010. Natural gas is imported explicitly from Russian Federation through Yamal-Europe gas pipeline. Belarus is also a crucial transit country for both natural gas and crude oil supplies to Europe. The Yamal-Europe gas pipeline and the Druzhba crude oil pipeline continue through CEE countries and end in Germany and the Czech Republic. Tab. 4.1.1: Key Energy Statistics Source Consumption Imports TPES share Electricity Generation share Crude Oil 7.59 Mt 193% 25.7% 2.4% Natural Gas 21.8 bcm 99% 66% 97.1% Coal (all types) 0.15 Mt 87% 2% 0.1% RES - - 5.5% 0.4% Nuclear Energy - - 0% 0% Note: 2010 data Source: U.S. Energy Information Administration; International Energy Agency, compiled and calculated byT. Vlcek Belarus imports nearly twice as much crude oil as it consumes. The reason for this is the existence of Mozyr refinery owned by the company JSC "Mozyr Oil Refinery"1. The refinery has 4.75 Mt/y design capacity. 1 The ownership structure consists of 42.76% Government of Republic Belarus; 42.58% OAO NGK Slavneft; 12.25% non-state individuals and entities; 2.41% other stakeholders. 99.8% of OAO NGK Slavneft is owned by Russian companies OAO NK RussNeft and OAO Gazprom Neft (JSC "Mozyr Oil Refinery"). The top electricity generation source is by far natural gas and there is practically no diversified electricity generation mix and diversified natural gas supply. This leads to regular Russia-Belarus disputes over gas prices that once (in 2004) escalated to a complete shutdown of gas supplies to Belarus. The full dependence on Russian Federation in natural gas and therefore also electricity production, and also in crude oil, together with the fact that Belarus' domestic electricity production does not cover the demand and Belarus imports electricity, are the main reasons for the construction of the Ostrovets NPP. In 2010, 34.9 TWh of electricity was generated and around 32.7 TWh annually is produced on average in Belarus. The country imports another 4.4 TWh annually on average to cover its electricity demand (International Energy Agency). The country's electricity sector is managed by state-owned GPO BelEnergo divided into six areas with six subsidiary companies (Minskenergo, Gomelenergo, Brestenergo, Grodnoenergo, Vitebskenergo, Mogilevenergo). The installed capacity in GPO BelEnergo is 8,506.2 MWe in 2014 (niO "BeA3Hepro") and the total installed capacity in Belarus is 9,221.2 MWe in 2014 (Popov, 2014, p. 15). Belarus is connected via electricity interconnectors with Russian Federation, Ukraine, Poland and Lithuania. There are three 330 kV lines to Russia and one 750 kV line to Russian Smolensk NPP with three RBMK-1000 reactors of 1,000 MWe each. There are two 330 kV interconnections to Ukraine (one from Chernobyl NPP) and five 330 kV interconnections with Lithuania (three from the Ignalina NPP). One 220 kV and two 110 kV interconnections heads to Poland (rilO "BeA3Hepro"). Sector of Nuclear Energy in Central and Eastern Europe 77 Tab. 4.1.2: Gas Power Plants (100 MWe+) in Belarus Power Plant Installed Capacity Fuel Year of Construction Novopolotskaya CHP 505 MWe Gas, HFO 1962 LukomlskayaTPP 2,462.6 MWe Gas 1969 Mogilevskaya-2 CHP 345 MWe Gas, HFO - Minskaya-3 CHPCCGT 542 MWe Gas - Minskaya-4CHP 1,035 MWe Gas, HFO 1977 Minskaya-5 CHPCCGT 720 MWe Gas - Bobruiskaya-2 CHP 182.6 MWe Gas, HFO 1976 Svetlogorskaya CHP 155 MWe Gas, HFO - Gomelskaya-2 CHP 544 MWe Gas 1986 MozyrskayaTPP 195 MWe Gas, HFO 1974 Grodnenskaya-2 CHP 302.45 MWe Gas 1970 Berezovskaya CHP 958.12 MWe Gas, HFO 1961-1967 Note: CHP = Combined Heat Power Plant; TPP = Thermal Power Plant; HFO = Heavy Fuel Oil; CCGT - Combined Cycle Gas Turbine Source: Global Energy Observatory, mo "BeA3Hepro" 4.1.2 New Units and Financing of the Nuclear Power Plant Belarus had some experience of building a nuclear power plant because construction of a 2,000 MWe plant comprising two Russian design WER-1000 reactors began in 1983, at a site 35 km from Minsk. Work stopped in 1988, two years after the Chernobyl accident, and eventually a thermal power plant was constructed on this site (Kovynev, 2014). 78 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises The reasons described above led Belarus to adopt a decision to construct a nuclear power plant in 2006. The site selection process was difficult as there were many potentially optimal places. But after consultations with experts from the IAEA, Russia, Ukraine and other countries, two sites were identified and eventually the site near the town of Ostrovets, in the Grodno region, 150 km from Minsk, was chosen and approved by IAEA missions in 2008 (Kovynev, 2014). After expressions of interest were invited by the Republic of Belarus, four proposals have been received in 2008 from Atomstroyexport, Westinghouse-Toshiba, Areva and China Guangdong Nuclear Power Corporation. For different reasons, the last three were scrapped; e.g. Areva's EPR was noted too big for the first power plant and US offer would have been too complicated and slow as intergovernmental agreement was needed (WNA, 2014). Russia's Atomstroyexport therefore emerged as the most suitable supplier with the offer of two WER-1200/V-491 units of combined capacity 2,400 MWe. Russia's Eximbank offered USD 2 billion credit in 2007 in line to enable purchase of equipment from Russia's Power Machines OJSC Company, the largest power plant engineering company in Russia, as a major part of the overall cost (WNA, 2014). This played definitely an important part in the decision as Belarus has not been able to finance the whole project on its own. Eventually, Russia (most likely the Eximbank and the Vnesheconombank) provided USD 6 billion loan for the construction and this loan was in 2009 and in 2011 renegotiated to final USD 10 billion loan including investment into a new infrastructure to accommodate the remoteness of Ostrovets in northern Belarus (Schneider 8c Froggat, 2014, p. Sector of Nuclear Energy in Central and Eastern Europe 79 80 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises 26). The term of the loan is 25 years and it is intended to finance 90% of the contract between AtomStroyExport and the Belarus Directorate for Nuclear Power Plant Construction. The whole process and also the particular aspects of the loan and construction contract are very similar to the Bulgarian one, i.e. a NPP delivery on a turnkey basis. Russian companies will receive no share in the company RUP Belarusian NPP, which will remain fully in hands of Belarusian state. On October 11, 2011, the JSC AtomStroyExport affiliated with Rosatom, and the Belarusian Directorate for Nuclear Power Plant Construction signed the contractual agreement for the construction of power units 1 and 2 of the nuclear power plant in Belarus ("Belarusian Nuclear", 2014). The JSC AtomStroyExport is the general contractor with Russian and Belarus subcontractors, and the state enterprise "Directorate for Nuclear Power Plant Construction" is the customer of preparatory, design and survey works on the construction of the nuclear power plant. This directorate exists under the Nuclear Power Engineering Department of the Ministry of Energy. In December 2013, the directorate was converted to state unitary enterprise RUP Belarusian NPP. The licensing body, the Nuclear and Radiation Safety Department (Gosatomnadzor) of the Ministry for Emergency Situations of the Republic of Belarus was created in 2007 and issued the license for building the nuclear reactor in December 2013. The construction of the Ostrovets NPP in Belarus started in November 2013 (Unit 1) and May 2014 (Unit 2) and should finish in 2018 (Unit 1) and 2020 (Unit 2). The second nuclear power plant, i.e. Units 3 and 4 at the Ostrovets NPP site is also planned. The construction should start in 2025. 4.1.3 The Front End of the Nuclear Fuel Cycle As there are no Uranium deposits, and no production, processing and/or fabrication capabilities in Belarus, no Front End information can be presented. There is an intergovernmental agreement between Belarus and Russia that guarantees the supply of nuclear fuel for the lifetime of the plant. Under this agreement the spent fuel of Russian production will be returned to Russia for reprocessing and temporary storage. 4.1.4 The Service Part of the Nuclear Fuel Cycle Belarus conducts a small civilian nuclear research. There was a 5 MWt IRT-M nuclear research reactor operating from 1962 to 1988, decommissioned nowadays. It was managed by the Institute for Nuclear Power Engineering of the Academy of Sciences2. The institute was divided into three bodies in 1989 forming the Joint Institute for Power and Nuclear Research — Sosny of the National Academy of Sciences of Belarus. The institute now houses two critical assemblies (Yalina-T and Yalina-Booster) for civilian nuclear experiments. Both are not-operational due to lack of funding and the latter is being explored together with the US scientists for conversion to low-enriched fuel (Nuclear Threat Initiative). However, as there are no nuclear power plants in Belarus, no Service Part information can be presented. 2 Assisted by over 150 organizations and enterprises of the USSR, in 1985, the Institute created and started-up the world's first mobile nuclear power plant Pamir-630D, unfortunately the project was scrapped due to large amount of emergency shutdowns. There was also a project of pilot nuclear power station with a fast breeder reactor BRIG-300 (electric output of 300 MW) that was scrapped shortly before construction was about to begin (The Joint Institute for Power and Nuclear Research - Sosny; NuclearThreat Initiative). Sector of Nuclear Energy in Central and Eastern Europe 81 4.1.5 The Back End of the Nuclear Fuel Cycle The irradiated material at Sosny and spent fuel was transported to the Russian Federation to be stored or reprocessed. Low-level waste is stored in the Spent Fuel Storage facility under the Institute of Atomic Energy in Minsk (State enterprise for nonreactor radioactive waste management) or in the underground storage facility near Sosny (Nuclear Threat Initiative). The spent fuel from the Ostrovets NPP will be stored and actively cooled in storage pools next to the reactor for 5-10 years. Besides the small Sosny and Minsk storage facilities, there is currently no spent fuel repository in Belarus. An Intermediate storage for spent fuel in dry containers for 50 years is part of the Ostrovets NPP construction project. As part of the contract, for the life of the plant, the used fuel will be repatriated to Russian Federation. It will be reprocessed there and the separated wastes returned to Belarus eventually. B. Popov suggests there might be an option to choose whether to dispose the separated wastes at home or abroad (WNA, 2014; Popov, 2014, p. 7). But it is more likely that high level waste final depository will eventually have to be constructed. 82 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Tab. 4.1.3: Belarus Nuclear Sector Examination Indicator Description Is there nuclear producing capacity present in the country? No Is there a project to expand the capacity? What is the status of the project? Yes, the Ostrovets NPP (2x VVER-1200/V-491 units of combined capacity 2,400 MWe), the project is under construction, operation start expected in 2018 and 2020 How was the project procured? Openly, with Russian bid, other bidders excluded on basis of too high installed capacity of the unit or the need of too complicated and slow intergovernmental agreement negotiation Who is the contractor in charge of the project? JSC AtomStroyExport (78.5362% Rosatom State Atomic Energy Corporation; 10.6989% OAO Gazprombank; 9.4346% AO VPO Zarubezhatomenergostroy; 1.3303 % OAO TVEL) How is the financing secured? Through USD 10 billion credit contract with Rosatom, the loan is for 25 years to finance 90% of the contract Who is the operator of the facility? State unitary enterprise RUP Belarusian NPP Are there enough home-based experts to run the facility safely? Yes, also training of the staff is part of the construction contract Who is/will be in charge of decommissioning? The contractor, the decommissioning will be funded from a special fund generated from the sales of electricity generated in Ostrovets NPP during its lifetime Who provides nuclear fuel and under what conditions? Russian OAO TVEL as part of the construction contract What is the experience with the fuel being currently used? Is there any rationale or path-dependency behind the current contract? No operational experience so far as the Ostrovets NPP is the first NPP in Belarus Is there any part of nuclear fuel industry present in the country? If so, how it contributes to country's nuclear fuel cycle? No How is used fuel treated and who is in charge of this? As part of the contract, the used fuel will be repatriated to Russian Federation for the life of the plant, reprocessed there and the separated wastes returned to Belarus eventually Sector of Nuclear Energy in Central and Eastern Europe 83 84 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises 4.1.6 Sources Backaitis, S. (2011).Dangers from Proposed Belarus and Russian Nuclear Power Plants to Lithuania. Lithuanian American Council. Retrieved June 15,2015, from http://altcenter.org/wp-content/uploads/2011/12/Dangers-from-Proposed-Belarus-and-Russian-Nuclear-Power-Plants-to-Lithuania.pdf Barcoun, A.V. (2014). Progress in implementation the project of the Belarusian NPP construction. Presentation of the Ministry of Energy of the Republic of Belarus' Republican Unitary Enterprise "Belarusian nuclear power plant", Ostrovets, February 2014. Retrieved June 15, 2015, from http://www.iaea.Org/NuclearPower/Downloadable/Meetings/2014/2 014-04-07-04-11-TM- INIG/Presentations/12_Belarus_Barcoun.pdf Belarusian Nuclear Power Plant Project: Timeline. (2014, June 4). Belta News Agency. Retrieved June 15,2015, from http://atom.belta.by/en/dosie_en/view/belarusian-nuclear-power- plant-project-ntimeline-208/ Bohdan, S. (2013, August 27). Belarus and Lithuania: A Tale of Two Nuclear Power Plants. BelarusDigest. Retrieved June 15,2015, from http://belarusdigest.com/story/belarus-and-lithuania-tale-two- nuclear-power-plants-15157 Kovynev, A. (2014, August 5). Belarus — a nuclear newcomer. Nuclear Engineering International. Retrieved June 15, 2015, from http://www.neimagazine.com/features/featurebelarus-a-nuclear- newcomer-4335307/ Energy Charter Secretariat. (2013). In-Depth Review of the Energy Efficiency Policy of the Republic of Belarus. Brussels: Energy Charter Secretariat. Retrieved June 15, 2015, from http://belgium.mfa.gov.by/docs/belarus_ee_2013_eng.pdf Global Energy Observatory. Retrieved June 15,2015, from http://globalenergyobservatory.org/ TTIO "BeA3Hepzo". Retrieved June 15,2015, from http://www.energo.by/ International Energy Agency. Retrieved June 15,2015, from http://www.iea.org/ JSC "Mozyr Oil Refinery". Retrieved June 15,2015, from http: //www. mnpz.by/ Nuclear Threat Initiative. Retrieved June 15,2015, from http: //www. nti. org/ Popov, B. (2014) .Belarusian NPP. Terms of economic efficiency and the INPRO methodology. Presentation at INPRO Dialogue Forum 8: Toward Nuclear Energy System Sustainability: Economics, Resource Availability, and Institutional Arrangements, Vienna International Centre, IAEA Headquarters, Vienna, 26-29 August, 2014. Retrieved June 15,2015, from http://www.iaea.org/INPRO/8th_Dialogue_Forum/Breakout_Econ omics_03_Popov_.pdf Pyn "Be/iopyccKcm amoMHOH MeKmpocmaHtfm". Retrieved from http://www.dsae.by/ Schneider, M., &Froggat, A. et al. (2014). The World Nuclear Industry Status Report 2014. Paris/London/Washington, D.C.: A Mycle Schneider Consulting Project. Retrieved June 15,2015, from http://www.worldnuclearreport.org/ The Joint Institute for Power and Nuclear Research — Sosny. Retrieved June 15,2015, from http://sosny.bas-net.by/ U.S. Department of the Interior, 8c U.S. Geological Survey. (2010). Minerals Yearbook. Area Reports: International 2008. Europe and Central Eurasia. Volume III. Washington: United States Government Printing Office. Sector of Nuclear Energy in Central and Eastern Europe 85 86 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises U.S. Energy Information Administration. Retrieved June 15,2015, from http://www.eia.gov/ World Nuclear Association. (2014). Nuclear Power in Belarus. Retrieved June 15,2015, from http://www.world-nuclear.org/info/Country- Pro files/Countries-A-F/Belarus/ 4.2 Country Case Study: Bulgaria Tomáš Vlček1 4.2.1 Introduction2 Bulgaria is a CEE country located in the south-eastern part of Europe and neighbouring with successor countries of former Yugoslavia, Greece, Romania and Turkey. This location gives the country an opportunity to play ever-greater role not only in energy sector in the future. Bulgaria was part of the so called Eastern Bloc and joined the European Union in 2007 along with Romania. As well as the other post-communist countries Bulgaria inherited specific structure of economy that has been influencing country's development not only in energy sector. Bulgarian total primary energy supply (TPES) is by more than two thirds comprised of hydrocarbons. The greatest import dependency is in oil and gas sector. Almost whole oil consumption is imported while about 80% is of Russian origin and some limited amounts from Kazakh oil fields predominantly transported by CPC pipeline and by tankers from Novorossiysk. However, overall amount of imported oil is substantially bigger than the domestic consumption since Bulgaria is important manufacturer of refined oil products. All imported gas is delivered from Russian Federation through single pipeline running through Ukraine, Moldova and Romania (CSD, 2014, p.46-50, Nitzov et al., 2010). High dependency in oil and gas sectors and other unfavourable 1 The chapter is based on a research that the author conducted in cooperation with Martin Jirusek. 2 The chapter is based on the article previously published in the International Journal of Energy Economics and Policy journal in March 2015, where preliminary outcomes of the research were presented. (VKek& Jirusek, 2015) Sector of Nuclear Energy in Central and Eastern Europe 87 88 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises factors, like low gas storage capacity and limited reverse-flow capacity of gas pipelines on the borders with Romania and Greece, pose great threat for energy security of Bulgaria and makes it one of the most vulnerable country in the region. On the other hand, Bulgaria is important transit country with robust inland infrastructure serving to transit gas supplies to Turkey, Greece and Macedonia (Nitzov et al., 2010). The energy sector in Bulgaria further suffers from other chronical flaws that, despite serious threats, still remain rather unsolved. Apart from the insufficient gas reserve capacity, which has not been upgraded despite severe impact of the 2009 gas crisis, other structural threats are imminent. Tab. 4.2.1: Key Energy Statistics Power Plant Installed Capacity Fuel Year of Construction CHPIru 207 MWe Gas, solid waste 1976-1978, 2010-2013 CHPBalti* 765 MWe Oil shale 1959-1965 CHP Eesti* 1,615 MWe Oil shale 1963-1973 14 Wind Parks 143.8 MWe Wind - * Together also known as Narva Power Plants Note: CHP = Combined Heat Power Plant Source: IRENA, 2011; Energy Delta Institute, n.d; European Commission; CSD, 2014, pp. 46-66;; compiled and calculated by M. Jirusek The most pressing issue is energy sector underinvestment in general, which is one of the main reasons for poor energy efficiency represented by huge energy loses in processes of transformation, transmission and distribution. Over 50% of energy is lost before it reaches end customers making Bulgaria the worst case of energy inefficiency in the region. Characteristic feature of practically all post-communist countries — high energy intensity (i.e. high ration of energy invested per unit of GDP) is also typical for Bulgaria adding up to the serious issues of the sector. Despite this severe inefficiency stemming out of gross underinvestment of infrastructure, the situation is still rather unaddressed. Rising costs of imported energy commodities and infrastructure maintenance are reflected in rising energy bills that pose a great financial burden for considerable share of Bulgarian population. The aforementioned factors have serious consequences — imminence of energy poverty. Over 1/3 of households are unable to keep adequate heating and are forced to switch-off heating due to high energy prices (CSD, 2014, pp. 33-34). Moreover, more than 1/2 of households use wood or coal for heating — a situation that is hardly to be seen anywhere else in the EU. Electricity power generating capacity in Bulgaria is among the most diverse in EU and OECD countries. The high capacity also enables Bulgaria to be a substantial electricity exporter exporting about 20% of its power generation ("Bulgaria Exports", 2014). With the total power generation capacity of 42.9 TWh and about 2.5 TWh of electricity imported, the country is able to export around 10.5 TWh of electricity (Euracoal, n.d.). The majority of power generating capacity is generated by coal and its variants that comprise about 50% of total power generating capacity. Since the majority of coal-based power generating capacity finds itself struggling with EU environmental rules due to its outdated technology and low quality of used lignite and the nuclear Sector of Nuclear Energy in Central and Eastern Europe 89 90 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises power development is unclear (below), the future of Bulgarian power generation is endangered. There is also high concentration in terms of location and market concentration as majority of coal produced is supplied to three power plants located at the Maritsa site (Global Energy Observatory, 2014; Nitzovetal.,2010). Tab. 4.2.2: Coal power plants in Bulgaria Power plant Installed capacity Maritsa 3 120 Mwe Bobov Dol 630MWe Maritsa East 1 670 Mwe Maritsa East 2 1450 Mwe Maritsa East 3 840 Mwe Varna Coal Power Plant 1260 Mwe Source: Global Energy Observatory, 2014 The second most important source of electricity is nuclear power comprising over one third of the total power generating capacity. All nuclear-based power generation capacity of Bulgaria is concentrated at the Kozloduy NPP site, where total amount of six units is located (table 4.2.2). Units 1 and 2 were brought online in mid 1970s and employed WER-440 units of Russian design, 405 MWe of power output each. Units 3 and 4 were brought online at the beginning of 1980s and although they employed upgraded version of the already used units, the power output was the same as in the case of units 1 and 2. Units 5 and 6 were built and started to operate at the break of 1980s and 1990s and unlike the first four units they employed more powerful WER-1000 units able to produce up to nearly 1000 MWe each. During the EU pre-accession period Kozloduy 1-4 were shut down in 2002 and 2006 respectively, although the government was trying to prolong the operating period for units 3 and 4 as they were substantially upgraded and were said to be complying with the required safety standards. The units 1-4 are thus currently undergoing decommission (World Nuclear Association, 2014b). Due to electricity shortages in Balkan region caused by series of draughts and declining power generating capacity that have become obvious in the region in the second half of previous decade, Bulgaria has the right to bring units 3 and 4 back online in case of energy crises. 4.2.2 New Units and Financing of the Nuclear Power Plant There have been plans since the late 1970s and early 1980s to build two new units at the Kozloduy NPP site, but the economics of the project have consistently undermined the progress. Eventually, in 2010, it was assessed that new construction was possible at the Kozloduy site. Progress of the project was further slowed down by the decision to use finished parts of the Belene 1 unit (see below) for the Kozloduy 7 unit. A key feature of this project has been the fact that no state funding or guarantees will be provided for the construction phase, which made it necessary to find an investor to finance the plant. For the purpose of the project a new company — — Kozloduy NPP New Build — was established. For the technological part, the government was at that time still considering two options — using the Russian equipment already Sector of Nuclear Energy in Central and Eastern Europe 91 92 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises purchased and delivered for the Belene 1 unit or building a brand new unit using Westinghouse AP1000 design. Eventually, in mid 2013, the latter option was selected3, although it was followed by the lawsuit with Rosatom (see below) and concerns regarding the transparency of the procedure (see above). Moreover, the financial part of the project still has not been satisfactorily settled. The whole enterprise was complicated in June 2014 by the withdrawal of Toshiba, the Westinghouse owner, which originally should have invested up to 30% of the project share. The 30% equity stake in the Kozloduy NPP New Build4 was subsequently transferred to Westinghouse with the rest held by the Bulgarian Government. Although this deal was cemented in August 2014, it is rather a formal confirmation of the previous selection of Westinghouse unit rather than final settlement as the details of the financing as well as the inner structure of the project (i.e. involved subcontractors) are still to be secured, as the Westinghouse spokesman confirmed at the time the deal was signed. It is said that financing should be mainly secured by loans obtained by both sides of the contract (i.e. Westinghouse and Kozloduy NPP New Build — essentially Bulgarian government). However, the agreement is yet to be finally confirmed by the government after the October elections ("Bulgaria to sue Russia", 2011; „Bulgaria picks Westinghouse", 2012; "Commission wants EU capital", 2010; Russia offers Bulgaria", 2011; "Westinghouse moves forward", 2014; Bivol, 2010; World Nuclear Association, 2014b). 3 Westinghouse is set to provide the needed equipment, project design, engineering and prospectively also fuel supplies for the unit (contract on fuel supplies is not yet agreed) (World Nuclear Association, 2014b) 4 This means that Westinghouse will not remain the equity holder once the unit is built. Plans have also been made to build other units at the Belene site, which was also selected back in the 1970s. The plan to build nuclear production units at this site was the subject of heated debate for many reasons and the project has been questioned, halted and resumed several times mostly because of its economic feasibility5 and unclear financing6, which, especially in the light of uneasy economic situation of the country after the collapse of the communist regime, made the project financially hazardous. The new units were later intended also to replace the Kozloduy 1-4 units that were shut down during the EU pre-accession period (see above). This project, which was originally set to utilize the Russian WER-1000 design, has been offered a Russian loan several times to support the Atomstroyexport-led consortium. However, a succession of Bulgarian governments have refused this offer and a further Russian proposal to take an equity stake in the plant in return for financial and technical support, fearing a security of supply risk from being over-exposed to a Russian contractor even when the original strategic partner, RWE, withdrew from the project ("Commission wants EU capital", 2010; World Nuclear Association, 2014b; World Nuclear Association - Weekly Digest, 2012). Instead, the Bulgarian authorities decided to try and find a European partner, but without success ("Commission 5 The study conducted by the Bulgarian electric system operator suggests that the new capacity is needed (and thus economically feasible) only if agreements on substantial future electricity exports are secured (CSD,2014,pp. 93-97). 6 The Belene NPP project is a fine example of how the upfront costs influence the price of the electricity generated by the plant. In this case the upfront cost of about EUR 10 billion have been one of the major arguments against the plant since the subsequent electricity price and further investments needed for the future exports (i.e. investments into infrastructure) would be hardly acceptable. Therefore the return-on-investment timeframe appears to be very unfavourable - 30-40 years - basically a great deal of typical nuclear plant's life cycle (CSD, 2014, p. 93-97). Sector of Nuclear Energy in Central and Eastern Europe 93 94 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises wants EU capital", 2010; Bivol, 2010). Indeed, eventually financial concerns followed by a legal dispute between Atomstroyexport and Bulgaria's National Electric Company NEK prompted the Bulgarian government to start considering a brand new solution to the problem ("Russia offers Bulgaria", 2011). This involved installing the equipment originally designed for the Belene 1 unit at the site of Kozloduy 7 ("Bulgaria to sue Russia", 2011; World Nuclear Association, 2014b), as it was becoming clear that the Belene NPP project was about to be terminated7. However, the procurement procedure for a new unit at the Kozloduy site eventually led to selection of the Westinghouse AP — 1000 designs („Bulgaria picks Westinghouse"; World Nuclear Association, 2014b), and this again prompted a lawsuit brought by Atomstroyexport claiming around EUR 1 billion in damages for the aborted Belene project. Although the ultimate decision selecting Westinghouse as the technology supplier for the Kozloduy 7 unit was accepted as geopolitically more favourable than the Russian offer, concerns questioning transparency of the procedure remained pointing to alleged corruption practices. Overall, though, the problems that both Bulgarian projects have faced highlighted the importance of financing and to lesser extent a complicated perception of Russian involvement in nuclear projects in CEE countries. The fact that the technical 7 This stems out of the development of the Kozloduy 7 project and the financial feasibility of building a completely new plant at Belene, and subsequent plans to build gas power plant on the site ("Bulgaria Quits", 2012). Also, the referendum on future development of nuclear energy in Bulgaria did not shed a light on the future of the project as it was non-binding due to low voter turnout and vague wording (CSD, 2014, pp. 93-97). On the other hand, governments have been sending mixed signals and have not been able to formulate a coherent energy strategy. This inability further harms the government's position in aforementioned lawsuits that still remain to be settled. features of each design were treated as rather second-tier priority8 indicates that it was the potential stake of Russian state-owned companies and the form of financing which has been of most concern. 4.2.3 The Front End of the Nuclear Fuel Cycle Uranium mining had been active since 1938. In 1992 and 1994, it was decided to shut down the mining and milling respectively, officially for ecologic and economic reasons. At its peak, the uranium mining industry produced approximately9 up to 645 tonnes of uranium ore per year, employed up to 13,000 employees and was very autonomous in terms of management. Altogether up to 48 uranium mines were active in Bulgaria and the country also ran 2 uranium enrichment facilities. Current remaining reserves in Bulgaria are estimated to be around 20,000 tonnes out of which suitable and recoverable is the amount totalling about 6000 tonnes at annual rate of 300 tonnes (International Atomic Energy Agency, 2013). The uranium industry was focused on mining, milling and uranium concentrate production (up to the stage of yellow cake) and in that stage of development the production was being sent to the Soviet Union, since the country did not possess plants for more sophisticated treatment. Until 1992, Bulgaria paid for reprocessing of their ore for use in the Kozloduy NPP and the remainder was being left for USSR as a provision (Lazarova, 2006). In mid 2000s, it was rumoured that Canadian Cameco 8 The technology issue was addressed rather with connection to the already installed Russian equipment at the Belene site and its possible utilization at the Kozloduy site. 9 Exact figures are unknown as they were confidential. Sector of Nuclear Energy in Central and Eastern Europe 95 96 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises and Russian TVEL show interest in reviving uranium mining in Bulgaria. In 2006, Bulgarian — Russian intergovernmental commission expressed its opinion that Bulgaria should revive uranium mining. At that time, TVEL expressed the same opinion as the uranium production and cooperation with Russia in this regard would help reduce the price of Russian fuel shipped to the Bulgarian Kozloduy NPP (Wise Uranium Project, 2014). This interest was probably linked to plans of building new production units in which Russia expressed their interest ("Bulgaria considers", 2006). Tab. 4.2.3: Bulgaria - nuclear fuel cycle profile Reprocessing Foreign Domestic WWER Uranium C on version -^ Enri cíl merit Russian Federation Mfnatom Minatom jsc TVEL Source: IAEA, 2005 Nowadays, Bulgaria relies on fuel shipments from Russia and no part of the fuel producing cycle is present on Bulgarian soil. As Table 4.2.3 illustrates, all parts of the fuel cycle are secured by the Russian Federation and its state-owned companies (TVEL) or governmental bodies (Rosatom State Nuclear Energy Corporation). The current agreement on fuel supplies was prolonged by 3 years10 in September this year ("A3C Ko3AOAyH onpoBeprAa", 2014). Although the country is 100% dependent on Russian fuel shipments, it does not mean that the country is vulnerable or exposed to unbearable economic, safety or political pressures from the Russian side. As stated in the first part of this study, the uranium market is highly competitive and it is thus no problem to obtain supplies from various sources. In this regard, Bulgaria is no way near vital and unbridgeable dependency on Russian fuel shipments. In case of supply cuts, the stored supplies of nuclear fuel can well bridge the period of curtailed or even none supplies. Although there have been accusations that Russian side was sending recycled fuel instead of fresh one, these were not proven and denied by both Russian side and the plant's officials ("Bulgaria Kozloduy asks", 2008). 4.2.4 The Service Part of the Nuclear Fuel Cycle Nuclear industry is deeply rooted in Bulgaria since the development of nuclear facilities dates back to 1950s. The first research reactor started in 1961 and development of commercial use of nuclear energy started 5 years later, when the cooperation 10 The three-year term is given by the fact that the current operating permission for Kozloduy 5 unit ends in 2017. Sector of Nuclear Energy in Central and Eastern Europe 97 98 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises and future use of Russian nuclear technology was agreed. All nuclear units in Bulgaria are possessed by Bulgaria's National Electricity Company (NEK) a subsidiary of state-owned Bulgaria Energy Holdings. Two units in operation at the Kozloduy site NPP near the Danube River close to the northern border (Kozloduy 5&6) are currently the only nuclear units in operation. These reactors, Kozloduy 5 8c 6, are the WER-1000 type, each with an output of 953 MW and they are the last two out of six units built during two decades since the early 1970s on the site (see above). In 2012, the procedure to extend their life-cycle has begun. The life-time extension will be ultimately granted by the Bulgarian Nuclear Regulation Agency based on the modernization and survey procedure that is being undertaken by the consortium of Russian Rosenergoatom and French EDF ("Bulgaria's NPP Kozloduy Moves"). These units are licensed to 2017 and 2019 respectively and since there are no concerns regarding their safety, it is planned to extend the licenses beyond 2030. Tab. 4.2.4: Nuclear Units in Bulgaria Reactor In Operation from Type Power output Status End of life-cycle Kozloduy 1 1974 VVER-440 405 MWe Shutdown - Kozloduy 2 1975 VVER-440 405 MWe Shutdown - Kozloduy 3 1980 VVER-440 405 MWe Shutdown - Kozloduy 4 1982 VVER-440 405 MWe Shutdown - Kozloduy 5 1987 WER-1000 953 MWe Operating 2017" Kozloduy 6 1991 WER-1000 953 MWe Operating 2019" Source: World Nuclear Association, 2014b 4.2.5 The Back End of the Nuclear Fuel Cycle The state-owned enterprise SE — RAW is responsible for dealing with nuclear waste. The way how the used fuel is treated in Bulgaria does not differ from how it is usually treated in other countries with nuclear production capacity. Initially, the used fuel is stored in cooling pools in reactors and in pool-type cooling facility in the area of the plant that was constructed in 2001 by German companies Nukem Technologies and GNS (World Nuclear Association, 2014b). A dry storage area for casks containing used fuel assemblies (i.e. fuel that already underwent initial cooling after being removed from the reactor) was opened near the Kozloduy site in 201113. An intention to build a disposal facility for low-level and intermediate-level waste to extend the capacity of storage at the Kozloduy NPP was announced in 2005. An area near the Kozloduy was selected for this project, which is currently in the stage of planning and designing. This facility is planned to accept nuclear waste worth of 60 years of nuclear plants' life-cycle and to be able to store it for about 300 years. The overall costs of the project are estimated to be around EUR 120 million. Used nuclear fuel is also sent back to Russia for reprocessing under terms of the agreement from 2002. The price per one tonne is set at USD 620,000 (World Nuclear Association, 2014b.). 11 It will be most probably prolonged by 10 or 20 years. 12 This construction was financed from the same source as is the project on decommissioning the closed 4 reactors - European Bank for Reconstruction and Development. The decommissioning and nuclear waste treatment is also partially paid from the governmental funds financed from energy taxes. The Kozloduy NPP also participates on this fund (World Nuclear Association, 2014b.). 13 This project will also be financed by the European Bank for Reconstruction and Development (World Nuclear Association, 2014b.). Sector of Nuclear Energy in Central and Eastern Europe 99 Tab. 4.2.5: Bulgarian Nuclear Sector Examination Indicator Description Is there nuclear producing capacity present in the country? Yes, Kozloduy 5 & 6 operating at the Kozloduy NPP site (VVER-1000/V-320 design, 2 units of 953 MWe each). Is there a project to expand the capacity? What is the status of the project? Yes, cooperation agreement between Kozloduy NPP New Build and Westinghouse Electric Company LLC was signed in 2014. The financing is yet to be secured. How was the project procured? By lengthy and turbulent procurement procedure. Allegations of non-transparency and corruption emerged. Who is the contractor in charge of the project? Westinghouse Electric Company LLC How is the financing secured? Not clear yet. Should be secured by both parties (Westinghouse Electric Company LLC and Bulgarian Energy Holding state-owned company) Who is the operator of the facility? Bulgaria's National Electricity Company (NEK) Are there enough home-based experts to run the facility safely? Yes Who is/will be in charge of decommissioning? The State Enterprise Radioactive Wastes (SE-RAW) Who provides nuclear fuel and under what conditions? Russia's OAO TVEL through OAO Techsnabexport (Tenex) What is the experience with the fuel being currently used? Is there any rationale or path-dependency behind the current contract? No operational issues; path dependency rationale found in nuclear fuel supply from Russian companies Is there any part of nuclear fuel industry present in the country? If so, how it contributes to country's nuclear fuel cycle? No part of the fuel producing cycle is present on Bulgarian soil. How is used fuel treated and who is in charge of this? Standard procedure of waste management. Used fuel stored initially in pool-type facility and in dry casks storage. Used fuel is being sent for reprocessing to Russia under the agreement from 2002 for USD 620,000 per tonne. 100 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises 4.2.6 Summary Bulgarian energy sector has several issues to deal with in foreseeable future. First, it is the high vulnerability of the sector caused by almost 100% one-sided dependency on Russia in terms of oil and gas imports. This issue proved to be especially pressing in 2009 gas crisis, but unfortunately, little has been done to change it since then. Despite the country's relative importance as important regional transit country, the country remains to be potentially endangered if any supply cuts or disruptions occur. The overarching issue of the whole Bulgarian energy sector is a gross underinvestment. This applies to practically all parts of the sector regardless energy source. Solid fuels and nuclear energy play important role in both, total primary energy supply of and in electricity generation of Bulgaria. The two nuclear units in Kozloduy along with three major coal fired power plants account for almost two thirds of total electricity generation capacity. As the coal fired power plants are getting old and will probably have serious issues in complying with environmental norms, the nuclear power generating capacity will play ever-greater role even though its future is still unclear due to unresolved financing of planned units. The price of the project and overall economical feasibility contribute to overall uncertainty. In nuclear sector, it is again rather the financing that poses the greatest threat than any inner or outer political pressure. Despite the fact that the whole nuclear sector relies on Russian technologies and fuel supplies, we can hardly state that this may lead to jeopardizing country's energy security. In fuel supply, the current contract with Russian side can be replaced by an agreement with different supplier, although this may come at Sector of Nuclear Energy in Central and Eastern Europe 101 102 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises higher price. Similarly, the nuclear waste treatment does not pose a threat since only a part of the nuclear waste is sent back to Russia, and additionally, Bulgaria has or plans to build capacities to store the used fuel. Since sober plans to extend nuclear producing capacity count with building only single unit at the Kozloduy NPP, the current repositories will be most probably able to handle this task for years to come even though the final deep geological repository has not been built yet. Bulgaria may serve as a good example illustrating the risks in the nuclear plant life-cycle that were identified in the general part of this study. This case proves that the most sensitive part of the whole endeavor is financing and economic feasibility, as these were the principal reasons for several postponements in Kozloduy NPP extension and Belene NPP construction. Despite the fact that the contract for constructing new nuclear reactor was finally agreed, the financing is still unsolved. Apart from the financial part itself, corruption as a related issue undermines the development in the sector. Rumors related to the procurement procedure of both planned projects (Kozloduy NPP 8c Belene NPP) seriously harm the investment environment and aggravate the state of Bulgarian energy sector often seems to reach a dead end in terms of future development. 4.2.7 Sources A3C Ko3AOAyn onpoBeprAa cooGltjchiih o noAnjicaroiH TonAiiBHoro KOHTpaicra c Westinghouse. (2014, September 17). Russian Association for Atomic Energy. Retrieved February 10,2015, from http: //www. at omi c- en ergy. ru/news/2014/09/17/51533 Bivol, A. (2010). Bulgaria Finance Minister rejects Russian loan for Belene nuke. The Sofia Echo. Retrieved February 10, 2015, from http://sofiaecho.com/ Bulgaria considers re-opening of uranium mines. (2006, May 206). Sofia Echo. Retrieved February 10,2015, from http://sofiaecho.com/2006/05/26/639097_bulgaria-considers-re- opening-of-uranium-mines Bulgaria Exports 1/5 of its Electricity Production. (2014, September 12). Novinite. Retrieved February 10, 2015, from http://www.novinite.com/articles/163326/Bulgaria+Exports+l+5+of +its+Electricity+Production Bulgaria Kozloduy asks IAEA to check nuclear fuel. (2008, July 17). Reuters. Retrieved February 10,2015, from http://www.reuters.com/article/2008/07/17/idUSL17799802 Bulgaria to Sue Russia in Geneva over Belene Project. (2011, August 4). Novinite.com. Retrieved February 10,2015, from http://www.novinite.com/articles/130838/Bulgaria+to+Sue+Russia+i n+Geneva+over+Belene+Project Bulgaria's NPP Kozloduy Moves to Extend Reactor Life by 20 Years. (2012, April 20). Novinite.com. Retrieved February 10,2015, from http://www.novinite.com/arti cles/138682/Bulgaria%27s+NPP+Kozl oduy+Moves+to+Extend+Reactor+Life+by+20+Years#sthash.nwPW Euq4.dpuf Bulgaria picks Westinghouse. (2012, August 27). Reuters. Retrieved February 10,2015, from Sector of Nuclear Energy in Central and Eastern Europe 103 104 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises http://www.reuters.com/article/2012/08/27/bulgaria-nuclear- kozloduy-idUSL5E8JR68820120827 Bulgaria Quits Belene Nuclear Power Plant Project. (2012, March28). Novinite.com. Retrieved February 10,2015, from http://www.novinite.com/articles/137961/Bulgaria+Quits+Belene+ Nuclear+Power+Plant+Project Center for the Study of Democracy (CSD). (2014). Energy Sector Governance and Energy (IN)Security in Bulgaria. Center for the Study of Democracy, Sofia, 2014. Commission wants EU capital for new Bulgarian nuclear plant. (2010, March 3). EurActiv. Retrieved February 10,2015, from http://www.euractiv.com/energy/commission-wants-eu-capitals- new-bulgarian-nuclear-plant-news-300969 Energy Delta Institute, (n.d.). Bulgaria. Retrieved February 10,2015, from http://www.energydelta.org/mainmenu/energy- knowledge/country-gas-profiles/bulgaria#t573 89 Euracoal. (n.d.). Country Profiles — Bulgaria. Retrieved February 10, 2015, from http://www.euracoal.org/pages/layoutlsp.php?idpage=69 European Commission — Energy, (n.d.). Bulgaria. Retrieved February 10,2015, from http://ec.europa.eu/energy/gas_electricity/doc/bg_energy_market_2 011_en.pdf Global Energy Observatory. (2014). Current List of Coal Poiverplants. Retrieved February 10,2015, from http://globalenergyobservatory.org/list. php?db=PowerPlants&type= Coal International Atomic Energy Agency. (2005). Country Nuclear Power Profiles — Bulgaria. International Atomic Energy Agency. Retrieved February 10,2015, from http://www-pub.iaea.org/MTCD/publications/PDF/TRS425_web.pdf International Atomic Energy Agency. (2013). Country Nuclear Power Profiles — Bulgaria. International Atomic Energy Agency. Retrieved February 10,2015, from http://www- pub.iaea.org/MTCD/publications/PDF/CNPP2013_CD/countrypr ofiles/Bulgaria/Bulgaria.htm#Footnotel International Renewable Energy Agency (IRENA). (2011). Renewable energy country prof He: Bulgaria. Retrieved February 10,2015, from http://www.irena.org/REmaps/countryprofiles/Europe/Bulgaria.pdf #zoom=75 Lazarova, B. (2006). ypameomo npouseodcmeo e EiAzapm. Darik News. Retrieved February 10,2015, from http://dari knews.bg/view_arti cle.php?article_id=98295 Nitzov, B. et al. (2010). The Energy Sector of Bulgaria. The Atlantic Council. Retrieved February 10, 2015, from http://www.atlanticcouncil.Org/images/files/publication_pdfs/403/B ulgariaEnergy_ECIssueBrief.pdf Russia Offers Bulgaria 14th Extension of Belene Nuclear Plant Contract. (2011, August 11). Novinite.com. Retrieved February 10, 2015, from http://www.novinite.com/articles/131037/Russia+Offers+Bulgaria+l 4th+Extension+of+Belene+Nuclear+Plant+Contract Vlcek,T. 8cjirusek, M. (2015). Risk Assessment in Construction Process in Nuclear Sector within the Central and Eastern Europe. InternationalJournal of Energy Economics and Policy, 5(2), p. 482-493. Retrieved March 20,2015 from http://www.econjournals.com/index.php/ijeep/article/viewFile/1135 /654 Westinghouse moves forward with Kozloduy (2014, August 1). World Nuclear News. Retrieved February 10,2015, from http://www.world-nuclear-news.org/NN-Westinghouse-moves-forward-with-Kozloduy-7-01081401.html Sector of Nuclear Energy in Central and Eastern Europe 105 106 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Wise Uranium Project. (2014). New Uranium Mining Projects — Europe. Retrieved February 10,2015, from http://www.wise- uranium.org/upeur.html World Nuclear Association - Weekly Digest. (2012). World Nuclear Association. Retrieved February 10,2015, from http://www.world- nuclear.org/WNA/Publications/Weekly-Digest/Archive/Archive- 2012/ World Nuclear Association. (2014b). Nuclear Power in Bulgaria. Retrieved February 10,2015, from http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/Bulgaria/ 4.3 Country Case Study: Czech Republic Tomáš Vlček 4.3.1 Introduction The Czech Republic is a country that emerged in modern history as an independent state (Czechoslovakia) after the WWI after 400 years of existence under the Habsburg Monarchy. The so called First Republic was occupied by Germany during the WWII and was integrated to the USSR as the Czechoslovak Socialistic Republic between 1948 and 1989. The communist regime collapsed during the Velvet Revolution in 1989 and democratic parliamentary Czechoslovak republic was formed. On January 1, 1993, the country was eventually peacefully dissolved into Czech and Slovak Republic. The country entered the EU in 2004 and is also a member of the UN, NATO, the OECD, the OSCE, the IAEA and IEA, the Council of Europe and many other international institutions. The country's modern political history contains one specific feature — relatively unstable governments due to periodical affairs and scandals of public officials. Therefore, also the citizens' trust in politics and politicians is low. The Czech Republic is almost fully dependent on imports of hydrocarbons. The country imports approximately 98 % of its crude oil consumption, and approximately 2/3 of the demand is imported from the Russian Federation via the Druzhba pipeline. The rest is imported from other production countries including Azerbaijan, Algeria, Kazakhstan, Norway, Nigeria, Libya and others, as the country has diversified routes of crude oil imports via the IKL and TAL oil pipelines. There are two Sector of Nuclear Energy in Central and Eastern Europe 107 108 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises processing companies in the Czech Republic - Česká rafinérská and Paramo. Each is divided into two more refining plants that make up the four refining plants in the Czech Republic (Litvinov, Kralupy nad Vltavou, Pardubice and Kolin; only the first two refine crude oil). The total primary distillation capacity is 9.7 Mt/y (OECD &IEA, 2014, p. 132). The majority owner of the refinery segment in the Czech Republic is the Polish company Polski Koncern Naftowy (PKN) Orlen SA. As the demand is higher than the refining capacity in the country, another approximately 15 % of the total petroleum consumption is imported directly in petroleum products. Speaking about natural gas, the Czech Republic imports approximately 98 % of its consumption from two main sources based on long-term contracts with OOO Gazprom Export, the supplier of Russian gas, until 2035 and with a consortium of Norwegian producers1 until 20172. The proportional share between these sources is approximately 2:1. Table 4.3.1 shows 111% imports of gas in 2011; this is due to the fact that some gas is imported to be stored in the country's vast underground natural gas storages. The gas industry has recently finished projects to expand the gas storage; the capacity at three of the country's eight underground storage sites has been raised to a total of 3.5 bcm. When completely full, the storage is able to supply peak demand for approximately 50 days (see OECD & IEA, 2014, p. 370-371). Natural gas is also transported via the Transgas and Gazelle pipelines through the Czech Republic to Germany. 1 ExxonMobil Production Norway Inc., Statoil Hydro ASA, Norské ConocoPhillips AS, TOTAL E&P NORGE AS, ENI Norge AS 2 The contracts with companies that own the parts of the German gas network used for gas transport to the Czech Republic are also necessary. These companies include ONTRAS - VNG Gastransport GmbH and Wintershall AG. Tab. 4.3.1: Key Energy Statistics Source Consumption Imports TPES share Electricity Generation share Crude Oil 9.81 Mt 98% 17.1%* 0.1% Natural Gas 8.41 bcm 111% 15.8% 1.3% Coal (all types) 52.3 Mt 6% 42.7% 57.1% RES - - 7.5%** 9.2% Nuclear Energy - - 17.2% 32.3% * Oil products imports add another 3.1% of TPES share ** Biofuels and waste stand for 6.5% of TPES share and 3.2% of Electricity Generation share Note: 2011 data Source: U.S. Energy Information Administration; International Energy Agency; OECD & IEA, 2013; compiled and calculated byT.VIcek The Czech Republic produced 87.56 TWh of electricity in 2011, of which 17 TWh exported. The Czech Republic is an important exporter of electricity in Central Europe; the average value of electricity export equals 14.9 TWh (Energeticky regulacni urad, 2012, p. 11-12; Energeticky regulacni urad, 2014, p. 13). The company ČEZ, a.s. operates 15,193 MWe of installed capacity in the country (72% of the total installed capacity) and produced 69.21 TWh of electricity in 2011 (79% of the total Czech production), which makes it sovereign on the market. The company is owned by the Ministry of Finance of the Czech Republic (69.78%), ČEZ, a.s. (0.72%), other legal entities (22.20%) and other private entities (7.3%) in 2013 (ČEZ, a.s.). As seen in Table 4.3.2, coal fired power plants are the crucial part of the electricity generation in the Czech Republic as they provide 10,819 MWe of installed capacity, which makes up 51.3 Sector of Nuclear Energy in Central and Eastern Europe 109 % of the energy mix. Thermal power plants (powered by brown coal, bituminous coal and biomass) in the Czech Republic provided 44,737 GWh of electricity in 2013, which is 51.4 % of the total gross electricity produced (Energeticky regulacni urad, 2014, p. 4,11). Tab. 4.3.2: Installed Capacity in the Czech Electricity Grid on 31 December 2013 Type of Power Station Installed Capacity (MWe) Percentage (%) Thermal Power Station 10,819 51.3 Gas Combined Cycle Power Station 518 2.5 Gas Fired Power Station 820 3.9 Hydroelectricity 1,083 5.1 Pumped-storage Hydroelectricity 1,147 5.4 Nuclear Power Station 4,290 20.4 Wind Power 270 1.3 Solar Power 2,132 10.1 Total 21,079 100 Source: Energeticky regulacni urad, 2014, p. 11. The following Table 4.3.3 shows all the 150+ MWe power plants in the Czech Republic including life expectancy as one of the most crucial aspect of the Czech coal industry. As seen in the chart, the life expectancy of the power plants is rather short and the end of electricity production from coal will have two peaks. The first peak is likely to occur around the year 2025, and the second around the year 2040. no Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Tab. 4.3.3:150+ MWe Coal Fired Power Plants in the Czech Republic Power Plánt Owner Installed Capacity Connected to the Grid Fired on Life Expectancy* Dětmarovice ČEZ, a. s. 800 MWe 1975-1976 Bituminous coal 2020-2030 Chvaletice Severní energetická a.s. 800 MWe 1977-1978 Brown coal 2020-2029 Kladno Alpiq Generation (CZ), s. r. o. 299.1 Mwe 1976,1999 Bituminous coal, brown coal 2045-2050 Komořany United Energy pravni nástupce, a. s. 239 Mwe 1959,1978, 1986,1994, 1997,1998 Brown coal** 2025 Ledvice II ČEZ, a. s. 220 MWe 1966-1968 Brown coal 2015 Ledvice III ČEZ, a. s. 110 MWe 1998 Brown coal 2040-2055 Ledvice IV ČEZ, a. s. 660 MWe 2014-2015 Brown coal 2055 Mělník (II) ČEZ, a. s. 220 MWe 1971 Brown coal 2015-2020 Mělník (III) ČEZ, a. s. 500 MWe 1981 Brown coal 2015-2020 Mělník (I) Energotrans, a. s. 352 MWe 1961,1994-1995 Brown coal ? Opatovice Elektrárny Opatovice, a. s. 378 MWe 1979,1987, 1995-1997 Brown coal 2020-2030 Počerady ČEZ, a. s. 1,000 MWe 1970-1977 Brown coal 2029+ Poříčí ČEZ, a. s. 165 MWe 1957 Brown coal, bituminous coal** ? Prunéřov II ČEZ, a. s. 1,050 MWe 1981 -1982 Brown coal 2015-2023 (2040***) Prunéřov I ČEZ, a. s. 440 MWe 1967-1968 Brown coal 2015-2023 (2040***) Tisová I ČEZ, a. s. 183.8 MWe 1959-1961 Brown coal 2020+ Tisová II ČEZ, a. s. 112 MWe 1959-1961 Brown coal ** 2020+ Sector of Nuclear Energy in Central and Eastern Europe 111 112 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Třebovice Dalkia Česká Republika, a. s. 174 MWe 1961,1998 Bituminous coal, light fuel oil 2015-2020 Tušimice II ČEZ,a.s. 800 MWe 1974- 1975 Brown coal 2035 * According to public open sources. **The Komorany power plant is also partially ?red on natural gas. One 55 MW block of the Poŕíčí power plant and one 57 MW block of the Tisová power plant employ biomass combustion. *** After completion of the modernization process that is due in 2015. Source: Energeticky regulační urad, 2010, p. 88,92; Energeticky regulační urad, 2012, p. 24. Livelong expectancy and overall adjustments byT. Vlcek. Source: Energeticky regulační urad, 2010, p. 88, 92; Energeticky regulační urad, 2012, p. 24. Livelong expectancy and overall adjustments byT. Vlcek. Going further in detail, we need to distinguish between brown coal and bituminous coal, as these are two separate markets in the Czech Republic. At this moment, the bituminous coal sector is very negatively affected by the world market. The low prices of (especially quality bituminous) coal mean low profit from the mining. The bituminous coal mining is much more costly compared to brown coal mining. The bituminous coal in the Czech Republic is mined in deep underground shafts in Silesian region unlike the brown coal that is mined in large open pits in northern Bohemia. The fluctuations in price is thus more effective on bituminous coal production that on brown coal production. The negative effects are rather limited also thanks to the character of use of the bituminous coal. Only approximately, a half of the mined coal is used for energy production. This coal is used in the only bituminous coal power plant (800 MWe Detmarovice) and only a few bituminous coal cogeneration units (28 MWe Kladno I-B3 and 174 MWe Tfebovice). The current domestic bituminous coal production covers the demand of these facilities taking their life expectancy into account. The rest of the mined coal is high quality coal intended and used for metallurgical coke production. The mine with highest life expectancy is the CSM mine that produces coal for energy production. Currently, it is relatively easier to find client for this product than for metallurgical coke. The economic slowdown of recent years led to lower demand for metallurgical coke by the steel industry. Speaking about the brown coal sub-sector, the life expectancy of exploitable reserves covers the two above mentioned power plant life expectancy peaks, i.e. the current electricity production from coal until the end of the production. The market subjects of the brown coal industry in the Czech Republic behave rather in comparative mood. On a background of the end of the coal industry itself (according to the territorial ecological limits3) they make efforts to maximize their profits by coupling the coal production with the coal use. Mining companies buy coal fired electricity or heat power plants and the operators of such power plants are trying to buy their own mines or to secure long-term contracts. Both sides act to maximize their profits in the last years or decades of life of the coal sector. The nuclear energy sector is analyzed further in the text and is the second most important source of electricity. There are two 3 Territorial Ecological Limits on Brown Coal Mining guided by the Government's Resolution No. 444/1991 on territorial ecological limits on brown coal mining in the North Bohemian Basin of October 30, 199L This resolution specified the final lines of mining and landfill in the mines Merkur, Březno, Libouš, Sverma, Vršany, ČSA, Ležáky, Bílina and Chabařovice and in Růžodolská and Radovesická landfills as well as the limit values of air pollution in basins in the regions Chomutov, Most, Teplice, Ústí nad Labem and Louny (Vláda Ceske republiky, 1991) The idea behind these limits was to provide the regions with some sort of government's guarantee that the city environment would not go worse and provide the inhabitants a stable ground for local investments, reconstructions, etc. The topic of territorial ecological limits on brown coal mining has been making its appearance on the political scene for years now Sector of Nuclear Energy in Central and Eastern Europe 113 114 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises nuclear power plants in the country, the Dukovany NPP with four Russian design 510 MWe WER-440/V-213 units and the Temelin NPP with two Russian design WER-1000/V-320 units (lx 1,078 MWe and lx 1,056 MWe). Thanks to the modernization of the technical part of nuclear blocks, the power plants as of December 31, 2012, reached 4,404 MWe of installed electrical capacity and, therefore, made a 19.7% electricity generation share. The development of nuclear energy as the least bad of bad alternatives takes place on the background of the end of the coal industry itself (according to the territorial ecological limits), which is the key electricity producer in the Czech Republic. To cover the loss of the electricity generation capacities in coal, the country aims at developing the nuclear energy as a capable, stable and cumulative source of electricity. 4.3.2 New Units and Financing of the Nuclear Power Plant The plan to expand the nuclear capacity exists since the 2004 State Energy Policy was presented. On August 3, 2009, CEZ, a.s. released the announcement about opening a call to tender for two new nuclear blocks for the Temeiin nuclear power plant. To some extent it was based on the investment plan for the construction of the Temeiin power plant with 4 x 1,000 MWe of installed capacity, adopted in February 1979, replicating the construction site itself and some already existing auxiliary systems. In the procurement procedure for the Temeiin NPP project and construction (i.e. turnkey power plant) it took 3 years to prepare the documentation specifying the conditions of the project and was created by group of several tens of experts. Ultimately this documentation comprised of more than 6,000 pages employing over 11,000 criteria to be met by the bidders in order to succeed in the procedure. In return each bidder provided the Czech side with documentation exceeding 10,000 pages each (Horacek 8c Topic, 2012; interview with a responsible Czech MFA official). Three entities applied to the tender in July 2012. It was a Consortium of the companies SKODA JS, a. s., from the Czech Republic, Atomstrojexport, a. s., from the Russian Federation (a daughter company of the Russian company ZAO Atomstroyexport4) and OKB Gidropress, a. s.5 from the Russian Federation, offering the project MIR 1200 (Modernized International Reactor) with 1,198 MWe of capacity6. The French company Areva SA7 offered the EPR™ (European Pressurized Reactor) with 1,700 MWe of capacity and finally, the American Westinghouse Electric Company, LLC8, offering the project AP1000 with 1,200 MWe of 4 3AO ATOMCTpoiisKcnopT is the leading Russian organization building nuclear power plants abroad and accordingly engaged in their modernization. It is supervised by the Federal Agency for Nuclear Energy, Rosatom ( Oryol /«fei Source:„Sa/f/c or Visaginas", 2014 The greatest rival to the Visaginas NPP is the Russian project of construction of Neman NPP in the Russian exclave Kaliningrad. The idea came up several times in 1990s with lack of interest from Kaliningrad's authorities. After a new pro-Putin governor of Kaliningrad entered his office in 2005, the political environment and interest in Neman NPP changed. In 2008, JSC Inter RAO UES, where the Rosatom State Atomic Energy Corporation indirectly owns 13.42% stake2, eventually presented a proposal to construct a NPP in Kaliningrad. Two units of WER-1000 were originally intended to be constructed at Neman, but later enhanced to two WER-1200/V-491 units. The design is the common project of OKB "Gidropress" and JSC "Atomenergoproekt" with the scientific supervision of Kurchatov Institute from Moscow (Jesien 8cTolak, 2013, p. 5). It is important to stress that the Neman NPP has been promoted not as a source of electricity for Kaliningrad area, but since the beginning as a source of electricity to be exported to foreign countries, namely Germany, Poland and the Baltic countries. Even though the construction started in February 2010, a search for Strategic Investor was not finished and took place at the same time. The logic was to sell 49% of the Neman NPP to foreign investor, while the control share of 51% would remain in the hands of Russian Federation3. The original plan was to start commercial operations in 2017 (Unit 1) and 2018 (Unit 2). JSC InterRAO UES was responsible for soliciting investment and also for electricity sales but as there are two more NPP projects in the region and basically all of the regional 2 See Moldova Case Study for information on equity shareholders. 3 Using money directly from Rosatom as well as from funding from the state budget and loans from Russian banks (see Menkiszak, 2013). 181 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 182 countries had some common history with Russia or Kaliningrad, no investors and no electricity sales were secured in the end, even though Germany and Poland supposedly participated in negotiations with JSC InterRAO UES. Eventually, in May 2013, Rosatom decided to revise its plans to build the Neman NPP and will consider building small- (40 MWe) and medium-sized (640 MWe) reactors instead (Menkiszak, 2013). There are probably several reasons reasons for this decision: no cooperation or support from regional countries, the inability to attract foreign investors, the inability to close contracts for electricity sales, the imminent overcapacity in the region, and also the electricity systems issue. If these problems will not be resolved, Russia will not resume the construction of Neman NPP. Speaking about the electricity systems issue, the electricity systems of Baltic States operate on the grid of Belarus, Russia, Estonia, Latvia and Lithuania (BRELL), which is a part of IPS/UPS system controlled by Moscow (Grigas, 2013, p. 79-80; Usanov 8c Kharin, 2014, p. 10). It would be therefore easy to supply electricity in the region after the construction of Neman NPP and this is the main reason why no Baltic country is interested in the Neman NPP project. It would also block the plans for development of electricity interconnectors and synchronizing the grid with the European ENTSO-E. The avoidance of physical dependence on BRELL electricity is among the key targets of Baltic countries nowadays. Besides the new EstLink4 and EstLink 25 interconnectors, two new electricity interconnectors are being constructed (see Table 4.7.6) to further develop the grid and the connections to ENTSO-E grid. The three Baltic States have already agreed to break up the BRELL and de-synchronize from the IPS/UPS system by 2020 (Menkiszak, 2013). Tab. 4.7.6: Planned Electricity Interconnectors in the Baltic Region Interconnector Voltage Capacity In operation date LitPol (Alytus, LT - Etk, PL) 330/400 kV 1,000 MWe 12/2015 NordBalt (Klaipeda, LT - Nybro, SWE) 330/400 kV 700 MWe 12/2015 Source: compiled byT. Vlcekfrom open sources Source: compiled byT. Vlcekfrom open sources Unfortunately, the de-synchronization would leave Kaliningrad without a connection to the rest of Russia and make it an energy island dependent on its own production of electricity. Moreover, the options of securing electricity supplies are being seriously considered by Russian government, including mentioned small- to medium-sized reactors, electricity link between Kaliningrad and Poland, or integration of Kaliningrad into the ENTSO-E together with the Baltic States. When we add the current very bad relations between the EU and Russia, Kaliningrad's future as an energy island looks like a predetermined outcome (Usanov 8c Kharin, 2014, p. 10-11; Jesien ScTolak, 2013, p. 4-5; Menkiszak, 2013). 4 From Harku, EST to Espoo, FIN; 330/400 kV; 350 MWe capacity, in operation from 12/2006. 5 From Piissi, EST over Nikuviken, FIN to Anttila, FIN; 330/400 kV; 650 MWe capacity, in operation from 3/2014. 183 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 184 4.7.3 The Front End of the Nuclear Fuel Cycle As there are no Uranium deposits, and no production, processing and/or fabrication capabilities in Lithuania, no Front End information can be presented. 4.7.4 The Service Part of the Nuclear Fuel Cycle As stated above, Lithuania operated two units of a RBMK reactor at Ignalina NPP until their shutdown in 2004 and 2009. The idea of construction of the Ignalina NPP emerged during the era of nuclear industry boom in 1970s. The power plant was built as a part of the Soviet Union's North-West Unified Power System rather than to meet Lithuania's needs (Cesna, 2004, p. 159). The first unit was commissioned in 1983, the second in 1987. Tab. 4.7.7: Nuclear Units in Lithuania Reactor Type Power Output Status End of life-cycle Ignalina 1 RBMK-1500 1,300 MWe* Decommissioning 2004 Ignalina 2 RBMK-1500 1,300 MWe* Decommissioning 2009 Visaginas 1 ABWR 1,350 MWe Planned - * Originally 1,500 MWe, but the reactors were de-rated to 1,300 MWe after the 1986 Chernobyl accident as they were of the same type. Construction of Ignalina 3 commenced in 1985 but was suspended after the accident, and the unit was later demolished. Source: compiled byT. Vlcek from open sources. After Lithuania declared independence in 1990, the Ignalina NPP was still guarded by Soviet troops and KGB operatives, and remained under the jurisdiction of the Soviet Union until the August of 1991 (Cesna, 2004, p. 159). Today, the Ignalina NPP is regulated and supervised by Lithuanian State nuclear power safety inspectorate (VATESI). Even though the plant's operators are ethnic Russians, most have agreed to stay on and become Lithuanian citizens (Pacific Northwest National Laboratory, n.d.). This does not mean that Lithuania does not have enough home-based experts to run the power plant. On the contrary, Lithuania established a complex system of education of nuclear energy engineers at Kaunas University of Technology and is able to secure its own operating personnel (Ziedelis, Gylys, Gediminskas 8c Brandisauskas, 2014). The power plant was inherited from the former Soviet Union with a rather low level of safety culture and even though a lot has been done to enhance safety and security standards, this was the reason why Lithuania had to close the power plant's Unit 1 upon joining the EU in 2004 and the second Unit until 2009 as a safety precaution. Lithuania was dependent solely on Russia in terms of the fuel supplies for Ignalina NPP. As the RBMK reactor design has been invented and developed in Russia and no other country in the world operates these reactors today, Russian company TVEL is the only supplier of nuclear fuel to RBMK nuclear reactors. According to A. Ozharovsky, M. Kaminskaya and C. Digges, the only player on this fuel market - Rosatom -also holds the prerogative to set its pricing policy. Additionally, for all kinds of planned repairs, upgrades, and procedures requiring the replacement of the facility's equipment and materials, Lithuania, again, have had to depend on Rosatom's enterprises. In return for the fuel supplies and services, Lithuania was expected to pay, partly, in power supplies, including the supplies to Russia's Kaliningrad Region (Ozharovsky, Kaminskaya 8c Digges, 2010). 185 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Tab. 4.7.8: The RBMK Reactor Scheme Steam Separator Control Rods Graphite Moderate!' Pump Source: Hong Kong Nuclear Investment Co. Ltd. The RBMK is a light-water, graphite-moderated reactor designed by the Soviet Union and currently, all the 11 remaining RBMK operating reactors in the world are in Russia. The shutdown of the last one is planned for 2026. It is a pressurized water-cooled reactor with individual fuel channels using only slightly-enriched uranium oxide as fuel and graphite as its moderator. The RBMK design allows fuel replenishment while the reactor is in operation. The reactor is very different from most of the other power reactor designs as it is derived from a design intended principally for plutonium production and was used in Russia for both plutonium and power production (WNA, 2010). The RBMK design contains no protective shell, i.e. containment structure which is one of the very basic passive safety measures of nuclear reactors. Sector of Nuclear Energy in Central and Eastern Europe 186 Lithuania, forced to shut down the reactors, received assistance for this commitment from EU funds. Out of the total decommissioning costs of €2.8 billion, the EU has committed €1.37 billion up to the end of 2013 ("EU freezes Lithuanian", 2012). The end stage of the decommissioning process is expected by 2038. The decommissioning process is coordinated by the Ministry of Energy of the Republic of Lithuania. 4.7.5 The Back End of the Nuclear Fuel Cycle Originally spent nuclear fuel from Ignalina was to be managed by USSR. However, with the disintegration of the Soviet Union, Lithuania was obliged to find other solutions. Therefore, Lithuania now runs facilities for disposal of low, intermediate and high radioactive waste. The Ministry of Economy of Lithuania established state enterprise Radioactive Waste Management Agency (Radioaktyviuji] atliekii tvarkymo agentura, RATA) in July 2001 to assume the responsibility for the safe management and final disposal of all radioactive waste. The used fuel was cooled and stored in special storage pools constructed near the reactor premises. But as it is a temporary method, it was decided to construct dry storage at Druksiniai at the Ignalina NPP site, approximately 1 km from the reactors. The storage facility was commenced in 1999 and up to 80 casks will be stored here for 50 years. However, the existing dry storage facility has been totally filled and the left spent fuel is still stored in the Unit 2 reactor and storage pools of both units until the new interim storage facility (ISFSF) will be constructed. The new ISFSF will be commissioned at Druksiniai in early 2017. The total storage capacity will be about 17,000 fuel assemblies (190 casks). The construction was 187 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 188 financed from the Ignalina International Decommissioning Support Fund (IIDSF) administered by the European Bank for Reconstruction and Development (EBRD) and the constructor was German Consortium NUKEM Technologies GmbH and GNS Gesellschaft für Nuklear-Service mbH (Ignalinos atomine elektrine). NUKEM Technologies GmbH has been owned by the Russian AtomStroyExport since 2009, and GNS is a joint venture of E.ON, RWE, EnBW and Vattenfall. The construction works are performed by the Lithuanian subcontractor Vetrüna UAB. There is also the closed Maisiagala Radioactive Waste Storage Facility in Lithuania for radioactive waste generated in industry, medicine, scientific research etc. and Lithuania also plans its final underground repository. Location in the crystalline rocks in southern Lithuania is being developed with the assistance of Swedish experts. The project is in its very beginning. Tab. 4.7.9: Lithuanian Nuclear Sector Examination Indicator Description Is there nuclear producing capacity present in the country? Not anymore, the Ignalina NPP (RBMK design, 2 Units of 1,300 MWe each) was shut down in 2009 Is there a project to expand the capacity? What is the status of the project? Yes, the project is in pre-construction period (licensing, project company establishment, plant designing etc.), construction start is expected in 2015, financing is basically resolved How was the project procured? Openly, without Russian bid; Rosatom has been competing through Neman NPP in Kaliningrad and Ostrovets NPP in Belarus Who is the contractor in charge of the project? VAE Project Company (20% Hitachi-GE Nuclear Energy, Ltd.; 20% Latvia; 22% Estonia; and 38% Lithuania) How is the financing secured? The shareholders will finance the construction according to their shares together with Strategic Investor Hitachi-GE Nuclear Energy, Ltd. (80.01% Hitachi Ltd.; 19.99% General Electric Company) Who is the operator of the facility? VAE Project Company (20% Hitachi-GE Nuclear Energy, Ltd.; 20% Latvia; 22% Estonia; and 38% Lithuania) Are there enough home-based experts to run the facility safely? Yes Who is/will be in charge of decommissioning? Russian TVEL was supplying fuel to the Ignalina NPP as the only supplier in the world for the RBMK reactors; BWR fuel fabrication takes place in much the same way as PWRfuel, therefore many subjects can supply fuel for the Visaginas NPP What is the experience with the fuel being currently used? Is there any rationale or path-dependency behind the current contract? The Ignalina NPP is shutdown and the potential Visaginas NPP is of different type with different technical aspects of fuel demand, the path-dependency is thus impossible Is there any part of nuclear fuel industry present in the country? If so, how it contributes to country's nuclear fuel cycle? Lithuania has limited capacities only in the Back End of the Nuclear Fuel Cycle that has to be developed How is used fuel treated and who is in charge of this? 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(2013, August 8). Nuclear plant near Kaliningrad — bad story that must be ended immediately. Nuclear Heritage Network. Retrieved April 25,2015 from http://www.nuclear-heritage.net/index.php/Nuclear_plant_near_Kaliningrad_%E2%80 %93_bad_story_that_must_be_ended_immediately Socor, V. (2011, July 19). Lithuania Chooses Hitachi-General Electric to Build Visaginas Nuclear Plant. Eurasia Daily Monitor. c?(138). Retrieved April 25,2015 from http://www.jamestown.org/single/?tx_ttnews[tt_news]=381948cno_ cache=l State Nuclear Power Safety Inspectorate. (2012). Nuclear Power Safety In Lithuania. Vilnius: State Nuclear Power Safety Inspectorate. Retrieved April 25,2015 from http://www.vatesi.lt/fileadmin/documents/Ataskaitos/VATESI_EN _2011.pdf OrponTCAbCTBo A3C CAeAaeT KaAiiHiimpaACKyio oGAacrb peraoHOM, nepe3 KOTOpbiii Poccjih coBepiiiHT reonoAHTHHecKHH npopHB: SKcnepT. (2008, April 17). Regnum. Retrieved April 25,2015 from http://www.regnum.ru/news/988434.html U.S. Energy Information Administration. Retrieved April 25,2015 from http://www.eia.gov/ Usanov, A., 8c Kharin, A. (2014). Energy security in Kaliningrad and geopolitics. Baltic Sea Policy Briefing (2)2014. Retrieved April 25, 2015 from http://www.centrumbalticum.org/en/bsr-policy-briefmg Vasiliauskas, S. (2010). New Nuclear Power Plant in Lithuania. Case of New Thinking in New Environment. Presentation at INPRO Dialogue Forum on Nuclear Energy Innovations: Multilateral Approaches to Sustainable Nuclear Energy Deployment -Institutional Challenges, 4—7 October 2010, IAEA, Vienna, Austria. Retrieved April 25,2015 from https://www.iaea.org/INPRO/2nd_Dialogue_Forum/Lithuania.pdf Visagino atomine elektrine. Retrieved April 25,2015 from http: //www. vae .It/ World Nuclear Association. (2010). RBMKReactors. Retrieved April 25,2015 from http://www.world-nuclear.org/info/Nuclear-Fuel- Cycle/Power-Reactors/Appendices/RBMK-Reactors/ World Nuclear Association. (2014a). Nuclear Power in Lithuania. Retrieved April 25, 2015 from http://world- nuclear.org/info/Country-Profiles/Countries-G-N/Lithuania/ World Nuclear Association. (2014b). Nuclear Power in Russia. Retrieved April 25, 2015 from http://world- nuclear.org/info/Country-Profiles/Countries-O-S/Russia--Nuclear-Power/ World Nuclear News. (2008, April 17). Kaliningrad plan for Baltic States market. Retrieved April 25,2015 from http://www.world-nuclear-news.org/newsarticle.aspx?id=17328 World Nuclear News. (2009, December 15). Nukem Technologies now owned by ASE. Retrieved April 25,2015 from http://world-nucl.ear-news.org/IT-Nukem_Technologies_now_owned_by_ASE-1512094.html World Nuclear News. (2014, April 3). Lithuania restates Visaginas commitment. Retrieved April 25,2015 from http://www.world- 195 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 196 nuclear-news.org/NN-Lithuania-restates-Visaginas-commitment-0304148.html Ziedelis, S., 8cGylys, J., 8c Gediminskas, V, 8c Brandisauskas, D. (2004). Nuclear education and training in Lithuania in the context of EU accession. Presentation at International Conference on Nuclear Knowledge Management — Strategies, Information Management and Human Resource Development, 7—10 September 2004, Saclay, France. Retrieved April 25,2015 from http://www.iaea.org/km/cnkm/presentations/lithuniaziedelisp.pdf 4.8 Country Case Study: Moldova Tomáš Vlček 4.8.1 Introduction Moldova (officially the Republic of Moldova) declared its independence in 1991 and it is currently the poorest country in Europe, even though Moldovan economy was able to transform from centrally planned economy quite satisfyingly. The economy is based on service sector and the GDP has slowly but steadily growed since 1999. Approximately 70-75% of the energy sector equipment is worn out. For example, over 2001-2008, gas pipeline losses were estimated at an average of 7% (Moldova Government, 2013, p. 8). As seen in Table 4.8.1, Moldova is nearly 100% dependent on energy sources imports (Moldova does not import crude oil, but imports nearly all consumed oil products; 0.8 Mt in 2010). The renewable energy potential is installed in hydro and this source is inevitably very affected by weather. Tab. 4.8.1: Key Energy Statistics Source Consumption Imports TPES share Electricity Generation share Crude Oil 0.85 Mt 0% 22.5% 0.5% Natural Gas 2.18 bcm 100% 67.9% 92.9% Coal (all types) 0.19 Mt 97.4% 2.8% 0% RES - - 3.1% 6.6% Nuclear Energy - - 0% 0% Note: 2010 data Source: US. Energy Information Administration; International Energy Agency, compiled and calculated byT.VIcek 197 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 198 Moldova is a small landlocked country and the energy sector is rather small too. The total installed capacity in the electricity system is only 3,016 MWe and the electricity sector is dominated by natural gas (see Table 4.8.2). Out of this nominal capacity, only about 346 MWe in cogeneration in Chisinau and Balti and in the hydro can be used, and only about a half of the capacity of the GRES is used (due to the difficult trading conditions) (Moldova Government, 2013, p. 6-7). Tab. 4.8.2: Power Plants in Moldova Power Plant Installed Capacity Fuel Year of Construction CHP-1 Chisinau 66 MWe Gas, HFO 1951-1961 CHP-2 Chisinau 240 MWe Gas, HFO 1976-1980 CHP-North Balti 28.5 MWe Gas, HFO 1956-1970 4CHPinFalestiand Drochia Sugar Factories* 97.5 MWe Biogas from sugar beet pulp 1956-1981** HPP Costesti 16 MWe Water 1978** HPP Dubasari 48 MWe Water 1954-1966** TPP Dnestrovsc (GRES) 2,520 MWe Gas, coal, HFO 1964-1982 Note: CHP = Combined Heat Power Plant, HPP = Hydroelectric Power Plant; TPP = Thermal Power Plant; HFO = Heavy Fuel Oil * Factories owned by Südzucker Moldova SA ** Modernized during 2010-2013 Source: UNECE, 2009, p. 3;T. Vlcek The TPP Cuciurgan in Dnestrovsc is the biggest power plant in Moldova with the installed capacity of 2,520 MWe. The power plant is located on the left bank of the river Dniester in the Transnistrian Region, which after the war in 1992 declared itself the Pridnestrovian Moldavian Republic. The territory is unrecognized by any UN member state and by Moldova it is recognized as the Transnistria autonomous territorial unit with a special legal status. Therefore, electricity produced here and used in Moldova is deemed imported. Anyway, the fact that only about a half of the capacity of the GRES is used is caused by no connection with the EU's internal electricity market, which significantly affects the regional prices of electricity. The high prices of electricity generation at GRES and the volatile import tariffs for electricity from Ukraine are among the reasons for regular supplier switches between Transnistria and Ukraine. The Moldovan possible connection to ENTSO-E is very difficult due to historical connection and synchronization with Ukrainian system. Moldova does not have any other option than to import electricity from Ukraine, Transnistria or potentially from Romania. There are seven double-330 kV international transmission lines between Moldova and Ukraine capable of transporting 1,400-1,500 MWe. As about 1,000 MWe are used by transits to Odessa, the net import capacity of Moldova is about 400-500 MWe (Zachmann & Oprunenco, 2010, p. 6). There is one 400 kV transmission line to Romania from Vulkanesti in the south. This line is used for exports of electricity produced at GRES to Romania as electricity prices in Romania are much higher than in Ukraine or GRES. But it is exported only to a small border part of Romania due technical and historical reasons as the two countries are not synchronized. The local consumption in this area equals to only about 3-5% of Romanian consumption. 199 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 200 Due to the difference in frequency standards the systems do not work in parallel, i.e. import or export of power can take place based on island principal only (The Carbon Finance Unit of the Republic of Moldova, 2011, p. 11). There is a planned project of a converter station at the line to Romania to link the two asynchronous systems. The Moldovan domestic production of electricity in 2010 reached 888.1 GWh while the consumption was 3,915.6 GWh (Moldova Government, 2013, p. 67). Moldova is therefore a net importer of electricity with the need of approximately 3,000 GWh annually. Since 2009, nearly 100% of electricity imports have come from Transnistria's Cuciurgan power plant (known as GRES in Moldova). Due to high prices of electricity produced in GRES and other reasons, in 2006-2008, Moldova imported electricity from Ukraine, and as explained above, Moldova imports electricity only either from Ukraine or Transnistria. The situation with Transnistria's Cuciurgan power plant is very complicated. The power plant is supplied with natural gas through the company Tiraspoltransgas-Pridnestrovie (OOO THpacnoAbTpaHcra3-IIpHAHecTpoBbe) based in Transnistria. This is a daughter company of Moldavian JSC MoldovaGaz (AO MoAAOBaras). Since 1993, Tiraspoltransgas does not pay for natural gas and this debt passes to MoldovaGaz as it is the mother company. The debt is currently calculated for USD 3 billion. A long discussion with Gazprom and Moldovan aiming to pass the debt back to Tiraspoltransgas has not ended with understanding, as Gazprom uses the Moldovan debt for Cuciurgan power plant's consumption as a political leverage. Gazprom is also a shareholder in both Tiraspoltransgas and MoldovaGaz (51% in both companies supposedly). Moldovan foreign policy is thus strongly influenced by Gazprom. Moldova purchases electricity in Transnistrian Cuciurgan TPP and also owes for this TPP's consumption of natural gas, which is, of course, strongly uneconomical for Moldova. Chisinau solves the situation by switching from Cuciurgan's electricity to electricity imported from Ukraine, where the power plants has been already paid off and the electricity price was lower due to overcapacity in the country. However, this situation has changed recently for two reasons. First, the Ukrainian crisis led to problems in domestic electricity production, and since 2014, Ukraine is no longer willing and able to export electricity to Moldova. And second, Ukrainian export policy changed in terms of pricing in 2011. Ukraine raised electricity price and also added new condition — the price of electricity shall be raised every month by 2.1 USD cents per 1 MWh. This eventually led Moldova to return to electricity imports from undesirable Transnistrian Cuciurgan TPP for economic reasons. Until 1997, the state company Moldenergo had been in charge of the Moldovan electricity sector, then after liberalization and unbundling, Moldenergo transformed into 16 new entities. There are 3 electricity generation companies, 5 distribution companies and state-owned transmission and central dispatch "Moldtranselectro". In 2000, the Spanish company "Union Fenosa" acquired 100% of the share capital in three out of five distribution companies (Zadnipru, 2011, p. 4). The ZAO Moldavskaya GRES Company operating the biggest power plant GRES is owned by the company JSC Inter RAO UES.The ownership structure is seen in Table 4.8.3. 201 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Tab. 4.8.3: The Ownership Structure of JSC Inter RAO UES Equity holder Share Rosneftegaz Group 27.63 % FGC UES Group 18.57% Minorities 16.65% INTER RAO Capital 13.93% Norilsk Nickel Group 13.21 % VEB 5.11 % RusHydro Group 4.92 % Note: through minorities Atomstroyexport JSC, Rosenergoatom Concern OJSC, Rosatom Securities Limited the Rosatom State Atomic Energy Corporation owns 13.42% stake in JSC Inter RAO UES as of 2012. Source: JSC Inter RAO UES; JSC Inter RAO UES", 2012 4.8.2 New Units and Financing of the Nuclear Plant As Moldavian Soviet Socialist Republic Moldova had been one of the fifteen republics of the USSR until the dissolution of the Soviet Union, the planned Soviet design NPP at Piatra Neamt in Romania have had supposedly been a source of electricity not only for Romania but for Moldova as well. But the plan for the construction of WER-440 or WER-1000 design in Romania was cancelled in 1980s (see Romania case study for detailed information). Another plan to construct Soviet-design NPP in Ribnita emerged in 1985 and building foundations were prepared. But this plan was dismissed after the Chernobyl accident and no plan for NPP in Moldova was considered ever after. In 2003, there were information that Moldova is investigating possibilities of building a NPP and the president of Moldova V. Voronin and French ambassador to Moldova Sector of Nuclear Energy in Central and Eastern Europe 202 E. Pamboukjian spoke out for prompt beginning of consultations on the issue ("Moldova builds", 2003). The topic stayed only within the mentioned consultations and was not further developed. The whole topic seems to be just political expressions during mutual visits of the presidents of Moldova and France. The plan was eventually changed for 400 MWe natural gas power plant in Burlaceni, but this was also rejected due to lack of finances. In December 2014, Romanian Minister for Energy Razvan-Eugen Nicolescu said that Romania would welcome Moldova as a partner in the Cernavoda NPP expansion project ("Romania wants", 2014), e.g. to become a shareholder in the EnergoNuclear SA. Moldova's partnership in the project would be a third competitive option for electricity imports besides Ukraine and Transnistria and the proposal seems beneficial even though additional investments to synchronize the two countries' electricity sectors would be necessary. However, it is impossible for Moldova to take part in the project financially, so Moldova's partnership is deemed rather symbolical. 4.8.3 The Front End of the Nuclear Fuel Cycle As there are no Uranium deposits and no production, processing and/or fabrication capabilities in Moldova, no Front End information can be presented. 4.8.4 The Service Part of the Nuclear Fuel Cycle As there are no nuclear power plants in Moldova, no Service Part information can be presented. 203 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 204 4.8.5 The Back End of the Nuclear Fuel Cycle As there are no nuclear power plants and nuclear industry in Moldova, no Beck End information can be presented. Tab. 4.8.4: Moldovan Nuclear Sector Examination Indicator Description Is there nuclear producing capacity present in the country? No Is there a project to expand the capacity? What is the status of the project? No How was the project procured? - Who is the contractor in charge of the project? - How is the financing secured? - Who is the operator of the facility? - Are there enough home-based experts to run the facility safely? No Who is/will be in charge of decommissioning? - Who provides nuclear fuel and under what conditions? - What is the experience with the fuel being currently used? Is there any rationale or path-dependency behind the current contract? - Is there any part of nuclearfuel industry present in the country? If so, how it contributes to country's nuclear fuel cycle? No How is used fuel treated and who is in charge of this? - 4.8.6 Sources AO MoAdoeazas. Retrieved June 5,2015 from http: //www. moldovagaz. m d/ International Energy Agency. Retrieved June 5,2015 from http://www.iea.org/ JSC Inter RAO UES. Retrieved June 5,2015 from http://www.interrao.ru/ JSC Inter RAO UES IRAO Share of State Corporation "Rosatom" in INTER RAO. (2012, May 29). Bloomberg. Retrieved June 5,2015 from http://www.bloomberg.com/article/2012-05-29/ ayjl.wezKvgA.html The Carbon Finance Unit of the Republic of Moldova. (2011). Moldova Grid Emission Factor Assessment. Chisinau: World Bank. Retrieved June 5,2015 from http://www.clima.md/download.php?file=cHVibGljL3BlYmxpY2F 0aW9ucy8yNzI5MjQzX2VuX3JlcG9ydF9tb2xkb3ZhLnBkZg%3D %3D U.S. Energy Information Administration. Retrieved June 5,2015 from http://www.eia.gov/ United Nations Economic Commission for Europe (UNECE). (2009/ Republic ofMoldova: National Energy Policy Information for Regional Analysis. Retrieved June 5,2015 from http://www.clima.md/public/102/en/EnergyPolicyInformationForR egionalAnalysisMoldova.pdf Moldova builds nuclear power plant, France to assist. (2003, November 29). New Europe Online. Retrieved June 5, 2015 from http://www.neurope.eu/article/moldova-builds-nuclear-power-plant-france-assist 205 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 206 Moldova Government. (2013). Energy Strategy of the Republic of Moldova until2030. Retrieved June 5,2015 from http://www.serviciilocale.md/public/files/Energy_Strategy_2030_Fi nal.pdf Romania wants Moldova as partner in nuclear power project. (2014, December 8). energybiz.com. Retrieved June 5,2015 from http://www.energybiz.com/article/14/12/romania-wants-moldova-partner-nuclear-power-project National Bureau of Statistics of the Republic of Moldova. (2012). The Energy Balance of the Republic of Moldova Statistical Collection 2011. Retrieved June 5,2015 from http://www.statistica.md/public/ files/publicati i_electronice/balanta_ energetica/B E_2012_eng.pdf 000 TupacnoAbmpaHaas-TIpudHecmpoebe. Retrieved June 5,2015 from http://www.ttgpmr.com/ Zachmann, G., 8c Oprunenco, A. (2010). Electricity Sector in Moldova: Evaluation of strategic options. Berlin/Chisinau: German Economic Team Moldova. Retrieved June 5,2015 from http://www.get-moldova.de/download/policypapers/2010/GET%20Moldova_PP%2 001%202010_en.pdf Zadnipru, R. (2011). Energy Policy of Republic of Moldova. Presentation for The Institute of Energy Economics, Japan, June 2011. Retrieved June 5, 2015 from http://eneken.ieej.or.jp/data/3923.pdf 4.9 Country Case Study: Poland Tomáš Vlček 4.9.1 Introduction Poland played an important role in European history, as powerful kingdoms were spread on today's Polish soil since the time of Boleslaw I Chrobry, the first Polish king, until the end of the Polish—Lithuanian union and Polish—Lithuanian Commonwealth. The historical importance and strategic position of Poland in Central Europe and the Baltic could also be deduced from the so called Partitions of Poland, when Europe's powers divided Polish territory among themselves in 1772,1793,1795, and 1939. The Polish Republic emerged according to the Treaty of Versailles after the WWI. Unfortunately, Poland had to fight several border wars and the war with Soviet Union for its independence. Poland was occupied by Germany and the USSR during the WWII and eventually left under Soviet control after the war. Poland is very famous for the anti-communist sociopolitical opposition called Solidarity - an independent trade union created in 1980 that significantly contributed to the collapse of communism in Poland. The modern Republic of Poland was created on September 13, 1989, and since that time managed to enter the NATO, the EU, implement market economy principles in the country, and significantly restore its diplomatic power. Although Poland is practically self-sufficient in terms of electricity production, it is dependent on imports of hydrocarbons. Poland imports nearly all of its oil demand from 207 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 208 a single source being the Russian Federation through the Druzhba pipeline (96% in 2012). There are six refineries in Poland, with a total primary distillation capacity of around 25.3 Mt/y (OECD 8c IEA, 2014, p. 363). These are the Refineries Lotos S.A. (in Gdansk), Orlen S.A. (in Plock), Trzebinia S.A. (at Czyzowka near Trzebinia), Czechowice S.A. (in Czechowice-Dziedzice), Jaslo, S.A. (in Jaslo) and Jedlicze S.A. (in Jedlicze). Polski Koncern Naftowy (PKN) Orlen SA and Grupa Lotos S.A. are owners of these refineries and account for almost the entire Polish refining industry. Speaking about natural gas, Poland imports approximately 2/3 of domestic demand and the rest is produced in the country (6.2 bcm in 2012). The share of Russian gas in Poland's total gas imports stood at 80% in 2012, while gas imports from Germany accounted for 15% in the same year (OECD 8c IEA, 2014, p. 370-371). Both crude oil and natural gas are also transported via the Druzhba and Yamal pipelines through Poland to Germany. Tab. 4.9.1: Key Energy Statistics Source Consumption Imports TPES share Electricity Generation share Crude Oil 27.74 Mt 85% 24.9% 1.5% Natural Gas 17.19 bcm 69% 12.7% 3.6% Coal (all types) 139.1 Mt 11% 54% 86.6% RES - - 8.5%* 8.3% Nuclear Energy - - 0% 0% * Biofuels and waste stand for 8% of TPES and 4.7 % of electricity generation shares Note: 2011 data Source: U.S. Energy Information Administration; International Energy Agency; compiled and calculated byT.VIcek Poland is strongly dependent on coal in electricity production; in fact, it is the world's most coal-dependent country. There are some small capacities in other power plant types, such as natural gas in Gorzow CCGT (65.5 MWe) and Zielona Gora CCGT (198 MWe), water in Pumped Storage Hydroelectric Power Plant in Zarnowiec (680 MWe) and Zydowo (150 MWe), in some RES projects, especially wind farms, and as it is relatively easy to transform a coal-fired power plant to waste-fired one, 4.7% of electricity in 2011 was generated from waste. But 86.6 % of electricity in 2011 was produced in coal-fired power plants, including hard coal as well as low-quality lignite. There are 65 hard coal and 5 lignite power plants in Poland (Kudelko, Suwala 8c Kaminski, n.d., p. 7). Table 4.9.2 presents the biggest coal-fired power plants in Poland. Belchatow TPP (5,354 MWe) is the world's third largest coal-fired power plant after Taiwanese Taichung TPP (5,834 MWe) and Chinese Tuoketuo TPP (5,400 MWe, to be expanded by another 1,320 MWe). This obviously causes trouble for the environment in Poland and for Polish C02 emissions reduction targets. There is already an impending penalty of over EUR 133 thousand for Poland failing to transpose its Renewable Energy Directive, which aimed at ensuring a 20% share of renewable energy in the EU by 2020 (Yeo, 2013), and as Poland is failing to achieve its part in the EU goal to reduce emissions by 20% by 2020, it is opposing the EU and the European Commission's plans to set more ambitious goals of 40% cut in C02 emissions by 2030 versus 1990 levels (Wasilewski, 2013). Due to Poland's coal-dependence, the country is a long-term stable critic of EU environmental goals. 209 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Tab. 4.9.2:1,000 MWe+ Power Plants in Poland Power Plant Installed Capacity Fuel Operátor Construction Year BetchatówTPP 5,354 MWe Lignite PGEGÍEKS.A. 1981 KozieniceTPP 2,913 MWe Hard Coal ENEA S.A. 1972 PotaniecTPP 1,800 MWe Hard Coal Electrabel PotaniecSA (GDF Suez) 1973-1979 RybnikTPP 1,775 MWe Hard Coal EDF Polska Oddziatw Rybniku 1972 Turów CHP 1,694.8 MWe Lignite PGEGÍEKS.A. 1962-1971 Patnów I, II CHP 1,669 MWe Lignite Zespót Elektrowni P^tnów-Adamów-Konin SA* 1958-1974 OpoleTPP 1,532 MWe** Hard Coal PGEGÍEKS.A. - Jaworzno II, III CHP 1,485 MWe Hard Coal Tauron Polska Energia S.A. 1972-1979 Dolna Odra CHP 1,362 MWe Hard Coal PGEGÍEKS.A. 1974 taziska CHP 1,155 MWe Hard Coal Tauron Polska Energia S.A. 1967-1972 * Ownership structure: 52.67% Zygmunt Solorz-Zak; 10.76% ING Open-end Pension Fund; 36.57% Others ** A 1800 MW expansion of the station began construction in 2014 Note: CHP = Combined Heat Power Plant, TPP = Thermal Power Plant Source: Polska Grupa Energetyczna SA and other open sources Poland produced 163.5 TWh of electricity in 2011, of which 57 TWh was produced within the company PGE SA (Polska Grupa Energetyczna) {International Energy Agency; Polska Grupa Energetyczna SA). The company production portfolio thus constitutes 34.9 % of the country's electricity production with 12.86 GWe of installed capacity. The company is owned by State Treasury (58.39%) and other investors (41.61%) in 2014. Other important electricity generating companies include Tauron Polska Energia S.A., ENEA S.A., EDF Polska, GDF SUEZ Energia Polska S.A., ZE PAK SA, and others. Sector of Nuclear Energy in Central and Eastern Europe 210 4.9.2 New Units and Financing of the Nuclear Power Plant Poland's problematic dependence on domestic coal in electricity production is the key reason for nuclear energy development plans, and much has been done since 2005, when it was decided to introduce nuclear energy to Poland again. On November 10, 2009, the Council of Ministers adopted a resolution on the Polish Energy Policy until 2030. This resolution expects 10% of electricity generation share to be from nuclear energy (Ministerstwo Gospodarki, 2009a, p. 28) and in the appendix 2 it is planned to operate nuclear capacities of 1,600 MWe in 2020, 3,200 MWe in 2025, and eventually 4,800 MWe in 2030 (Ministerstwo Gospodarki, 2009b, p. 16). The Council of Ministers also issued a resolution on the actions taken for the development of nuclear power industry in 2009, where it was stated that it is necessary to prepare and implement a program for Polish nuclear power industry. Therefore the Government Plenipotentiary for Polish Nuclear Power was appointed and in January 2014 the Council of Ministers adopted the Polish Nuclear Power Program (PNPP; the first draft of the PNPP was presented in 2010), which envisions the construction of country's first nuclear power plant by 2024 (Unit 1) and 2029 (Unit 2). The capacity targets were reconsidered to be of minimum value 1,000 MWe for 2024; 3,000 MWe minimum value for 2030, and 6,000 MWe as a 2035 target (Ministerstwo Gospodarki, 2014, p. 19). Since 2009 the Government has been searching for the optimal NPP site. The first appraisal of the site criteria by Energoprojekt Warszawa SA proposed 28 locations, of which eventually three were chosen by the investor: Zarnowiec (in the 211 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises city of Kartoszyno), Choczewo (5 km from Zarnowiec) and Gaski (between the towns of Kolobrzeg and Koszalin on the coast of the Baltic Sea). Preparations for location and environmental research were started in February 2013 for the sites of Choczewo and Zarnowiec. The outcome will enable to finally indicate the site for the first Polish NPP (Ministerstwo Gospodarki, 2014, p. 100-103). It is likely that the second power plant would stand on the second location coming out from this research. The company PGE SA (Polska Grupa Energetyczna) — Poland's largest power group by generating capacity — is the investor in the nuclear project. In January 2010, a limited liability company PGE Energia Jadrowa 1 Sp. z o.o. in the portfolio of the PGE SA company was established as the project company responsible for preparing the investment process and the construction (the construction itself will be overseen by the National Atomic Energy Agency), as well as to be the future operator and licensee. Originally, the PGE SA aimed at 51% share in a consortium with foreign strategic partners, but after several changes throughout the years, the PGE SA holds 70% in the project company, while ENEA S.A., KGHM Polska Miedz and Tauron Polska Energia SA. own 10% stake each. This was confirmed in a Shareholders' Agreement in September 2014 (PGE Energia Jadrowa 1 Sp. z o.o.).The project total expenditures are estimated to USD 10.3-11.3 billion (WNA, 2014) that these companies will split according to their shares in the project company. Sector of Nuclear Energy in Central and Eastern Europe 212 Tab. 4.9.3: Shareholders of the PGE Energia Jadrowa 1 Sp. z o.o. project company Shareholder Share Ownership Structure PGE SA 70% 58.39% Ministry of State Treasury; 41.61 % Other Investors (Free float) ENEA S.A. 10% 51.50% Ministry of State Treasury; 48,50% Other Investors (Free float) Tauron Polska Energia S.A. 10% 30.06% Ministry of State Treasury; 10.31% KGHM Polska Miedz S.A.; 5.06% ING Otwarty Fundusz Emerytalny; 54.49% Other Investors (Free float) KGHM Polska Miedž S.A. 10% 31.79% Ministry of State Treasury; 68.21 % Other Investors (Free float) Source: compiled byT. Vlcekfrom open sources The actual tender for the contractor has not been opened yet, but it is very likely that there will be no Russian contractor or subcontractor in the project due to Polish very strong traditional anti-Russian feeling. In February 2014, four bidders submitted tender offers to PGE EJ 1 Sp. z o.o. to provide technical assistance as owner's engineer for the program. These were AMEC Nuclear UK Limited, Exelon Generation Company, LLC, a Mott MacDonald Limited - Aktiebolaget Angpanneforeningen AB consortium, and a URS Polska Sp. z o.o. — Tractebel Engineering GDF-Suez consortium. In July, the company announced its selection of AMEC Nuclear UK Limited. The owners engineer will help select EPC (Engineering, procurement and construction) contractor, oversee project management, and supply chain contract management as well as regulatory aspects (WNA, 2014). Several non-exclusive agreements were signed between PGE SA and Electricite de France S.A., GE Hitachi Nuclear Energy and Westinghouse Electric Company LLC to investigate using 213 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 214 their respective technologies in Poland. Korea Electric Power Corporation KEPCO is interested in Polish nuclear project as well, and estimates so far pointed towards the selection of Korean APR1400 or AREVA's EPR (Kulczynski, 2014). PGE SA expects to make a final investment decision on the two plants by 2018. Final design and permits for the first are expected to be ready in 2018, allowing construction start in 2020. The first unit is now expected to be operational in 2024, the second one in 2029 (WNA, 2014). The financing model is not completed, but to avoid breaking the EU state-aid rules, the Ministry of State Treasury is not expected to involve directly. 4.9.3 The Front End of the Nuclear Fuel Cycle Poland has historical experience with uranium mining and processing. First uranium ores were found in 1853, but until 1942, uranium was treated as waste with no commercial value as radium was the desired mineral (Chajduk 8c Polkowska-Motrenko, 2012, p. 4). Uranium was mined in Sudetenland for German WWII nuclear projects and eventually for Soviet projects. During 1948-1963, the Polish-Soviet enterprise "Kowarski Mines" named after Kowary site was responsible for the production of c.a. 704 tons of uranium that has all been sent to the USSR. The uranium mining facilities were secret and were codenamed Rl. The extraction took place in many underground mines in Poland, such as Wolnosc, Podgorze, Miedzianka, Radoniow, Rubezal, Mniszkow, Wiktoria, Wolowa Gora, Radoniow, Wojcieszyce and others (Chajduk 8c Polkowska-Motrenko, 2012, p. 5-9; Rewerski, Mielnicki, Bartosiewicz, Polkowska-Motrenko 8c Sklodowska, 2013, p. 5-6). All mines were closed in 1960s and 1970s and there are no operating mines nowadays. Although uranium had no commercial value in the past, there are large number of abandoned piles of waste rock that contain uranium. And even though the concentration is generally very low (under 0.01%), there are some interesting locations such as Kopaniec pile where the concentration reaches up to 0.24%. Therefore the possibility of uranium extraction from post-mining wastes is also analyzed (Rewerski, Mielnicki, Bartosiewicz, Polkowska-Motrenko 8c Sklodowska, 2013, p. 7) together with the possibility of mining domestic uranium resources after the plan to construct an NPP has been introduced. Polish historic geological documentation (see Table 4.9.4) suggests that there are uranium deposits in Poland, but no modern prospects were executed, except for the Radoniow area that is being prospected since 2012 (OECD 8c IAEA, 2014, p. 348). Tab. 4.9.4: Potential Conventional Uranium Resources in Poland Region Resources in place (t) Uranium content (%) "Rajsk" deposit 5,320.0 0.025 Okrzeszyn 937.6 0.05-0.11 Grzmiaca 792.0 0.05 Wambierzyce 217.5 0.0236 Source: OECD&IAEA, 2014, p. 348 The estimation of the total identified uranium resources amount to 7,267.1 tons, which is the reason why Poland is interested in the extraction. The potential uranium reserves 215 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 216 could positively affect the dependency on imported nuclear fuel. On the other hand, it is more likely that they would stay as potential uranium reserves, as it is very likely that the price of extraction and its use in the fuel would be more expensive than the purchase of commercial fuel. Also, there is strong local opposition in the potentially uranium-rich sites (Powiedz Nie dla Kopalni Uranu w Sudetach). For example, the prospecting process at Kopaniec (undertaken by Australian company European Resources Pty Ltd) was strongly opposed both by the Municipality of Stara Kamienica and the local inhabitants. It is important to mention that Poland has also some short experience with uranium processing. It was the ore, not the metal that was transported to the USSR under the Polish-Soviet enterprise "Kowarski Mines". And when the Polish mines became depleted and closed, the chemical processing of low-grade ore waste in Kowary began operation in 1969 and lasted until 1972, extracting some uranium even from the waste. One of the biggest environmental radioactive isotope contaminations in Poland, the Kowary tailing pond, was remediated with financial support of the European Commission in 2001. In the end, as no Uranium is produced nowadays, and there are no processing and/or fabrication capabilities in Poland, no Front End information can be presented. 4.9.4 The Service Part of the Nuclear Fuel Cycle In 1982, Poland started construction of a nuclear power plant called Zarnowiec (named after the Jezioro Zarnowieckie lake) in the city of Kartoszyno, not far from the Gdynia and Gdansk ports. It was an NPP with four WER-440 units and it was planned as only a first step in Poland's nuclear power program, as the construction of the Warta NPP in the village of Klempicz was envisaged. The Zarnowiec project was carefully planned and a superb infrastructure developed in the area. The reactor vessels were manufactured in Skoda factory in Czechoslovakia, while the turbines and generators were made in Poland. Polish boiler factory Rafako built the Steam Generators (Kulczynski, 2010). After the Chernobyl accident, protests against the Zarnowiec NPP were strong in Poland and after the construction break, the government eventually decided to abandon the project. A referendum in 1990 in the Gdansk Voivodeship with very clear outcome played also its part in the decision. The components in the under-construction plant were sold and the country became very anti-nuclear, putting a temporary freeze on nuclear projects overall until at least 2000 (Raguzina 8c Kamiskaya, 2010). And truly, the nuclear project has been reconsidered in 2005, when it was decided by the Polish cabinet to introduce nuclear energy to Poland again. There is a quite extensive nuclear research in Poland taking place at the National Center for Nuclear Research (Narodowe Centrum Badah Jadrowych, NCBJ) in Otwock-Swierk. The NCBJ emerged in 2011 by joining the former Institute of Atomic Energy POLATOM (Instytut Energii Atomowej POLATOM) with the former Andrzej Soltan Institute for Nuclear Studies (Instytut Badah Jadrowych im. Andrzeja Soltana). The NCBJ houses a Polish-design MARIA research reactor of 20-30 MWt operating since 1974. The NCBJ is currently the largest research Institute in Poland that is expanding quickly. 217 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 218 Between 1958 and 1995, the Andrzej Soltan Institute for Nuclear Studies operated also the Russian design WR-S research reactor named EWA (Eksperymentalny Wodny Atomowy Reaktor) with 2 MWt (later increased to 10 MWt) installed capacity. Also other nuclear research devices (MARYLA 0.1 MWt research reactor, AG ATA and ANNA critical assemblies) have been already dismantled in the past. And as there are no nuclear power plants in Poland, no Service Part information can be presented. 4.9.5 The Back End of the Nuclear Fuel Cycle There are currently four spent fuel storages in Poland. Three of them (the interim spent fuel storage facilities 19 and 19A and technological pool of MARIA research reactor) are situated at Swierk. The fourth facility is the near-surface National Radioactive Waste Repository in Rozan (Krajowe Skladowisko Odpadow Promieniotworczych, KSOP Rozan) operating since 1961. The National Radioactive Waste Repository is subject to the state enterprise Radioactive Waste Management Plant (przedsiebiorstwo pahstwowe Zaklad Unieszkodliwiania Odpadow Promieniotworczych, ZUOP) that also operates the 19 and 19A pool-type facilities in Swierk (the technological pool of MARIA reactor is of course operated by the NCBJ). The Plant (a state-owned company) is subordinated to the Polish Ministry of State Treasury, while National Atomic Energy Agency (Pahstwowa Agencja Atomistyki, PAA) under the Ministry of Environment is responsible for activities connected with the licensing and oversight of nuclear safety and radiological protection1. As the Rozan repository will be closed in 2020-2022, a new repository should be constructed and the Ministry of State Treasury is currently working on the National Plan of Radioactive Waste and Spent Nuclear Fuel Management (European Commission, 2012, p. 4). Therefore the new Low and Intermediate Radioactivity Waste Disposal is one of the most important goals of Polish Nuclear Power Program. The site selection process has not yet been closed but the construction should be completed before 2020. A deep underground geological repository is also considered as the final repository of spent fuel from the future nuclear units. However, the necessity to construct such a repository will arise in about 30-40 years after commissioning the first nuclear power plant, i.e. in about 2050 at the earliest. By this time, spent nuclear fuel will be stored on-site the NPP (Ministerstwo Gospodarki, 2011, p. 32). 1 There is also a Government Commissioner for Nuclear Energy under the Ministry of Economy for activities related to peaceful use of nuclear energy to satisfy social and economic Leeds of Poland (Ministry of Economy of Poland, 2011, p. 15). 219 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Tab. 4.9.5: Polish Nuclear Sector Examination Indicator Description Is there nuclear producing capacity present in the country? No Is there a project to expand the capacity? What is the status of the project? Yes, 2 units of 3,000 MWe combined until 2029, another 3,000 MWe until 2035; site selection process is finishing and public procurement for the contractor is expected to be open soon How was the project procured? So far openly and professionally, the public procurement for the contractor did not yet take place; Russian technology is not considered at all, bids from following four subjects can be expected: Electricite de France S.A. together with AREVA S.A.; GE Hitachi Nuclear Energy; Westinghouse Electric Company LLC; Korea Electric Power Corporation KEPCO Who is the contractor in charge of the project? Unknown yet How is the financing secured? There are four investors in the project company to finance the construction, contractor's financial participation is possible and expected Who is the operator of the facility? PGE Energia Jadrowa 1 Sp. z o.o. (70% PGE SA; 10% ENEA S.A.; 10%Tauron Polska Energia S.A.; 10% KGHM Polska MiedzS.A.) Are there enough home-based experts to run the facility safely? Yes Who is/will be in charge of decommissioning? The responsibility for radioactive waste management issues rests with the Ministry of Economy and the Minister State Treasury (superviser of the state-owned "Radioactive Waste Management Plant") overseen by the Polish National Atomic Energy Agency Who provides nuclear fuel and under what conditions? The issue of nuclear fuel supply will likely be addressed in the tender or after the NPP construction What is the experience with the fuel being currently used? Is there any rationale or path-dependency behind the current contract? As there is no NPP, there is no fuel experience Sector of Nuclear Energy in Central and Eastern Europe 220 Is there any part of nuclear fuel industry present in the country? If so, how it contributes to country's nuclear fuel cycle? No How is used fuel treated and who is in charge of this? Standard cooling in ponds followed by interim storage; Radioactive Waste Management Plant (state enterprise managed by the Polish Ministry of State Treasury) is in charge of storage 221 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 222 4.9.6 Sources Chajduk, E., 8c Polkowska-Motrenko, H. (2012). Uranium resources in Poland— the past and present. Presentation at the Workshop on "Recent Developments in Evaluation of Uranium and Thorium Resources and Possibilities for Application of UNFC", October 15-18,2012, Lisbon, Portugal. Retrieved May 5,2015 from http://www.unece.org/fileadmin/DAM/energy/se/pdfs/UNFC/ws_I AEA_CYTED_UNECE_Octl2_Lisbon/4_Ross.pdf European Commission. (2012). IPPA Report from I Workshop in Poland. Retrieved May 5,2015 from http://www.ippaproject.eu/sites/default/files/deliverables/IPPA_Deli verable-6-3-ReportPoland-WSl.pdf International Energy Agency. Retrieved May 5,2015 from http://www.iea.org/ Kudelko, M., 8c Suwala, W., 8c Kaminski, J. (n.d.). External costs of power plants in Poland. Presentation of Mineral and Energy Economy Research Institute, Krakow, Poland. Retrieved May 5, 2015 from http://www.needs- project.org/docs/Krakow/KUDELKO.ppt Kulczynski, D. W. (2010, July 25). Poland returns to nuclear power. Nuclear Engineering International. Retrieved May 5,2015 from http://www.neimagazine.com/features/featurepoland-returns-to- nuclear-power/ Kulczynski, D. W. (2014, May 8). Planning for nuclear in Poland. Nuclear Engineering International. Retrieved May 5,2015 from http://www.neimagazine.com/features/featureplanning-for-nuclear- in-poland-4261487/ Ministerstwo Gospodarki. (2009a). Polityka energetyczna Polski do 2030 roku. Retrieved May 5, 2015 from http://www.mg.gov.pl/files/ upload/8134/Polityka%20energetyczna%20ost.pdf Ministerstwo Gospodarki. (2009b). Zalqcznik 2 do „Polityki energetycznej Polski do 2030 roku" — Prognoza zapotrzebowania na paliiua i energif do 2030 roku. Retrieved May 5,2015 from http://www.mg.gov.pl/files/upload/8134/Prognoza%20zapotrzebowa nia%20na%20paliwa%20i%20energie-ost.pdf Ministerstwo Gospodarki. (2011). International Workshop on Building Partnership in Waste Disposal Programme. Presentation of the Ministry of Economy of Poland. Retrieved May 5,2015 from http://www.iaea.org/OurWork/ST/NE/NEFW/WTS-Networks/DISPONET/disponetfiles/MalaysiaTC2011/TCMalaysi a2012-Poland.pdf Ministerstwo Gospodarki. (2014). Polish Nuclear Power Programme. Retrieved May 5,2015 from http://www.mg.gov. pl/files/upload/8134/Polityka%20energetyczna% 20ost.pdf Niewodniczariski, J. (2014). Nuclear Power in Poland (Nuclear Regulator's Perspective). Presentation of Polish National Atomic Energy Agency. Retrieved May 5,2015 from http://www.iaea.org/OurWork/ST/NE/Pess/copl4/CoP14_Niewod niczanski_specialsideevent.pdf Organization for Economic Co-operation and Development Nuclear Energy Agency, 8c International Atomic Energy Agency. (2014). Uranium 2014: Resources, Production and Demand. Paris: OECD/NEA Publishing. Organization for Economic Co-operation and Development, 8c International Energy Agency. (2014). Energy Supply Security — Emergency Response oflEA Countries 2014. Paris: OECD/NEA Publishing. 223 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 224 PGE Energia Jqdrovoa 1 Sp. z o.o. Retrieved May 5,2015 from http://www.pgeejl.pl/ PGE Gornictwo i Energetyka Konivencjonalna S.A. Retrieved May 5, 2015 from http://www.pgegiek.pl/ Polska Grupa Energetyczna SA. Retrieved May 5,2015 from http://www.gkpge.pl/ Poiviedz Nie dla Kopalni Uranu iu Sudetach. Retrieved May 5,2015 from http://www.uranstop.pl/ Raguzina, G., 8c Kamiskaya, M. (2010, August 17). Back to the atom: Caught between Communist past and democratic future, Poland eager to revive old nuclear power plant project. Bellona. Retrieved May 5,2015 from http://bellona.org/news/nuclear-issues/2010-08-back-to-the-atom-caught-between-communist-past-and-democratic-future-poland-eager-to-revive-old-nuclear-power-plant-project Rewerski, B., 8cMielnicki, S., 8cBartosiewicz, I, 8cPolkowska-Motrenko, H., 8c Sklodowska, A. (2013). Uranium Post-mining Wastes as a Potential Reserve Source of Uranium for Nuclear Energy Plants. Physico chemical Problems of Mineral Processing 49(1), 2013, p. 5-11. Retrieved May 5,2015 from http://www.minproc.pwr.wroc.pl/journal/ pdf/ ppmp49-l .5-11 .pdf U.S. Energy Information Administration. Retrieved May 5, 2015 from http://www.eia.gov/ Wasilewski, P. (2013, September 26). Poland to Fight Brussels on More Ambitious C02 Targets. The Wall Street Journal. Retrieved May 5,2015 from http://stream.wsj.com/story/latest-headlines/SS-2-63399/SS-2-338582/?mod=wsj_streaming_latest-headlines World Nuclear Association. (2014). Nuclear Power in Poland. Retrieved May 5,2015 from http://www.world-nuclear.org/info/Country-Profiles/Countries-O-S/Poland/ Yeo, S. (2013, September 30). Poland could violate law with new power plants - EU climate chief. RTCC. Retrieved May 5,2015 from http://www.rtcc.org/2013/09/30/poland-could-violate-law-with-new-power-plants-eu-climate-chief/ Zaklad Unieszkodliiuiania Odpaddiu Promieniotworczych. Retrieved May 5,2015 from http://www.zuop.pl/ Sector of Nuclear Energy in Central and Eastern Europe 225 226 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises 4.10 Country Case Study: Romania Tomáš Vlček 4.10.1 Introduction Romania, together with Bulgaria, is one of the very latest countries to join the European Union. They have been member states since January 1, 2007, and only Croatia's joining in 2013 followed ever since. As one of the countries of the former Eastern Bloc, the Romanian economy is still burdened with residues of the centrally planned economy, even though all the former Eastern Bloc countries underwent the process of transition towards market economy in 1990s. The energy efficiency of transport has been dropping since 2000, and the trend is considered irreversible at present. On the other hand, in the period 2000-2010, the whole country's energy efficiency was twice as good as the EU's according to energy efficiency indicator (ODEX) (ICEMENERG & ANRE, 2012, p. 66). This has a lot to do with the fact that the Romanian energy sector is not as heavily reliant on hydrocarbon imports and on the use as other post-Soviet countries. The top three electricity generation sources are hydro, coal and nuclear. On the country's total electricity production of 57.8 TWh in 2010, these accounted for 35.7%, 33.8%, and 19.4% (see Table 4.10.1). The total installed capacity in SEN (National Energy System) in 2011 was 21,717 MWe (Hidroelectrica, 2012, p. 14). With the installed capacity of 6,382 MWe in 2011 (Renewable Facts, 2011), hydropower is among the most important sources of electricity in Romania. This is due to a very favourable situation in Romanian hydrogeology. All the 587 hydro production units are united under the company S.C. HIDROELECTRICA S.A., out of which 7 have more than 200 MWe of installed capacity and 5 are pumping stations (S.C. Hidroelectrica S.A.). The largest one is The Iron Gate I (Portile de Fier I) on the Danube River with 2,246 MWe installed capacity built as a joint venture with the former Yugoslavia. Nowadays, half of the power plant belongs to Serbians and half to Romanians. Tab. 4.10.1: Key Energy Statistics Source Consumption Imports TPES share Electricity Generation share Crude Oil 10.81 Mt 56% 25% 0.9% Natural Gas 13.76 bcm 23% 30% 10.2% Coal (all types) 39 Mt 4.6% 22% 33.8% RES - - 15% 35.7%* Nuclear Energy - - 8% 19.4% Note: 2011 data, Oil Consumption and Electricity Generation share data from 2010 * Almost the whole figure stands for hydropower. Wind power as the second most developed RES in Romania has risen from 7 MWe in 2007, over 440 MWe in 2010, to 2,599 MWe in 2013. Other RES are negligible. Source: International Renewable Energy Agency, 2012; European Commission, 2012; U.S. Energy Information Administration; Lificiu, 2012; compiled and calculated byT.VIcek Altogether 5,918 MWe of installed capacity in the Romanian electricity sector in 2011 accounts to coal-fired power plants. Hard coal reserves and resources are estimated at 2,446 Mt, of which 252.5 Mt are commercially exploitable within the currently leased perimeters, although as little as 11 Mt might be economically recoverable. Proven reserves of lignite total to 280 Mt, with further 9,640 Mt of resources. 95% Sector of Nuclear Energy in Central and Eastern Europe 227 228 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises of lignite deposits are situated in the Oltenia mining basin and more than 80% of these can be mined in opencast mines. The main consumers of hard coal are the thermal power plants at Paroseni (3 x 50 MWe) and Mintia (6 x 210 MWe). The main consumers of lignite are Turceni (2,640 MWe), Rovinari (1,720 MWe) and Mintia - Deva (1,260 MWe) and 300 MWe Craiova power plant (Euracoal, 2013). Coal sector is quite supported also by the inhabitants, as the monoeconomical mining areas are strongly connected with employment. Romania has one nuclear power plant at Cernovoda with 1,413 MWe, which has two Canadian designed CANDU pressurized heavy water reactors that began operating in 1996 and 2007. Construction started in the 1980s, with the initial intention of five units. The first two units were partly funded by the Canadian Export Development Corporation with the second unit co-funded by Euratom (Schneider 8c Froggat et al., 2014, p. 134). Construction of the first unit started in 1980, and construction of units 2-5 in 1982. In 1991, work on the last four was suspended in order to focus on the unit 1, responsibility for which was handed to an AECL-Ansaldo (Canadian-Italian) consortium. The second 700 MWe unit had been built by an AECL-Ansaldo-SNN management team, and entered commercial operation in October 2007 (WNA, 2014). The SNN, Societatea Nationala Nuclearelectrica, Romanian state nuclear power corporation established in 1998 was assigned to operate the Cernavoda NPP The shareholders are the Romanian Government (91%) and Romanian Property Fund (9%). The main shareholder of the Romanian Property Fund is the Ministry of Economy and Finance (66 %), the rest are private shareholders. 4.10.2 New Units and Financing of the Nuclear Power Plant As the original plan was to build five Units at Cernavoda, but only two were constructed, the current plan aims at construction of Units 3 and 4 at Cernavoda site. There are currently no plans to complete Unit 5 at this time. There are building foundations from 1980s at the Cernavoda site for the construction of Units 3 and 4, as the decision to stop construction of Units 2-5 was made in 1991. As Romania have well-developed nuclear infrastructure, including heavy water plant, fuel fabrication plant, uranium production, and technically qualified and experienced staff (Rotaru, 2012) and operation experience, the plan to further develop nuclear capacities is expected, logical and predictable. The procurement process for the construction of Cernavoda NPP Units 3 and 4 started in 2002 with the Unit 3 only. As the outcomes were unconvincing, SNN created a project joint venture EnergoNuclear SA with SNN to complete both 720 MWe units in a €2.5 billion project and then operate them. Twelve potential investors were selected from 15 initial bidders and eventually binding offers from six companies were accepted: ArcelorMittal of Romania, CEZ of the Czech Republic, Electrabel of Belgium, Enel of Italy, Iberdrola of Spain, and RWE Power of Germany (WNA, 2014). In 2010-2013, all of these companies pulled out of the project for mainly commercial reasons and sold their stakes to SNN. SNN was thus a sole owner of the EnergoNuclear SA and it became clear that it could not raise this share of the funds1, and new bidding was opened in 2011, unfortunately 1 The total costs at that time were expected to be about €4 billion. Sector of Nuclear Energy in Central and Eastern Europe 229 230 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises with no bids received2. In May 2014, a vendor equity agreement with the China General Nuclear Power Group (CGN) to hold 51% in the EnergoNuclear SA (while SNN will hold the remaining minority of 49%) was closed (WNA, 2014). This agreement was eventually followed with a new public tender in August 2014, where the CGN was the only company to submit a non-binding bid with the September 9, 2014 being deadline for the contract to build the two new reactors. In October 2014, CGN has been designated as the "selected investor" for the development of units 3 and 4 at Romania's Cernavoda nuclear power plant. A letter of intent has been signed to complete the two units ("CGN to invest", 2014). Meanwhile, CNPEC has signed a "binding and exclusive" cooperation agreement with Candu Energy Inc for the construction of two more reactors at the Cernavoda NPP in Romania ("Cernavoda 38e4", 2014). The construction project of reactors 3 and 4 is supposed to be worth €6.45 billion ("China Nuclear Power", 2014). Also Moldova's partnership in the project is discussed (see Moldova case study for details). However, the memorandum of cooperation with the Chinese also contained previously unknown points, such as the equipment and labour would come from China and Chinese demand for long-term governmental guarantees (contract for difference). The whole deal is therefore not certain yet, as Chinese presented new requirements that are being discussed at the moment. Romanian Government is of course reluctant to offer guarantees because there is in reality no need for electricity 2 Some information suggest that the SNN, Societatea Nationala Nuclearelectrica, Romanian state nuclear power corporation was poorly managed so far and that they have problems with negotiating and receiving loans from private banks. This might also be among the reasons it were only the Chinese who eventually came with money from the Units 3 and 4. Also, some information suggest problems with water supply, especially in dry months. Nicolae Ceausescu's original plan was to displace thousands of people and to create an artificial water reservoir for the Units 3 and 4. This plan is of course unrealistic today. To sum up, the CGN is the investor in the Cernavoda NPP Unit 3 and 4 projects, the CGN subsidiary CNPEC (China Nuclear Power Engineering Co) is the constructor of the units, and the Industrial and Commercial Bank of China provided the finances to the investor. The design of the Units 3 and 4 will be the Canadian CANDU and as the CGN has no experience with CANDU design, the construction and the commission is to be overseen by the Canadian Candu Energy Inc, the owner of the CANDU technology and design. In 2014, Unit 3 is reported to be 53% complete and unit 4 to be 30% complete, and the construction should end in July 2019 (WNA, 2014). Also, there is some evidence that a second nuclear power plant is planned to start construction in 2020 and the Romanian authorities are currently looking for the best suited nuclear technology. The French EPR has been considered so far and Piatra Neamt was understood to be the best location for a nuclear power station based on the EPR technology ("Romanians ponder", 2008; "Old fashioned", 2008). This idea of a second NPP is in the very beginning of the process and no further development has been registered. The reason might also be the fact that current Romania's generation capacities exceed consumption, and further development of these capacities would have negative impact on the competitiveness of some Romanian electricity production options. Another reason might also be the French willingness to sell Mistral-class military Sector of Nuclear Energy in Central and Eastern Europe 231 232 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises ships to Russian Federation even after the Crimea crisis, which led to huge debates in Romania and froze the discussions about the second NPP with French technology. 4.10.3 The Front End of the Nuclear Fuel Cycle The end of the delivery of uranium metal to the USSR in 1963 did not mean the end of the uranium extraction industry in Romania. On the contrary, in 1960s, the follower company of Sovrom Cuartit, the Organizatia Expeditia Geologica worked on important geological surveys, where a lot of new uranium deposits were found, the Crucea-Botusana and the Tulghes-Grinties being the most important ones (Dumitrescu, 2010). During the socialist era, many deposits, both underground and open-cast, were mined (e.g. Avram Iancu, Dobrei, Natra, Ciudanovita, Bäita). Bäita, closed in 2009, was the biggest mine in Romania and was also the first to be opened in the 1950s by the Soviet Union. Nowadays, only Crucea-Botusana mines are still mined (together with the Rožná underground mine in the Czech Republic, these are the last two operating uranium mines in Europe). As Romania has yet not reported its production to OECD Nuclear Energy Agency, the Agency estimates the production is 80 tons of Uranium metal annually (OECD NEA 8c IAEA, 2014, p. 61). The Crucea-Botusana mines are mined over 40 years and they are almost depleted. The closure of the mines is planned to 2015. Therefore, the state-owned Compania Nationala a Uraniului SA. Bucuresti (CNU) is planning to develop the small Tulghes-Grinties deposit in the East Carpathian mountains about 100 km south of Crucea-Botusana at a cost of EUR 91 million (WNA, 2014). The investment will most probably be covered from the state budget and mainly by the CNU (Euratom Supply Agency, 2014, p. 12). It is an advanced project, as the feasibility study was already conducted. Authorities assess an annual exploitation of 124,000 tons over a 108 month long project (Stroe, 2013). The extracted uranium has been since 1977 transported to Feldioara Processing Plant, where uranium dioxide has been produced ever since. The uranium dioxide produced is then transported to the Nuclear Fuel Plant (FCN) Pitesti, where the CANDU fuel bundles are fabricated. The facility is recognized by the Atomic Energy of Canada Limited (AECL, nowadays known as Candu Energy Inc) as an authorized CANDU fuel manufacturer, the only supplier of this fuel in the Word outside Canada (Dumitrescu, 2010). The domestic uranium production covers the domestic uranium demand. Cernavoda 1 has been using 105 tons of natural U02 fuel per year; the domestic production of the fuel bundles fully covers the demand. In 2003, the production was doubled to 46 fuel bundles daily in preparation for unit 2 commissioning (WNA, 2014). We can thus clearly infer that Romania is self-sufficient in the uranium fuel production and supply. 4.10.4 The Service Part of the Nuclear Fuel Cycle Even though the Russian WER-440 design was also considered in the past, eventually, the CANDU design was selected. The decision was not done because of the actual need of the nuclear power plant, but rather due to the efforts to politically move away from the USSR during Nicolae Ceausescu's rule. Also, Ceausescu's denouncement of the Soviet invasion to Czechoslovakia in 1968 led to the end of Soviet- Sector of Nuclear Energy in Central and Eastern Europe 233 Romanian cooperation in the nuclear sector. He thus started to play the "Western" card to secure Western technology for Romania. The CANDU design has many structural similarities with PWR design, with the most visible difference that the power plant operation consists of only two circles, as the first and second one is jointed (see Table 4.10.2). Unlike with PWR, the CANDU design uses heavy water as regulator. Heavy water absorbs less neutrons, thus is able both to moderate nuclear reaction and secure criticality, and non-enriched fuel can be used. The Danube River is used as a reservoir for cooling water in the cooling circle. The reactor design originated in Canada, but was sold to and is used also in India, South Korea, Romania, Pakistan, Argentina, and China. Heavy water is produced within Romania, in ROMAG-PROD Heavy Water Plant in the city DrobetaTurnu Severin. The Romanian nuclear sector is relatively new, but very well organized. All the nuclear related institutions and bodies work under the Ministry of Economy and Finance, with the exception of independent control body (CNCAN, National Commission for Nuclear Activities Control), which is subordinated to the prime minister. The Cernavoda NPP and FCN Nuclear Fuel Factory are parts of the SNN Company, and the SNN together with Waste Management Agency (ANDRAD), Nuclear Agency (NA) and Romanian Authority for Nuclear Activities (RAAN) are subordinated to the Ministry of Economy and Finance. RAAN controls and coordinates the work of the ROMAG-PROD Heavy Water Plant, SITON Center of Design and Engineering for Nuclear Projects and INR Institute for Nuclear Research (Romanian Authority for Nuclear Activities, n.d.). 234 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Tab. 4.10.2:The CANDU Reactor Scheme (Uranium) Moderator Machine I__________ (in calandria) L—Zj->■-- ; -—— Cooling Water from Lake/OcearVRiver Source: Nuclear Engineering Romania has also quite a history of nuclear energy development originally based on the cooperation with the USSR. The cooperation started with creation of the joint venture Sovrom Cuartit Company to extract uranium. Even though the lifetime of the company was only 4 years (1951-1956), the USSR had received 17,228 tons of uranium metal until Romania bought out the Soviet stake in the company in 1961 (Cioroianu, 2005, p. 70). After the dismantlement of the Sovrom Cuartit, the cooperation flourished and USSR assisted with the construction of the WR-S research reactor in Magurele, U120 cyclotron and other equipment (Gheorghe, 2012, p. 10-11). In late 1960s, Romania started to court various Western governments and firms active in the nuclear industry. Sector of Nuclear Energy in Central and Eastern Europe 235 236 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises The reason was the poor quality of Soviet equipment and the fact the USSR was reluctant to share its technology with Romania as the USSR was delaying the delivery of nuclear technology to all Eastern European allies at that time fearing of nuclear proliferation (Gheorghe, 2012, p. 13). Tab. 4.10.3: Nuclear Units in Romania Reactor Type Power Output Status End of life-cycle Mägurele* VVR-S 2MWt Decommissioning 2002 Mägurele** Sub Critical Assembly - Shut down 2006 Mägurele** RP-0 OMWt Decommissioned - Pitesti*** TRIGAII 14MWt Operating 2025 Cernavoda 1 CANDU 6 706.5 MWe Operating 2026 Cernavoda 2 CANDU 6 706.5 MWe Operating 2037 Cernavoda 3 CANDU 6 720 MWe Planned - Cernavoda 4 CANDU 6 720 MWe Planned - Second NPP - 2,400 MWe Proposed - * It is a research reactor built in 1957 based at Horia Hulubei National Institute of Physics and Nuclear Engineering (IFIN HHJ.The reactor was shut down in July 1997. **The sub critical assembly "HELEN" is owned by the Faculty of Physics, University of Bucharest. The Zero Power Reactor RP-0 belongs to the Polytechnic University of Bucharest. *** It is an American research reactor manufactured by General Atomics built in 1980 and based at Institute for Nuclear Power Research in Pitesti. Source: compiled byT. Vlcek from open sources. Eventually, even though an agreement on construction of WER-440 design NPP at Olt River was never cancelled, Nicolae Ceausescu decided to deal with the unwillingness to share the technology simply with finding partnership in the West. And shortly after the energy crisis connected with the closure of the Suez Canal in 1967, Romania established that the CANDU reactor was the most efficient option3 (Gheorghe, 2012, p. 15,29). Also, in 1982 a contract was signed with the Soviet Union to build a WER-1000 nuclear power plant, which would have three 1,000 MWe reactors. The preparatory work even began in March 1986 for construction of a nuclear plant at Piatra Neamt, to be equipped largely by the Soviet Union (Federal Research Division of the Library of Congress, n.d.). Piatra Neamt is a city approximately 100 km from the current Moldovan border. But these plans appeared unattainable and the plan was scrapped. 4.10.5 The Back End of the Nuclear Fuel Cycle The used fuel from the Cernavoda NPP is cooled in Spent Fuel Storage Bay (SFB) next to the reactor with the capacity for ten years of operation for one unit (Radu, n.d., p. 115) and then stored in interim storage units4. The Interim Dry Spent Fuel Storage Facility (DICA) at Cernavoda NPP location is a modular construction5 with the first module operational from 2003, second from 2006, third from 2008, fourth from 2011 etc., with the final profile of 27 modules. Altogether, this storage capacity is enough for 50-80 years of storage for 2 CANDU Units (Rotaru, 2012, p. 24). At the end of 2002, after 6 years of plant operation, the inventory was of 30,344 spent 3 During the following negotiation period, the USA equipped Romania with different nuclear technology, including TRIG A II research reactor 4 There are other repositories in Romania for low and intermediate level waste, such as the location Baita-Bihor at the former uranium mine Baita operational since 1985. 5 A concrete monolith module of the rVLACSTOR type, a system designed by Atomic Energy of Canada Limited (see Andrei, Glodeanu,Talmazan & Radu, n.d.). Sector of Nuclear Energy in Central and Eastern Europe 237 238 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises fuel bundles, which means an annual production of 5,000 spent fuel bundles per Unit (Andrei, Glodeanu, Talmazan 8c Radu, n.d., p. 283). Obviously, another Dry Spent Fuel Storage Facility will be constructed for the Units 3 and 4. The Spent Fuel Final Disposal Facility (SFDF), e.g. the deep underground depository, is planned to be developed later as the capacity of the interim storage is adequate. The plan is to open the facility in 2050 and fill it with spent fuel until 2075, when it should be closed (Radu, n.d., p. 115). There are 15 locations that were taken into consideration for future geological analysis. Romania has got experience also with decommissioning of nuclear facilities with decommissioning of Magurele WR-S reactor, Sub Critical Assembly and RP-0 reactor, and with decommissioning of depleted uranium mines. The National Agency for Radioactive Waste (ANDRAD) together with the Ministry of Economy and Finance are responsible for the Decommissioning process of nuclear facilities, and these agencies have responsibly prepared very detailed plans and scenarios for the future including financing. Tab. 4.10.4: Romanian Nuclear Sector Examination Indicator Description Is there nuclear producing capacity present in the country? Yes, Cernavoda NPP (CANDU design, 2 Units of 706.5 MWe each) Is there a project to expand the capacity? What is the status of the project? Yes, financing resolved, negotiations reaching their end How was the project procured? Openly, without Russian bid Who is the contractor in charge of the project? China General Nuclear Power Group How is the financing secured? The contractor received a loan from the Industrial and Commercial Bank of China Who is the operator of the facility? Societatea Nationala Nuclearelectrica (91% Romanian Government, 9% Romanian Property Fund, of which 66% Ministry of Economy and Finance, and 34% private shareholders) for Cernavoda 1 and 2; EnergoNuclear SA (51% China General Nuclear Power Group; 49% Societatea Nationala Nuclearelectrica) for Cernavoda 3 and 4 Are there enough home-based experts to run the facility safely? Yes Who is/will be in charge of decommissioning? National Agency for Radioactive Waste together with the Ministry of Economy and Finance Who provides nuclear fuel and under what conditions? Romanian Nuclear Fuel Plant Pitesti, licensed and authorized CANDU fuel manufacturer by Candu Energy Inc What is the experience with the fuel being currently used? Is there any rationale or path-dependency behind the current contract? No operational issues; path dependency inherent as Nuclear Fuel Plant Pitesti or Canadian Candu Energy Inc are the only CANDU fuel type producers worldwide Is there any part of nuclear fuel industry present in the country? If so, how it contributes to country's nuclear fuel cycle? Romania houses working capacities for the whole nuclearfuel cycle and is therefore fully self-sufficient How is used fuel treated and who is in charge of this? The used fuel is stored in the Interim Dry Spent Fuel Storage Facility (DICA) at Cernavoda NPP, the DICA is owned and operated by Societatea Nationala Nuclearelectrica Sector of Nuclear Energy in Central and Eastern Europe 239 240 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises 4.10.6 Sources Andrei, V., 8c Glodeanu, R, 8cTalmazan, EC, 8c Radu, M. (n.d.). The licensing process of Cernavoda NPP interim spentfuel dry storage. Retrieved June 5,2015 from http://www.researchgate.net/publication/221704195_The_licensing _process_of_Cernavoda_NPP_interim_spent_fuel_dry_storage Canadian Nuclear Association. Retrieved June 5,2015 from https://cna.ca/ Cernavoda 38c4 construction back on after Candu Energy signs cooperation deal with Chinese state company. (2014, July 28). Nuclear Engineering International. Retrieved June 5,2015 from http://www.neimagazine.com/news/newscernavoda-34-construction-back-on-after-candu-energy-signs-cooperation-deal-with-chinese-state-company-4328151 CGN to invest in new Cernavoda units. (2014, October 20). World Nuclear News. Retrieved June 5,2015 from http://www.world-nuclear-news.org/NN-CGN-to-invest-in-new-Cernavoda-units-2010144.html CGN was selected as the final investor in Cernavoda 38c4. (2014, October 15). China General Nuclear Power Corporation Press Report. Retrieved June 5,2015 from http://en.cgnpc.com.cn/nl508/nl509/c817921/content.html China Nuclear Power Corporation, the only bidder for construction of Cernavoda reactors 3 and 4. (2014, September 9).Agerpress. Retrieved June 5,2015 from http://www.agerpres.ro/english/2014/09/09/china-nuclear-power-corporation-the-only-bidder-for-construction-of-cernavoda-reactors-3-and-4-l 8-52-52 Cioroianu, A. (2005). On Marx's shoulders. An introduction to the history of Romanian communism. Bucharest: Curtea Veche Publishing House. Dumitrescu, N. (2010). Uranium Mining and Milling in Romania. Presentation at "Low Grade Uranium Ore" IAEA, Vienna, 29-31 March 2010. Retrieved June 5,2015 from https://www.iaea.org/OurWork/ST/NE/NEFW/documents/RawM aterials/TM_LGUO/4e%20Dumitrescu%20%20Romania.pdf Euracoal. (2013). Country Profiles - Romania. Retrieved June 5,2015 from http://www.euracoal.org/pages/layoutlsp.php?idpage=77 Euratom Supply Agency. (2014). Annual Report 2013. Retrieved June 5,2015 from http://ec.europa.eu/euratom/ar/ar2013.pdf European Commission. (2012). Romania Energy Market 2011. Retrieved June 5,2015 from http://ec.europa.eu/energy/gas_electricity/doc/ ro_energy_market_2 011_en.pdf Federal Research Division of the Library of Congress, (n.d.). Romania - A Country Study. Retrieved June 5,2015 from http://www.country-data.com/frd/cs/rotoc.html Gheorghe, R.E. (2012). Romania's Nuclear Negotiations Postures in the 1960s: Client, Maverick and International Peace Mediator. Working paper # 1 of Romania Energy Center. Retrieved June 5, 2015 from http://www.roec.ro/wp- content/uploads/2012/08/Gheorghe_Nuclear-Negotiations-Postures_EN.pdf Hidroelectrica. (2012). Annual Report 2011. Bucharest: Hidroelectrica. Retrieved June 5,2015 from http://www.hidroelectrica.ro/showData.aspx?type=download8cdoc= RAPORT_2013.pdf Sector of Nuclear Energy in Central and Eastern Europe 241 ICEMENERG, &ANRE. (2012). Energy Efficiency Policies and Measures in Romania. Retrieved June 5,2015 from http://www.odyssee-mure.eu/publications/national-reports/energy- efficiency-romania.pdf International Renewable Energy Agency. (2012). Renewable Energy Country Profile Romania. Retrieved June 5, 2015 from http://www.irena.org/REmaps/countryprofiles/Europe/Romania.pdf Lificiu, P. (2012, April 27). The Energy Sector in Romania. Present and Future. Presentation of the Romanian Energy Regulatory Authority. Retrieved June 5,2015 from http://www.econet- romania.com/files/documents/27Aprill2/Vortrag%20ANRE.pdf Nuclear Engineering. Retrieved June 5,2015 from http://www.nuceng.ca/ Old fashioned nuclear tech under attack. (2008, May). The Diplomat Bucharest Online. Retrieved June 5,2015 from http://www.thediplomat.ro/print.php?reports_0508_l.php Organization for Economic Co-operation and Development Nuclear Energy Agency, 8cInternational Atomic Energy Agency. (2014). Uranium 2014: Resources, Production and Demand. Paris: OECD/NEA Publishing. Radu, M. n.d. Status of the Spent Fuel Dry Storage Programme for Cernavoda NPP. Retrieved June 5,2015 from http://www.iaea.Org/inis/collection/NCLCollectionStore/_Public/3 0/040/30040081.pdf Renewable Facts. (2011). Hydro electrical Power: Romania Factsheet. Retrieved June 5,2015 from http://www.renewablefacts.com/country/romania/hydro Romanian Authority for Nuclear Activities, (n.d.) Presentation of Romanian Authority for Nuclear Activities. Retrieved June 5,2015 from http://www.successromania.ro/documents/romanian_ authority_for_nuclear_activities_~1977870076.pps 242 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Romanians ponder price of French technology. (2008, March). The Diplomat Bucharest. Retrieved June 5,2015 from http://www.electricityforum.com/news/mar08/Romaniamaystickwit hCandu.html Rotaru, I. (2012). Romanian Nuclear Power Programme. Presentation at the Joint ICTP-IAEA School of Nuclear Energy Management, 5-23 November 2012. Retrieved June 5,2015 from http://indico.ictp.it/event/al 1195/session/96/contribution/68/materi al/0/O.pdf S. C. Hidroelectrica S.A. Retrieved June 5,2015 from http: //www. hidroelectrica.ro/ Schneider, M., 8cFroggat, A. et al. (2014). The World Nuclear Industry Status Report 2014. Paris/London/Washington, D.C.: A Mycle Schneider Consulting Project. Retrieved June 5,2015 from http://www.worldnuclearreport.org/ Stroe, D. (2013, September 16). Romania to start a new uranium extraction project. Independent Balkan News Agency. Retrieved June 5, 2015 from http://www.balkaneu.com/romania-start-uranium- extraction-project/ U.S. Energy Information Administration. Retrieved June 5,2015 from http://www.eia.gov/ World Nuclear Association. (2014). Nuclear Power in Romania. Retrieved June 5,2015 from http://www.world- nuclear.org/info/Country-Profiles/Countries-O-S/Romania/ Sector of Nuclear Energy in Central and Eastern Europe 243 244 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises 4.11 Country Case Study: Slovak Republic Tomáš Vlček 4.11.1 Introduction Slovakia is a country that shares common history with the Czech Republic until 1993, when Czechoslovakia was peacefully dissolved into Czech and Slovak Republic. Even though separated, the two Republics are still very close partners. The country entered the EU in 2004 and its economy and citizens' will allowed for the adoption of Euro in 2009. Slovakia is fully dependent on imports of crude oil from the Russian Federation via the Druzhba pipeline. As seen in Table 4.11.1, the imports of crude oil reached 146% in 2011. This happened due to the fact that Slovakia houses the Slovnaft, a.s. refinery in Bratislava with 5.5 Mt/y design capacity. The ownership structure of the Slovnaft refinery is 98.4% Hungarian MOL Rt and 1.6% other legal and physical entities (Slovnaft, a.s.). The transport sector accounts for half of all oil used in Slovakia (OECD & IEA, 2014, p. 392). The petroleum products are partly supplied to neighbouring states, especially the Czech Republic and Hungary. Slovakia is also almost fully dependent on natural gas imports from Russian Federation via the Yamal pipeline. Less than 3% of demand is covered by domestic production. Table 4.11.1 shows over 100% imports of gas in 2011; this is due to the fact that some gas is imported to be stored in the country's underground natural gas storages in the Láb complex. The capacity of this facility in Western Slovakia is 3.02 bcm (OECD & IEA, 2014, p. 401). Both crude oil and natural gas are also transported via the Druzhba and Eustream pipelines through Slovakia to the Czech Republic. Tab. 4.11.1: Key Energy Statistics Source Consumption Imports TPES share Electricity Generation share Crude Oil 4.09 Mt 146% 35.9% 2.0% Natural Gas 5.64 bcm 105% 26.7% 11.0% Coal (all types) 7.47 Mt 68% 21.4% 14.1% RES - - 7.7%* 19.1%* Nuclear Energy - - 23.5% 53.8% * Biofuels and waste stand for 5.5% of TPES share and 2.9% of Electricity Generation share; hydro stands for 14.5% of Electricity Generation share Note: 2011 data Source: US. Energy Information Administration; International Energy Agency, compiled and calculated byT.vlcek Slovakia produced 28.66 TWh of electricity in 2011 and produces 28 TWh annually on average. The import/export values are more or less coping with one another; the average import is 10.1 TWh and export is 9.3 TWh (International Energy Agency). The sovereign company in terms of its market share is Slovenské elektrárne, a.s. operating 68% (5,739 MWe) of the total installed capacity in the country (8,431 MWe) and produced 21.93 TWh in 2011, making it 77% of the total electricity production (Slovenské elektrárne, a.s.). The company is owned by Italian Enel Produzione S. p. A. (66%) and the Ministry of Economy through the National Property Fund of the Slovak Republic (34%). Due to mother company's debt, the Sector of Nuclear Energy in Central and Eastern Europe 245 246 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Italian Enel Produzione S. p. A. decided in summer 2014 to sell its share in Slovenské elektrárne, a.s. (Holes, 2014b) The following Table 4.11.2 shows the key power plants in the Slovak Republic besides the nuclear power plants. As seen in Table 4.11.1, nuclear energy produces more than half of the country's electricity consumption and is therefore the most important source of electricity. There are currently four operating units in Jaslovské Bohunice NPP and Mochovce NPP with two more being under construction at Mochovce site. The current total installed capacity in nuclear reaches 1,950 MWe.The nuclear energy sector is analyzed further in the text. Tab. 4.11.2: Key Power Plants in the Slovak Republic Power Plant Owner Installed Capacity Connected to the Grid Fired on Gabčíkovo HPP Vodohospodársky podnik, š.p. 746.54 MWe 1992-1996 Water ČiernyVáh PSHPP Slovenské elektrárne, a.s. 734.4 MWe 1982 Water Vojany 1 TPP Slovenské elektrárne, a.s. 440 MWe 1965-1967 Hard coal Vojany 2 TPP Slovenské elektrárne, a.s. 440 MWe 1973-1974 Gas Nováky B TPP Slovenské elektrárne, a.s. 440 MWe 1964,1976 Brown coal Note: HPP = Hydroelectric Power Plant; PSHPP = Pumped Storage Hydroelectric Power Plant; TPP = Thermal Power Plant Source: compilation byT.VIcek. Besides nuclear power plants, the remaining electricity generation capacity is well diversified. There are basically only five more centralized power plants with bigger cumulative capacity. Slovakia has been developing its hydroelectric potential, so two of them are Gabčíkovo Hydroelectric Power Plant (746.54 MWe) and Čierny Váh Pumped Storage Hydroelectric Power Plant (734.4 MWe). The Gabčíkovo HPP was originally part of the international Slovak-Hungarian project of Gabčíkovo—Nagymaros Waterworks. Hungaria withdrew from the project in 1977 due to negative environmental effects leaving Slovakia alone to choose whether to abandon the project or to finish it. After several years of negotiation and reconsidering, Slovakia adjusted the project and completed the Gabčíkovo Dam without the Hungarian Nagymaros part in 1992-1996. The Slovak-Hungarian international dispute at the International Court has still not been resolved. The Gabčíkovo HPP is owned by the state enterprise Vodohospodársky podnik, š.p. but operated by Slovenské elektrárne, a.s. In December 2014, it was announced that the Slovak Government terminated the contract between Vodohospodársky podnik, š.p. and Slovenské elektrárne, a.s. for violations of the contract ("Slovenské elektrárne", 2014). Legal struggle is now expected. The Čierny Váh PSHPP is the biggest hydroelectric plant in Slovakia and is also a very important part of the electricity supply system. It assists the TSO greatly as it is used as a primary regulation of the power balance. Vojany TPP and Nováky TPP are the country's fossil fuel power plants being fired on hard coal, brown coal, natural gas and heat fuel oil. Together their installed capacity is 1,398 MWe. Besides all these power plants, there are many decentralized small units around Slovakia, for example, several tens of small hydroelectric power plants followed by some photovoltaics, wind power plants and biofuels. Sector of Nuclear Energy in Central and Eastern Europe 247 248 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises 4.11.2 New Units and Financing of the Nuclear Power Plant Originally, the Mochovce NPP was supposed to be equipped with four WER-440/V-213 units, but due to the lack of finances, the construction of the units 3 and 4 was stopped in 1992. In 2006, Italian Enel Produzione S. p. A. acquired 66% stake in Slovenské elektrárne, a.s. and came with an investment plan to enhance nuclear capacities. The plan was eventually incorporated in the 2006 Energy Policy and 2008 Energy Security Strategy. These documents envisaged completion of Mochovce NPP 38c4 (+880 MWe); uprate of Jaslovské Bohunice V2 NPP and Mochovce NPP 1&2 (+180 MWe) and eventually uprate of newly constructed Mochovce NPP 38c4 (+60 MWe). In 2024, the operation of a new NPP of 1,200 MWe is also proposed (Ministerstvo hospodárstva SR, 2008, p. 106). The Mochovce NPP 38c4 were partially built and the project was thus a real completion. In 2007, Slovenské elektrárne, a.s. concluded a revolving credit line for seven years in the amount of EUR 800 million and the major shareholder announced its intend to invest over EUR 3 billion in Slovakia, of which approx. EUR 1.7 billion will be used for the completion of units 38c4 of the Mochovce NPP (Slovenské elektrárne, a.s., 2008, p. 19). The total cost was in November 2014 finally authorized at EUR 4.63 billion, the whole sum is covered exclusively with the company's own financial resources ("Akcionári schválili", 2014). In July 2008, the European Commission approved the completion of the units and in June 2009, contracts were signed with the original suppliers of the unfinished parts. The contracts were signed with Skoda JS a.s., ZAO AtomStroyExport and Slovak suppliers Výskumný Ustav Jadrovej Energetiky, a.s. (VUJE), Enseco a.s. and Inžinierske Stavby a.s. for more than EUR 370 million to supply the remaining nuclear island equipment (beyond that delivered 20 years earlier), with part of the instrumentation and control (I&C) systems being from Siemens AG. Contracts for engineering, construction and project management of the conventional island were signed with ENEL Ingegneria 8c Innovazione S.p.A., involving the use of Doosan Skoda Power s.r.o. steam turbines (WNA, 2014). The completion of the project was originally due in 2012 and 2013, but has been postponed several times, currently to November 2016 and 2017. The main reason was the implementation of new safety measures after the Fukushima Daiichi accident ("Urad jadrového", 2014). In 2008, plans for a new NPP were announced and it was decided that it will be a new reactor at Jaslovské Bohunice NPP site. A project company Jadrová energetická spoločnosť Slovenska, a. s. (JESS) was established in 2009, with 51% share for Jadrová a vyraďovacia spoločnosť (JAVYS), fully owned by the Slovak Ministry of Economy (Ministerstva hospodárstva SR), and 49% share for CEZ Bohunice a.s. fully owned by the Czech company CEZ, a.s. (Jadrová energetická spoločnosť Slovenska, a. s.) At that time, the Czech 2008 tender for the Temelin NPP contained an option for up to three more reactors; one of them was intended for Slovakian Jaslovské Bohunice NPP. In 2010, potential vendors were invited to send information about their projects. At the end of the year, six information packages were received: Westinghouse Electric Company LLC 1 Joint venture of AREVA SA and Mitsubishi Heavy Industries, Ltd. Sector of Nuclear Energy in Central and Eastern Europe 249 250 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises (AP1000 PWR of 1,117 MWe), ATMEA S.A.S.1 (ATMEA 1 PWR of 1,100 MWe), Mitsubishi Heavy Industries, Ltd. (Mitsubishi Advanced PWR of 1,700 MWe), Consortium MIR. 12002 (MIR 1200 of 1,200 MWe), Korea Hydro & Nuclear Power3 (Advanced Pressurised Reactor-1400 of 1,400 MWe) and AREVA SA (PWR EPR 1600 of 1,600 MWe). The material received was used for the feasibility study prepared in 2012 by Ustav jaderného výzkumu Rež, a.s., which stated that the location is suitable for up to 2,400 MWe of new installed capacity and a turnkey option is the most preferable. It was also said that all the offered technologies are suitable for the location. In September 2013, the work proceeded with the start of EIA process that should end in the second half of 2015 (Jadrová energetická spoločnosť Slovenska, a. s.). Originally, the project was meant to be financed by the stakeholders of the project company, e.g. the Jadrová a vyraďovacia spoločnosť (JAVYS) and the Czech company CEZ, a.s. In August 2010, the newly-elected centre-right government said it was keen for the Bohunice project to proceed, but would not offer any financial support for it (WNA, 2014). The Czech company eventually started to aim at withdrawal from the project, since they focused on the Czech Temelín NPP tender, and also because of its unsuccessful Balkan investments. In January 2013, Jadrová a vyraďovacia spoločnosť (JAVYS); CEZ, a.s.; CEZ Bohunice a.s.; and Jadrová energetická spoločnosť Slovenska, a. s. (JESS) signed a memorandum of understanding with Rosatom, as this company showed, in 2012, an interest to 2 Consortium of the companies SKODA JS, a. s., from the Czech Republic, Atomstrojexport, a. s., from the Russian Federation (a daughter company of the Russian company ZAO Atomstroyexport ) and OKB Gidropress, a. s. from the Russian Federation. 3 Subsidiary of Korea Electric Power Corporation KEPCO. be both technology provider and an investor in this unit (CEZ Bohunice a.s., 2014, p. 10). The CEZ, a.s. offered its 51% stake to Rosatom; the planned sell was supported by the Slovak government. However, Rosatom possibly sought a BOO (build-own-operate) arrangement, and also a guaranteed long-term electricity price of EUR 60-70 /MWh, which the Minister of Economy Tomáš Malatinský was unwilling to provide (Mitev, 2013), and therefore the transaction was scrapped. Slovaks eventually stopped the negotiations with Russians at the end of 2013, as Rosatom insisted on a guaranteed electricity price, and even though promised, no other proposal was provided. Shortly after, at the beginning of 2014, Rosatom stopped insisting on guaranteed prices and it is now prepared to consider any form of support from the Slovak side, which will ensure that a project is economically viable way for investors as well as for creditors (Holes, 2014a). Also, the new Minister of Economy of Slovakia Pavol Pavlis, who entered the office in July 2014, is inclined to offer electricity price guarantees. The new Jaslovské Bohunice II NPP should be operational after 2025. However, the negotiations and investor seeking is complicated, and financing of the new NPP is not secured. Other non-Russian subjects are interested as well (for example French and Slovak presidents discussed potential cooperation in nuclear energy in October 2013), but they were not disclosed and no official offer was received (Dargaj, 2014). 4.11.3 The Front End of the Nuclear Fuel Cycle The Slovak Republic shares common history with the Czech Republic as until 1993 the countries were coupled in Czechoslovakia. Therefore the uranium mining history is also Sector of Nuclear Energy in Central and Eastern Europe 251 252 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises common. Because the uranium deposits were richer in the Czech lands, uranium has never been really mined in Slovakia, except as a byproduct in molybdenum and copper mining or during some geological research (Rizman, 2009, p. 5). Uranium was therefore to some extent extracted in the Novoveská Huta deposit near the city Spišská Nová Ves, where 6,340 tons of uranium in 0.099 grade uranium ore is now deposited (Bartalský, Kuestermeyer 8c Novotný, 2012, p. 12). Other deposits include Kurišková — Jahodná, Kluknava, Kálnica — Selec. However, there is a plan for opening a new deposit Kurišková near the city of Košice in east Slovakia. A Preliminary Feasibility Study conducted by American Tetra Tech, Inc. gave evidence of 15,831 tons of economically exploitable uranium deposited in Kurišková (Ludovika Energy s.r.o.). Currently, detailed geological and technical research by the company Ludovika Energy s.r.o. takes place and this will be eventually followed by a feasibility study, EIA, and potential licensing procedure. The amount of resources will be enough for 50 years of Slovak needs, as Slovak demand is 300 tons of uranium annually (Bartalský, Kuestermeyer 8c Novotný, 2012, p. 24), which is an important incentive for further work on this deposit. The European Uranium Resources Ltd., 50% owner of both projects in Novoveská Huta and Kurišková (the other 50% owns Forte Energy NL), decided in April 2014 to sell their shares to Australia's Forte Energy NL for USD 8.5 million plus a 1% production royalty (Bacal, 2014). The reason might be the fact that the outlined development is not certain, as strong opposition emerged not only in local authorities and NGOs, but also in the Slovak Parliament, where two members of the parliament (SDKU-DS party) submitted in April 2014 a proposal for country-wide ban for uranium mining with local referendum approved exceptions. They later withdrew their proposal because the Minister of Environment Peter Ziga with the mayor of Košice Richard Raši succeeded with their initiative to impose a general uranium mining ban in the whole territory of the Slovak republic by a law. The government agreed on this amendment of the law in May 2014, and since June 2014, there has been a compulsory prerequisite for uranium mining — a positive compulsory referendum in affected municipalities ("Uranium mining amendment", 2014). Without this referendum it is forbidden by law to mine uranium in Slovakia. As people in the affected municipalities in east Slovakia are generally against uranium extraction, it will be very difficult to successfully complete the two abovementioned uranium projects. As Slovakia does not have capacities in the Front End of the Nuclear Fuel Cycle, it purchases the final product (uranium fuel) directly from the producer. Slovakia signed a contract with Russian TVEL in 2008, and according to this contract, TVEL is the provider of fuel until 2015 with an option to prolong the contract. The Government has however discussed the possibilities of reducing dependency on Russian nuclear fuel, and in November 2014, information about signing a contract for uranium fuel supply with a non-Russian company emerged without any further details. ("Vymeniť ruské", 2014; Ehl, 2014) Later the contract was publicly specified as a contract for the supply of enriched uranium only and this product will still be processed into nuclear fuel elements by TVEL. The supplies began in 2015. (Carney, 2014; Vilikovská, 2014) Unofficial information suggests that the new supplier of enriched uranium is AREVA SA. Sector of Nuclear Energy in Central and Eastern Europe 253 4.11.4 The Service Part of the Nuclear Fuel Cycle There are two nuclear power plants operating in the Slovak Republic with a total of four pressurized water reactors cooled and moderated by light water. The Jaslovske Bohunice NPP is located in western Slovakia near the Czech and Austrian borders. The VI Units were shutdown because of Austrian political pressure during the EU-accession period4, therefore only the V2 Units are currently in operation. Jaslovske Bohunice NPP is equipped with two VVER-440/V-230 pressurized water reactors (2x 505 MWe), which had provided their first electricity in 1984-1985. The second nuclear power plant Mochovce in southern Slovakia is equipped with two WER-440/V-213 pressurized water reactors (2x 470 MWe) and has been operating since 1998 and 2000. The new units at Mochovce site should be operational in 2016 and 2017. Both of the power plants were constructed with Soviet assistance end employs Soviet design WER reactors. The Slovak Republic (or Czechoslovakia) has also experience with its own reactor design. Between 1958 and 1972, the Czechoslovak KS-150 design Jaslovske Bohunice Al NPP had been constructed by domestic companies with Soviet support. Since 1972, the Al NPP had generated electricity until its shutdown in 1977 due to a nuclear accident (INES 4). Human error was behind the 1977 accident, with rector meltdown that eventually led to NPP shutdown. This also means that the Czech and Slovak experts have quite an experience with decommissioning and nuclear accident mitigation. 4 With EUR 437 million compensation from the EU for the first seven years after the shutdown. 254 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Tab. 4.11.3: Nuclear Units in the Slovak Republic Source Consumption Imports TPES share Electricity Generation share Crude Oil 4.09 Mt 146% 35.9% 2.0% Natural Gas 5.64 bcm 105% 26.7% 11.0% Coal (all types) 7.47 Mt 68% 21.4% 14.1% RES - - 7.7%* 19.1%* Nuclear Energy - - 23.5% 53.8% * Biofuels and waste stand for 5.5% of TPES share and 2.9% of Electricity Generation share; hydro stands for 14.5% of Electricity Generation share Note: 2011 data Source: open sources, compiled byT.vlcek. Speaking about the life-cycle of the nuclear units, they were all designed and licensed for 30-year operation. As the two units of Jaslovske Bohunice V2 reached its planned life-cycle, the operator requested in 2013-2014 at the Urad jadrového dozoru SR (Nuclear Regulation Office of the Slovak Republic) an extension of the life of the two units for another thirty years and a positive decision is expected. In fact, the operator counts that all the nuclear units will be operating for 60 years. The WER-440/V-230 model at Jaslovske Bohunice VI was not equipped with containment structure and this was one of the safety deficiencies and the main reasons Slovakia had to shut down the VI NPP in accordance with the Accession Treaty to the European Union. The Unit 1 was therefore shutdown in December 2006 and the Unit 2 in December 2008. During the natural gas crisis January 2009 caused by Russia—Ukraine gas disputes, the Slovak Government announced that the EU it will restart the NPP to mitigate the Sector of Nuclear Energy in Central and Eastern Europe 255 effects of the crisis (Rio, 2009). However, as the cut-off of Russian gas supplies was mitigated by reverse flow from the Czech Republic, the Jaslovské Bohunice VI NPP was not restarted. 4.11.5 The Back End of the Nuclear Fuel Cycle After at least 3 years of cooling, the spent fuel in a pool they are transported to the wet-type Interim Spent Fuel Storage (MSVP, Medzisklad vyhoretého paliva) at the Jaslovské Bohunice site. Spent fuel from both of the country's nuclear power plants is stored there. Even though the current capacity is 14,112 fuel assemblies, this will be enough only until 2021 (with respect to the new Units 3 and 4 at Mochovce). Plans for expansion are therefore being considered, as well as plans for construction of another Interim Spent Fuel Storage in Mochovce to avoid unnecessary transportation of spent fuel. The ISFS construction in Mochovce should commence in 2016. The whole Back End of the Nuclear Fuel Cycle is managed by the company Jadrová a vyraďovacia spoločnosť (JAVYS), fully owned by the Slovak Ministry of Economy (Ministerstva hospodárstva SR). This company thus also operates the Jaslovské Bohunice MSVP. It is also responsible for the safe storage of non-fuel radioactive wastes; therefore, it operates the storages at Jaslovské Bohunice and Mochovce sites, and since its construction in 2001, also the Republic Radioactive Waste Storage (RU RAO, Republikové úložisko rádioaktívnych odpadov) for industrial low- and medium-level waste (Jadrová a vyraďovacia spoločnosť). 256 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Tab. 4.11.4: Slovak Nuclear Sector Examination Indicator Description Is there nuclear producing capacity present in the country? Yes, Jaslovské Bohunice V2 NPP with two VVER-440/V-230 reactors (2x 505 MWe) and Mochovce NPP with two VVER-440/V-213 (2x 470 MWe) Is there a project to expand the capacity? What is the status of the project? Yes, the EIA procedure will be finished in second half of H2 2015, investor and technology provider is sought How was the project procured? The public procurement process has not yet been opened, direct negotiations with technology suppliers and investors in one are preferred Who is the contractor in charge of the project? Jadrová energetická spoločnosť Slovenska, a. s. (51 % Jadrová a vyraďovacia spoločnosť, fully owned by the Slovak Ministry of Economy; 49% ČEZ Bohunice a.s. fully owned by the Czech company ČEZ, a.s.) How is the financing secured? Originally from contractors, currently strategic investor is sought Who is the operator of the facility? Unclear, either Jadrová energetická spoločnosť Slovenska, a. s. or Slovenské elektrárne, a.s. Are there enough home-based experts to run the facility safely? Yes Who is/will be in charge of decommissioning? The operator together with Jadrová a vyraďovacia spoločnosť (fully owned by the Slovak Ministry of Economy) overseen by Úrad jadrového dozoru SR (Nuclear Regulation Office of the Slovak Republic) Who provides nuclear fuel and under what conditions? OAO TVEL under the contract from 2008; since 2015 undisclosed non-Russian company has started supplying the fuel, unofficial information suggests the new supplier is AREVA SA What is the experience with the fuel being currently used? Is there any rationale or path-dependency behind the current contract? No issues, as OAO TVEL is the traditional manufacturer and supplier of VVER-reactor fuel, path-dependency was expected, however, breached by the new undisclosed fuel supplier Sector of Nuclear Energy in Central and Eastern Europe 257 258 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Is there any part of nuclear fuel industry present in the country? If so, how it contributes to country's nuclear fuel cycle? None except for spent fuel storage How is used fuel treated and who is in charge of this? The whole Back End of the Nuclear Fuel Cycle is managed by Jadrová a vyraďovacia spoločnosť (JAVYS), fully owned by the Slovak Ministry of Economy; standard procedure with Interim Spent Fuel Storage at the Jaslovské Bohunice site; plans for expansion as well as for construction of another one in Mochovce; deep final underground depository planned 4.11.6 Sources Akcionári schválili rozpočet na dokončenie Mochoviec. (2014, November 21). Slovenské elektrárne, a.s. Press Releases. Retrieved May 20,2015 from http://www.seas.sk/clanok/akcionari-schvalili-rozpocet-na-dokoncenie-mochoviec/138 Bacal, D. (2014, April 4). European Uranium to sell Slovakia uranium projects to Forte Energy. Proactiveinvestors USA & Canada. Retrieved May 20,2015 from http://www.proactiveinvestors.com/companies/news/53229/europea n-uranium-to-sell-slovakia-uranium-projects-to-forte-energy- 53229.html Bartalský, B., 8c Kuestermeyer, A., 8cNovotný, L. (2012). Urán, významný slovenský energetický zdroj. Presentation of Ludovika Energy s.r.o. and European Uranium Resorces ltd. at the conference Spoločná energetická politika EU a energetická bezpečnosť Slovenska, Bratislava, November 26-27,2012. Retrieved May 20, 2015 from http://www.d-pro.sk/sfpa/files/energetika2012/Boris-Bartalsky.pdf Carney, S. (2014, November 11). Slovak Utility Diversifies Enriched Uranium Supply Chain Away from Russia. The Wall Street Journal. Retrieved May 20,2015 from http://blogs.wsj.com/emergingeurope/2014/ll/ll/slovak-utility-diversifies-enriched-uranium-supply-chain-away-from-russia/ CEZ Bohunice a.s. (2014). Výroční zpráva 2013. Retrieved May 20, 2015 from https://www.cez.cz/edee/content/file/o-spolecnosti/dcerine-spolecnosti/vz-cez-bohunice-2013-vcetne-zpravy-auditora.pdf Dargaj, M. (2014, March 5). Speciál: Projekt novej atómky sa zamotáva. Bude bez Rusov? V energetike. Retrieved May 20,2015 from http://www.venergetike.sk/aktuality/clanok/1014-special-projekt-novej-atomky-sa-zamotava-bude-bez-rusov/ Sector of Nuclear Energy in Central and Eastern Europe 259 260 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Ehl, M. (2014, November 11). Slovenský výrobce elektřiny omezí závislost na ruském jaderném palivu. Hospodářské noviny. Retrieved May 20,2015 from http://zahranicni.ihned.cz/cl-63095960-slovensky-vyrobce-elektriny-omezi-zavislost-na- ruskem-jadernem-palivu Filo,J. (2009, January 10). Vláda oznámila Európskej únii zámer spustiť Bohunice. Aktuálne.sk. Retrieved May 20,2015 from http:// aktuálne. atlas. sk/vlada- oznámila- európskej -unii-zamer-spustit-bohunice/ekonomika/slovensko-a-ekonomika/ Holeš, M. (2014a, January 16). Nová atómka v Bohuniciach je reálnejšia, Rusi ustúpili. Pravda.sk. Retrieved May 20,2015 from http://spravy.pravda.sk/ekonomika/clanok/305482-nova-atomka-v-bohuniciach-je-realnejsia-rusi-ustupili/ Holeš, M. (2014b, July 11). Slovenské a rumunské elektrárne sú na predaj. Pravda.sk. Retrieved May 20,2015 from http://spravy.pravda.sk/ekonomika/clanok/323683-taliani-predavaju- slovenské- a-rumunske- elektrárne/ Jadrová energetická spoločnosť Slovenska, a. s. Retrieved May 20,2015 from http://www.jess.sk/ Jadrová a vyraďovacia spoločnosť. Retrieved May 20,2015 from http://www.javys.sk/ International Energy Agency. Retrieved May 20,2015 from http://www.iea.org/ Ludovika Energy s.r.o. Retrieved May 20,2015 from http://www.ludovika-energy.sk/ Miliardy pro Rusy. Slovensko možná Rosatomu přihraje garance na jádro. (2014, July 10). E15.cz. Retrieved May 20,2015 from http:// zprávy, e 15. cz/byzny s/průmysl- a-energetika/miliardy-pro-rusy-slovensko-mozna-rosatomu-prihraje-garance-na-jadro-1100213 Ministerstvo hospodárstva SR. (2006) Energetická politika SR. Bratislava: Ministerstvo hospodárstva SR. Retrieved May 20,2015 from http://www.economy.gov.sk/energeticka-politika-sr-5925/127610S Ministerstvo hospodárstva SR. (2008) Návrh strategie energetickej bezpečnosti SR - upravené nové znenie. Bratislava: Ministerstvo hospodárstva SR. Retrieved May 20,2015 from http://www.rokovania.sk/Rokovanie.aspx/BodRokovaniaDetail?idM aterial=14372 Mitev, L. (2013, July 8). Rosatom Demands Guarantee From Slovakia On New Unit At Jaslovské Bohunice. NucNet - The Communications Network for Nuclear Energy and Ionising Radiation. Retrieved May 20,2015 from http://www.nucnet.org/all-the-news/2013/07/08/rosatom-demands-guarantee-from-slovakia-on-new-unit-at-jaslovsk-bohunice Organization for Economic Co-operation and Development, 8c International Energy Agency. (2014). Energy Supply Security — Emergency Response of IEA Countries 2014. Paris: OECD/IEA Publishing. Rizman, J. (2009). Urán: Riziká ťažby a spracovania uránu v Slovenskej republike. Bratislava: Greenpeace. Retrieved May 20,2015 from http://www.nasepodjestedi.cz/brozury/brozura%20SK.pdf Slovenské elektrárne, a.s. Retrieved May 20,2015 from http://www.seas.sk/ Slovenské elektrárne, a.s. (2008). Annual Report 2007. Retrieved May 20,2015 from http://www.seas.sk/data/education/50/file/ cfakepathvyr-spr-2007.pdf Slovenské elektrárne přišly o Gabčíkovo. (2014, December 4). Hospodářské noviny. Retrieved May 20,2015 from http://byznys.ihned.cz/cl-63213580-slovenske-elektrarne-prisly-o- gabcikovo Sector of Nuclear Energy in Central and Eastern Europe 261 262 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Slovnaft, a.s. Retrieved May 20,2015 from http://www.slovnaft.sk/ U.S. Energy Information Administration. Retrieved May 20,2015 from http://www.eia.gov/ Uranium mining amendment passed. (2014, May 26). The Slovak Spectator. Retrieved May 20,2015 from http://spectator.sme.Sk/articles/view/54076/3/uranium_mining_ame ndment_passed.html Urad jadrového dozoru: Mochovce sa dajú dostavať t remíne. (2014, December 16). Pravda.sk. Retrieved May 20,2015 from http://spravy.pravda.sk/ekonomika/clanok/339679-urad-jadroveho- dozoru-mochovce-sa-daju-dostavat-v-termine/ Vilikovská, Z. (2014, November 13). SE signs contract with new supplier of nuclear fuel. The Slovak Spectator. Retrieved May 20,2015 from http://spectator.sme.sk/c/20052607/se-signs-contract-with- new-supplier-of-nuclear-fuel.html Vlček, T., 8c Černoch, F. (2012). Energetický sektor České republiky. Brno: Masarykova univerzita. Vlček, T., 8c Černoch, F. (2013b). The Energy Sector and Energy Policy of the Czech Republic. Brno: Masarykova univerzita. Vlček,T., 8c Suchý, P. (2012). Pohled do historie uranového hornictví a jaderné energetiky v České republice. Bezpečnost jaderné energie/ Bezpečnosť jadrovej energie, 20(11/12), p. 351-357. Vymeniť ruské jadrové palivo za iné by bolo zložité. (2014, December 26). Pravda.sk. Retrieved May 20,2015 from http://spravy.pravda.sk/ekonomika/clanok/340617-vymenit-ruske-jadrove-palivo-za-ine-by-bolo-zlozite/ World Nuclear Association. (2014). Nuclear Power in Slovakia. Retrieved May 20, 2015 from http://www.world-nuclear.org/info/Country-Profiles/Countries-O-S/Slovakia/ 4.12 Country Case Study: Ukraine Tomáš Vlček 4.12.1 Introduction Ukraine declared its independence for the first time in the turbulent times after the February Revolution in the Russian Empire in 1917. The following Ukrainian war for independence ended with partition of Ukraine among Poland, USSR and Ukrainian SSR. The Ukrainian SSR withstood all the political changes in the world and lasted until the breakup of the USSR in 1991. In December 1991, three officials; Ukrainian president Leonid Kravchuk; Chairman of the Supreme Council of the Republic of Belarus Stanislav Shushkevich, and President of the Russian Federation Boris Yeltsin, signed the Belavezha Accords, dissolving the Soviet Union and establishing the Commonwealth of Independent States instead. The political struggle between presidential candidates Viktor Yanukovych (pro-Russian) and Viktor Yushchenko (pro-Western) eventually led to massive protest (Orange Revolution) and abdication of the elected president Viktor Yanukovych. However, at the end of Yushchenko's presidential mandate, one of his closed allies, Yulia Tymoshenko, turned against Yushchenko and ran for president. Even though she did not succeed, the country was politically harmed and Viktor Yanukovych became the president. This eventually led to a political switch from heading towards the EU to closer ties with Russia. This was again followed by a public protest and the power struggle continued. Two more presidents changed in the office (Oleksandr Turchynov and the current one Petro Poroshenko) and the country went to another crisis in 2014, Sector of Nuclear Energy in Central and Eastern Europe 263 when Crimea was annexed through Russian military intervention. The crisis burst out into civil war and the fighting continues in Eastern Ukraine until today. The country is still neither unified, nor stable. Tab. 4.12.1: Key Energy Statistics Source Consumption Imports TPES share Electricity Generation share Crude Oil 14.2 Mt* 55%* 7.2% 0.3% Natural Gas 64.6 bcm 69% 37% 9.5% Coal (all types) 64.1 Mt 20% 32.8% 38.2% RES - - 2.1% 5.7%** Nuclear Energy - - 18.7% 46.3% * 2010 data ** Hydro stands for 5.6% of Electricity Generation Share Note: 2011 data Source: U.S. Energy Information Administration; International Energy Agency, compiled and calculated byT.VIcek Speaking about fuel imports, the country is dependent on crude oil and natural gas imports. Speaking in percentage, the dependence is relatively lower than in many other CEE countries (55% and 69% respectively); however, speaking in absolute numbers, the consumption is high (14.2 Mt of crude oil and 64.6 bcm of natural gas in 2011), thus the import dependency is high as well. Crude oil is imported via the Druzhba and Prydniprovski oil-trunk pipelines from the Russian Federation to Ukrainian refineries (see Table 4.12.2). However, due to the current political and economical situation, only one of the seven refineries in Ukraine is operational — the Kremenchuk refinery. 264 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Tab. 4.12.2: Ukrainian refineries Refinery Owner Capacity Odessa VTB Bank OAO 2,8/3,9 Lysychansk TNK-BP 7,2/16,0 Kherson Continuum Group ?/7,1 Kremenchuk Privat Group (57 %), Naftogaz of Ukraine (43 %) 8,0/18,6 Drohobych Privat Group (75 %), Naftogaz of Ukraine (25 %) 2,0/3,3 Nadvirna Privat Group (74 %), Naftogaz of Ukraine (26 %) 2,2/4,0 Shebelinka UkrGazVydobuvannia 1,0/1,2 Note: capacity in Mt/y; first figure is technical (maximal available) capacity, the second is installed capacity Source: LUKOIL oil company; OECD&IEA, 2012, p. 142;„0// Processing Industry of Ukraine", n.d.; compiled by T. Vlček 31% of domestic consumption of natural gas is covered from the domestic sources. The main natural gas fields are Dashava in the West and Krestiche and Shebelinka in the East. There is also major potential in underexplored Ukrainian sectors of the Azov and Black Seas as well as in the onshore areas of the Crimean Peninsula. Very promising are also unconventional natural gas sources that could exceed 11.5 Tcm (Ministry of Energy and Coal Industry of Ukraine, 2012, p. 18-21). Driven by the idea of diversification of natural gas supplies, the Naftogaz of Ukraine1 (HAK Ha4)Tora3 yKpamn) signed a USD 3.65 billion contract with China Development Bank Corporation for investment programs into coal gasification 1 Owned fully by Ministry of Energy and Coal Industry of Ukraine. Sector of Nuclear Energy in Central and Eastern Europe 265 266 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises facilities in Luhansk, Donetsk and Odessa (Alic, 2013). The facilities are to be constructed by China National Chemical Engineering Corporation (CNCEC). Even though there are only several exclusively natural gas-fired power plants in Ukraine (700 MWe CHP-5 and 500 MWe CHP-6 in Kiev and 540 MWe CHP-5 in Kharkiv), as primary use of natural gas is for heating and cooking, the country will save 1.64 Bern annually (Revina, 2012, p. 8). The following Table 4.12.3 shows the key power plants in Ukraine besides the nuclear power plants. As seen in Table 4.12.1, nuclear energy constitutes 46.3% of the country's electricity generation share and is therefore the most important source of electricity. There are currently fifteen operating units in four nuclear power plants, all operated by DP NNEGC National Nuclear Energy Generating Company Energoatom (A,ep>KaBHe niAnpHeMCTBo HaiiioHaAbHa aTOMHa eHeproreHepyiOHa KOMnamfl EHeproaTOM) fully owned by the Ministry of Energy and Coal Industry of Ukraine. The current total installed capacity in nuclear reaches 13,835 MWe. The nuclear energy sector is analyzed further in the text. Besides nuclear power plants, the second most important source for electricity generation is coal with 38.2% on electricity generation share. 31,800 million tons of proven coal reserves at the end of 2012 ranks the country as No. 7 in the world (Euracoal, 2013) and as No. 2 in Europe (DTEK, 2014, p. 23). The most important is the Donetsk Basin in the East, followed by Lviv and Dnipro Basins. As of December 2012, more than 350 legal entities operated in the coal, lignite and peat production, processing and agglomeration sectors in Ukraine, of which approximately 250 produced and processed hard coal (Euracoal, 2013). The coal sector is an important part of Ukrainian energy sector, the government plans to further support development of its coal production capacities as well as the portfolio of coal-fired power plants by both modernization and new construction. The largest coal miner as well as the largest private energy company in Ukraine is DTEK, which produces nearly half of the total country's coal production. Tab. 4.12.3:1000+ MWe Power Plants in Ukraine Power Plant Installed Capacity Fuel Operator Construction Year Krivorozhskaya TPP 2,820 MWe Coal, Gas OJSC Dniproenergo 1965-1973 Pridneprovskaya TPP 1,765 MWe Coal, HFO OJSC Dniproenergo 1959-1966 Kurakhovskaya TPP 1,487 MWe Coal, Gas Vostokenergo LLC 1972-1975 ZuyevskayaTPP 1,245 MWe Coal Vostokenergo LLC 1982-1988 UglegorskayaTPP 3,600 MWe Coal, Gas OJSC Centrenergo 1972-1977 Starobeshivska TPP 1,775 MWe Coal, Gas OJSC Donbasenergo 1961-1967 BurshtynskaTPP* 2,300 MWe Coal, Gas OJSC Zapadenergo 1965-1969 ZmiyevskayaTPP 2,200 MWe Coal, Gas OJSC Centrenergo 1960-1969 TrypilskaTPP 1,800 MWe Coal, Gas OJSC Centrenergo 1969-1972 LuganskayaTPP 1,150 MWe Coal, Gas Vostokenergo LLC 1963-1969 LadyzhinskaTPP 1,800 MWe Coal, Gas OJSC Zapadenergo 1970-1971 ZaporiskaTPP 3,600 MWe Coal, Gas OJSC Dniproenergo 1972-1977 DaniproHPP 1,504 MWe Water VA UkrHydroEnergy 1947-1980 * The Burshtynska TPP is vital for ensuring electricity exports to Hungary, Slovakia and Romania as it operates within the Burshtyn Energy Island integrated in ENTSO-E.The export capacity is 650 Mwe. Note: TPP = Thermal Power Plant; HFO = Heavy Fuel Oil; HPP = Hydroelectric Power Plant; OJSC = Open Joint-Stock Company Source: Global Energy Observatory Sector of Nuclear Energy in Central and Eastern Europe 267 268 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Ukraine produced 194.9 TWh of electricity in 2011 and produces 189 TWh annually on average. The country is a net exporter, the average electricity exports value is 6.6 TWh (International Energy Agency). Electricity is exported mainly to Hungary and Belarus, to some extent also to Moldova and Poland. Negligible amounts go to Romania and Slovakia. The electricity sector is divided into seven main companies covering the whole country; these are OJSC Kyivenergo, OJSC Dniproenergo, Vostokenergo LLC, OJSC Centrenergo, OJSC Donbasenergo, OJSC Zapadenergo, and VA Ukr Hydro Energy, The country is dominated in terms of its market share by DTEK, Ukrainian leader in coal and energy markets. The company owns 72.4% in OJSC Kyivenergo, 73.3% in OJSC Dniproenergo, 100% in Vostokenergo LLC and 72.19% in OJSC Zapadenergo. The second most important subject is the Energy Company of Ukraine (HAK EHepreTHHHa KOMnamfl yKpaiHn) as it owns shares in these companies as well (78.29% in OJSC Centrenergo, 25% in OJSC Donbasenergo and 100% in VA UkrHydroEnergy). 4.12.2 New Units and Financing of the Nuclear Power Plant Following the recent decision for life extension of Rivne 1 and 2 and South Ukraine 1 and 2, the key Ukrainian topic in nuclear sector today is the life extension of operating units. In the following years, units Rivne 3, Khmelnitsky 1, South Ukraine 2 and 3, and Zaporizhzhya 1-5, will come to their 30-year design life and the operator is fully focused on the life extension process. Lifetime extension of Ukrainian NPPs is envisaged by February 2014 state Energy Strategy of Ukraine for the period up to 2030, and is considered as high priority activity by DP NNEGC Energoatom. Currently, there are Khmelnitsky units 3 and 4 under construction. The construction of units 1 and 2 started in 1981 and 1983, but the works were stopped as part of Ukrainian Moratorium on new nuclear plant construction in 1990. Units 1 and 2 were finished in 2004 shortly after the moratorium was lifted. Units 3 and 4, of which the construction started in 1985-1986, were however left unfinished — unit 3 was completed from 75% and unit 4 from 28%, according to DP NNEGC Energoatom (Sklyar, 2013, p. 17). The Information and Analytical Survey (IAS) of the Feasibility Study (FS) however described the degree of completion as 35-40% for unit 1 and 5-10% for unit 2 (Backer, Wallner, Hirsch, Indradiningrat 8c Andrusevych, 2013, p. 6). In 2005-2006, government decided to focus on finishing these two units, as well as to focus generally on nuclear power plants enhancement as part of reaction measures for problems with natural gas supply from Russia. The 2006 nuclear power strategy involved building and commissioning 11 new reactors with the total capacity of 16.5 GWe (and 9 replacement units totaling 10.5 GWe) to more than double the nuclear capacity by 2030 (WNA, 2014). This strategy was strongly corrected several times to current emphasis on life-extensions and around 2-5 GWe of new nuclear units by 2030. Five potential suppliers were invited to participate in the tender in 2008, Russian OAO OKB Gidropress (OAO OKB 'TuAponpecc"); Czech SKODA JS, a. s.; American Westinghouse Electric Company, LLC; Korea Electric Power Corporation KEPCO; and French Areva SA. Only OAO OKB Sector of Nuclear Energy in Central and Eastern Europe 269 270 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Gidropress and Korea Electric Power Corporation KEPCO however submitted their bids, and in October 2008, it was stated that the OAO OKB Gidropress' reactor facility WER-1000 V-392 was chosen as the reactor facility for new power units (Backer, Wallner, Hirsch, Indradiningrat 8c Andrusevych, 2013, p. 35-37). In February 2011, Russian ZAO AtomStroyExport and Ukrainian SE AtomProektlnzhiniring (Bn ATOMnpoeKTiroKHHipHHr, subdivision of DP NNEGC Energoatom) signed an agreement in Kiev to complete the reactors, and the following year, the Ukrainian Parliament adopted legislation to create a framework to finance the project, which included 80% of the funds coming from Russia (Schneider 8c Froggat, 2014, p. 138; "Contract agreement", 2011). The logic of the agreement is that Russia will provide loan for 80-85% of the total costs estimated at EUR 3.7 billion. The rest will be provided by Ukraine. However, Ukraine and Russia haven't yet agreed on the government guarantees for this loan, nor on the interest rate. One of the main conditions for the loan was a government guarantee that the Ukrainian side has not granted to the necessary extent. As a result, Sberbank offered Energoatom a credit for priority effort to implement the project on commercial terms, to which the Ukrainian side did not agree ("Russia to credit", 2012; "Further construction", 2011). There has been generally no progress in the matter since 2012, and the current Russia-Ukraine relations do not imply that the issue will be resolved soon. This idea was confirmed in August 2014, when DP NNEGC Energoatom stated that Ukraine will not cooperate with Russia in building new power units at Khmelnitsky NPP Yuri Nedashkovskiy, president of DP NNEGC Energoatom stated that Russian participation is not even considered from now on and that there are other financing options, such as long-term electricity export contracts to Europe. According to him, a "completely new attitude" towards nuclear power is adopted and he supports the idea of building new reactors using technology of Western design ("YKpaHHa peniHAa", 2014; "Ukraine to sign", 2014). This was demented by Russian side stating that the two parties are still negotiating over the Ukraine's Khmelnitsky Nuclear Power Plant (Sweet, 2014). Unfortunately, the most recent development in this issue is strongly affected by disinformation and propaganda of both sides in the conflict. The Ukrainian turn away from Russia can be observed since September 2014, when Ukraine and Westinghouse Electric Company, LLC started negotiating the possibility of privatization of nuclear power plants in Ukraine. The operator of the power plants DP NNEGC Energoatom could be privatized, which would allow for foreign investment and nuclear energy development. This most up to date plan was developed by Ukraine Prime Minister Arseniy P. Yatsenyuk and Pavlo M. Sheremeta, Ukrainian economist and former Minister of Economical Development and Trade ("Westinghouse xohct", 2014). 4.12.3 The Front End of the Nuclear Fuel Cycle Ukraine has got several decades of experience with uranium mining. It started in 1944 with the first deposits discovery. Subsequently, the Pervomayskoye and Zheltorechenskoye uranium deposits were mined out in 1967 and 1989 respectively. In the mid-1960s, the explorations revealed deposits in the Kirovgrad region that have been mined until today. Currently, Sector of Nuclear Energy in Central and Eastern Europe 271 272 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises three mines are in operation (Ingulsky with Michurinskiy and Centrálny deposits, Smolinskiy with Vatutinskiy deposit and Novokonstantinovskiy mine with the deposit of the same name) with uranium concentration ranging between 0.1% and 0.17%. The recoverable resources are 160,816 tons of uranium. Also, there are plans to begin operation of the Safonovskiy deposit in the Safonovskiy mine in 2015 with 2,248 tons of uranium in 0.02% grade uranium; and the Severinskiy-Podgaytsevskiy deposit in the Severinskiy mine in 2020 where 48,120 tons of uranium in 0.1% grade uranium ore is now deposited (OECD & IAEA, 2014, p. 426-427). The Vostochnyi mining-processing combinat VostGOK (CxÍahhíí T3K, Aep^KäBHe nÍAnpHeMCTBo "CxÍahhíí ripHiiHO-36araHyBaAbHHÍí KOMÔmaT"), fully owned by the Ministry of Energy and Coal Industry of Ukraine, is the only body operating in the uranium production and processing. The annual average uranium production of 940 tons of uranium concentrate has recently started to be exceeded by 1,000 tons annually. The first Ukraine uranium processing plant, the Pridneprovskiy Chemical Plant (PCP) in the town of Dneprodzerzhinsk, is connected with the first deposits discoveries. It was constructed in 1948 and uranium ore from the Pervomayskoye and Zheltorechenskoye uranium deposits was processed there. After mining out the mines, the PCP stopped uranium processing in 1991. The company developed zirconium production technologies and have processed zirconium from a mine near the city of Volnogorsk, the only zirconium mine in the former Soviet Union. Zirconium is used for fuel rods production and the mine with the processing plant has the capacity to meet all of Ukraine's zirconium requirements. In 1959, a second uranium processing plant (VostGOK) was constructed in the city of Zheltiye Vody. The plant capacity is 1.5 Mt/y of uranium ore (OECD & IAEA, 2014, p. 428) and it is the largest facility in the former Soviet Union's military industrial complex. Uranium fuel has always been provided by the Russian OAO TVEL. However, as the country's uranium production is quite significant, domestic uranium concentrate is send to the Russian Federation for enrichment and fuel fabrication. Domestic uranium production currently covers 30% of domestic requirements, but the expansion in uranium production due to new mines openings is expected to meet the uranium requirements for the Ukrainian nuclear fleet by 2014-2015 (OECD & IAEA, 2014, p. 430). Ukraine has planned to construct the facilities for domestic uranium fuel production since early 1990s (Levine, 1995, p. 896). Obviously, the fact that Ukraine houses extensive uranium and zirconium production played its part in these plans. There is, however, no enrichment plant in Ukraine, which is why Ukraine joined in October 2010 the new JSC International Uranium Enrichment Centre at Russian Angarsk in Siberia. The company is now owned by Rosatom State Atomic Energy Corporation (70%), JSC NAK Kazatomprom (10%), JSC Armenian NPP (10%) and Ukrainian State Concern "Nuclear Fuel"2 (10%) (JSC International Uranium Enrichment Centre). The Ukrainian State Concern "Nuclear Fuel" aims at preparation of domestic nuclear fuel elements production and fuel assembly fabrication. 2 rocyAapcTBeHHbiii KOHirepH "JiAepHoe toiiahbo" under the Ministry of Energy and Coal Industry of Ukraine. Sector of Nuclear Energy in Central and Eastern Europe 273 274 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Ukraine's State Concern Nuclear Fuel apparently sells natural uranium to IUEC, which enriches it at Russian plants. Then IUEC sells the enriched uranium to the OAO TVEL, which fabricates fuel assemblies and supplies them to NNEGC Energoatom. The remaining nuclear fuel required for Ukraine's nuclear power plants is purchased directly from OAO TVEL. The contracted volume is reported to be 60,000 SWU/yr, proportional to the Ukrainian shareholding, which covers approximately 3% of Ukraine requirements (WNA, 2014; Safirova, 2014, p. 47.5). However, as the capacity of Ukrainian share of IUEC is very low, NNEGC Energoatom signed a long-term contract with OAO TVEL for all 15 reactors. The contract was signed in June 2010 for 20 years, as Rosatom had offered a substantial discount to Ukraine if it signs up with TVEL for 20 years. Ukraine is OAO TVEL's biggest foreign client, totaling to 55% of its exports (WNA, 2014). Ukraine has historically been sending its used fuel to Russia for storage or reprocessing and has no long-term storage facility for high-level waste (Schneider 8c Froggat, 2014, p. 138). Westinghouse Electric Company LLC supplies WER design fuel assemblies to Ukraine as well. Although the price of the contract was not published, the logic is obvious. The Ukrainian political decision was clearly to diversify the supply of nuclear fuel even at higher costs. The contract was signed in 2008 and Westinghouse supplied a total of 630 fuel assemblies for the South Ukraine NPP ("More Westinghouse", 2014). And although there were similar problems (manufacturing defects in the fuel led to a lengthy unscheduled outage at two units) with the diversified fuel as in the Czech Republic's case, after the Russian annexation of Crimea, the contract with Westinghouse was extended until 2020 ("Ukraine signs", 2014; "Westinghouse significantly", 2014; WNA, 2014). So far, no figures or details on the quantities of fuel or the number of reactors involved were presented. The mentioned Ukrainian State Concern "Nuclear Fuel" is active in building nuclear fuel fabrication plant in Ukraine. It was in 2010 when tender for joint venture to build a plant to manufacture WER-1000 fuel assemblies was announced. OAO TVEL and Westinghouse Electric Company LLC bid to build this plant, and in September 2010, OAO TVEL was selected by the decision of the Cabinet of Ministers of Ukraine. It is likely that the OAO TVEL has won because it offered to transfer all the nuclear fuel manufacturing technologies from nuclear fuel elements filling and fuel assembly to the production of medicine and powder to the joint venture. The joint venture (Private Joint-Stock Company Nuclear Fuel Production Plant) thus comprises of OAO TVEL (50% -1) and State Concern "Nuclear Fuel" (50% +1) and the construction has been underway near the village of Smolino since 2012. In 2015, it is planned to put the assembly into operation, and by 2020, the plant will commence its own production of fuel pellets. Once operational, it will produce around 400 fuel assemblies annually. However, delays might occur, as the construction was delayed already in 2014 due to shareholders' disagreements and financial issues. Sector of Nuclear Energy in Central and Eastern Europe 275 4.12.4 The Service Part of the Nuclear Fuel Cycle There are four nuclear power plants operating in Ukraine with a total of fifteen pressurized water reactors cooled and moderated by light water. The Rivne NPP with two WER-440/V-213 units (415 and 420 MWe) and two WER-1000/V-320 units (2x 1,000 MWe); and the Khmelnitsky NPP with two WER-1000/V-320 units (2x 1,000 MWe) are located in Western Ukraine. The other two plants are located in Southern Ukraine. These are the South Ukraine NPP with three WER-1000 units of V-302, V-338 and V-332 types (3x 1,000 MWe); and the Zaporizhzhya NPP with six WER-1000/V-320 units (6x 1,000 MWe). The Zaporizhzhya NPP is the biggest nuclear power plant in Europe. All of the units were constructed with Soviet assistance end employs Soviet design WER reactors. All units are operated by DP NNEGC National Nuclear Energy Generating Company Energoatom (A,ep>KaBHe niAnpneMCTBO Hau,ioHaAbHa aroMHa eHeproreHepyiOHa KOMnama EHeproaTOM) fully owned by the Ministry of Energy and Coal Industry of Ukraine. There are also two research reactors in Ukraine. The 10 MWt WR-M reactor is located at Kiev Institute for Nuclear Research of the National Academy of Sciences of Ukraine. The reactor is scheduled for shutdown in 2015 followed by decommission. The very small IR-100 research reactor at the Naval Engineering School in the Sevastopol National University of Nuclear Energy and Industry in Crimea has been recently seized by the Russian Federation. Also, in 2012, the construction of Experimental Neutron Source at the Kharkov Institute of Physics and Technology began with US technological assistance. 276 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Tab. 4.12.4: Nuclear Units in Ukraine Reactor Type Power Output Status End of life-cycle Chernobyl 1 RBMK-1000 800 MWe Permanent shutdown 2000 Chernobyl 2 RBMK-1000 1,000 MWe Permanent shutdown 1991 Chernobyl 3 RBMK-1000 1,000 MWe Permanent shutdown 2000 Chernobyl 4 RBMK-1000 1,000 MWe Permanent shutdown 1986 Rivne 1 VVER-440/V-213 415 MWe Operating 2030 Rivne 2 VVER-440/V-213 420 MWe Operating 2031 Rivne 3 WER- 1000/V-320 1,000 MWe Operating 2016 Rivne 4 WER- 1000/V-320 1,000 MWe Operating 2034 Khmelnitsky 1 WER- 1000/V-320 1,000 MWe Operating 2017 Khmelnitsky 2 WER- 1000/V-320 1,000 MWe Operating 2034 Khmelnitsky 3 WER-1000/V-392B 1,000 MWe In construction - Khmelnitsky 4 WER-1000/V-392B 1,000 MWe In construction - South Ukraine 1 WER-1000/V-302 1,000 MWe Operating 2023 South Ukraine 2 WER-1000/V-338 1,000 MWe Operating 2015 South Ukraine 3 WER-1000/V-320 1,000 MWe Operating 2019 Zaporizhzhya 1 WER-1000/V-320 1,000 MWe Operating 2015 Zaporizhzhya 2 WER-1000/V-320 1,000 MWe Operating 2016 Zaporizhzhya 3 WER-1000/V-320 1,000 MWe Operating 2016 Zaporizhzhya 4 WER-1000/V-320 1,000 MWe Operating 2017 Zaporizhzhya 5 WER-1000/V-320 1,000 MWe Operating 2019 Zaporizhzhya 6 WER-1000/V-320 1,000 MWe Operating 2025 Kiev WR-M 10 MWt In termination 2015 Sevastopol IR-100 200 kWt Suspended ? Sou rce: Mykolalchuk, 2011; DP NNEGC Energoatom; State Nuclear Regulatory Inspectorate of Ukraine, 2013, p. 39; International Nuclear Safety Centers of Ukraine; open sources; compiled byT. Vlcek. Sector of Nuclear Energy in Central and Eastern Europe 277 278 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Speaking about the life-cycle of the nuclear units, they were all designed and licensed for 30 years operation. As many of the units achieved the 30 years of operation or are about to achieve, the life extension is one of the key targets of the nuclear units' operator. Lifetime extension of Ukrainian NPPs is envisaged by state Energy Strategy of Ukraine for the period up to 2030, and is considered a high priority activity by DP NNEGC Energoatom. The Rivne 1 and 2 have been extended by 20 years by State Nuclear Regulatory Inspectorate of Ukraine (Aep>KaBHa mcneKLUfl HAepHoro peryAioBaHHfl yKpamn) in 2010, and the South Ukraine 1 has been extended by 10 years in 2013. Actions for life extension of South Ukraine 2 and Zaporizhzhya 1 and 2 have been implemented since 2012. The Zaporizhzhya 1 was disabled for 96 days at the end of 2014 and Zaporizhzhya 2 and 5 will be disabled from February 2015 for 110 and 107 days respectively ("Ukraine will disable", 2014; "The power unit?", 2014). These outages are in line with the implementation of the planned activities associated with the prolongation of the life of these units. The requirement of a new license for these units might be problematic due to the lack of investment and potential EU pressure on closing the power plant. 4.12.5 The Back End of the Nuclear Fuel Cycle The country's spent fuel management is specific, as the spent fuel is partly stored on site and partly removed to Russian Federation for storage. Speaking about the Zaporizhzhya NPP, after cooling down the spent fuel in a pool, the spent fuel is stored in an interim dry storage facility on site (new facility for treatment solid radioactive waste will be commissioned in 2015). There is also a wet interim storage facility at Chernobyl NPP site (together with the whole Industrial Complex for Solid RW Management) for storage of high-level wastes from Chernobyl NPP and other sources. However, the spent fuel from all other Ukrainian NPPs is removed to the Russian Federation, according to the contract with OAO TVEL, at a cost to Ukraine of over USD 100 million per year. From 2011, high-level wastes from reprocessing Ukrainian fuel are to be returned from Russia to Ukraine to be stored in Ukrainian Central Spent Fuel Storage Facility (CSFSF) (WNA, 2014). However, this has been most likely postponed as the CSFSF is not commissioned yet. These high-level wastes are stored in the interim storage facility (ISF-1) at Chernobyl NPP, where another one (ISF-2) is currently under construction. It was the Strategy for Radioactive Waste Management in Ukraine adopted in 2009 that envisaged the construction of CSFSF. The Construction of the centralized storage facility of the State Specialized Enterprise "Centralized RW Management Enterprise" (AepJKaBHe cnen,iaAi30BaHe mAnpneMCTBo IleHTpaAbHe niAnpneMCTBo 3 noBOA>KeHHfl 3 paAioaKTHBHHMH BiAxoAaMn) was originally planned to take place in March 2011, but commenced in August 2014, and is being built with the financial support of the Department of Energy and Climate Changes of the United Kingdom and the European Commission. The final design capacity of the facility will allow storage of 16,530 used fuel assemblies, including 12,010 WER-1000 assemblies and 4,520 WER-440 assemblies (IAEA Contact Expert Group, 2012; WNA, 2014). The company is subordinated to Ukrainian State Corporation RADON (AK YKpAO "PaAOH") that collects, transports, Sector of Nuclear Energy in Central and Eastern Europe 279 280 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises conditions, and stores temporarily radioactive waste from all non-nuclear cycle enterprises, which produce radioactive waste in the course of their activities. USC RADON consists of Scientific and technical center and 6 facilities for storage and management, processing, decontamination etc. in Lviv, Kyiv, Kharkiv, Odessa, Donetsk and Dnipropetrovsk. The state managing body for USC RADON is the State Agency of Ukraine on Exclusion zone management (AepacaBHe areHTCTBo yicpaiHH 3 ynpaBAiHHH 30Horo BiAHyaceHiw). This company is in charge of management of RW processing including long-term storage and disposal in Chernobyl Exclusion Zone and is also in charge of the implementation of the state policy for RW management. Deep geological repository is planned in Ukraine without specific data as the new Central Spent Fuel Storage Facility is planned for at least 50 years of operation. Tab. 4.12.5: Ukrainian Nuclear Sector Examination Indicator Description Is there nuclear producing capacity present in the country? Yes, 4 nuclear power plants with a total of 15 reactors; Rivne NPP (2x 505 MWe VVER-440/V-213 and 2x 1,000 MWeVVER-1000/V-320 units), Khmelnitsky NPP (2x 1,000 MWe VVER-1000/V-320 units), South Ukraine NPP (3x 1,000 MWeVVER-1000 of V-302, V-338 and V-332 types), Zaporizhzhya NPP (6x 1,000 MWeVVER-1000/V-320 units) Is there a project to expand the capacity? What is the status of the project? Khmelnitsky 3 and 4, tender was won by OAO OKB Gidropress, however, due to Crimea crisis, the project was cancelled and other Western options are investigated, especially with Westinghouse Electric Company, LLC How was the project procured? Publicly, openly, five potential suppliers were invited (Russian OAO OKB Gidropress; Czech SKODA JS, a. s.; American Westinghouse Electric Company, LLC; Korea Electric Power Corporation KEPCO; and French Areva SA); OAO OKB Gidropress and Korea Electric Power Corporation KEPCO eventually submitted their bids and in October 2008, OAO OKB won the tender Who is the contractor in charge of the project? DP NNEGC Energoatom fully owned by the Ministry of Energy and Coal Industry of Ukraine How is the financing secured? Russian loan for 85% of total costs, however, due to Crimea crisis, the project was cancelled and other Western options are investigated, especially with Westinghouse Electric Company, LLC Who is the operator of the facility? DP NNEGC Energoatom fully owned by Ministry of Energy and Coal Industry of Ukraine Are there enough home-based experts to run the facility safely? Yes Who is/will be in charge of decommissioning? The operator together with State Agency of Ukraine on Exclusion zone management Who provides nuclear fuel and under what conditions? Ukraine's State Concern Nuclear Fuel sells natural uranium to IUEC in Russia for enrichment, OAO TVEL fabricates fuel assemblies and supplies them to DP NNEGC Energoatom; as the Ukrainian share of IUEC capacity is very low, NNEGC Energoatom signed a long-term contract until 2030 with OAO TVEL for all 15 reactors with a substantial discount; Ukraine's diversification efforts led to Westinghouse Electric Company LLC supplying VVER design fuel assemblies for the South Ukraine NPP, the contract with Westinghouse was extended until 2020 after the Russian annexation of Crimea Sector of Nuclear Energy in Central and Eastern Europe 281 282 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises What is the experience with the fuel being currently used? Is there any rationale or path-dependency behind the current contract? Some Westinghouse's fuel manufacturing defects led to a lengthy unscheduled outage at two units of the South Ukraine NPP Is there any part of nuclear fuel industry present in the country? If so, how it contributes to country's nuclear fuel cycle? Uranium production currently covers 30% of demand, opening of Safonovskiy and Severinskiy-Podgaytsevskiy deposits should cover the whole demand; VostGOK uranium processing plant in Zheltiye Vody has 1.5 Mt/y of uranium ore processing capacity; Pridneprovskiy Chemical Plant produces zirconium (used for fuel rods) has the capacity to meet all of Ukraine's zirconium requirements; the State Concern "Nuclear Fuel" (50% +1) together with OAO TVEL (50% -1) is constructing nuclear fuel fabrication and fuel assemblies plant at Smolino, it should be in operation by 2020 with production of around 400 fuel assemblies annually, delays are likely to occur How is used fuel treated and who is in charge of this? 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Retrieved June 5,2015 from http://www.globalconreview.com/news/russia- claims-it-stiJl-talking-ukrainel83636390101/ The Delegation from Nuclear Fuel State Concern (Ukraine) Made a Working Visit to JSC NNCP (2013, December 4). TVEL News. Retrieved June 5,2015 from http://www.tvel.rU/wps/wcm/connect/tvel/tvelsite.eng/presscenter/n ews/23f36a80420fbe23813ad5b32al94887 The power unit? 1 Zaporizhzhya NPP ahead of time connected to the network after recovery. (2014, December 13). NEWS.RIN.ru. Retrieved June 5,2015 from http://news.rin.ni/eng/news///78042/ TVEL JSC and the State Concern "Nuclear Fuel" (Ukraine) state the intermediate results of the construction project of nuclear fuel plant. (2011, September 16). TVEL News. Retrieved June 5,2015 from http://www.rosatom.ru/wps/wcm/connect/tvel/tvelsite.eng/presscent er/news/ba4488804859bcd9abl7ef426863e0b2 U.S. Energy Information Administration. Retrieved June 5,2015 from http://www.eia.gov/ yKpajma peiniiAa AOCTpoirrb XMeAbHimicyio A3C 6e3 yqacTJM Pocchh. (2014, August 27). VoccuucKoe amoMHoe coo6u/ecmeo. Retrieved June 5, Sector of Nuclear Energy in Central and Eastern Europe 287 2015 from http://www.atomic-energy.ru/news/2014/08/27/51031 Ukraine signs Westinghouse nuclear fuel deal. (2014, December 30). Business Insider. Retrieved June 5,2015 from http://www.businessinsider.com/afp-ukraine-signs-westinghouse- nuclear-fuel-deal-2014-12 Ukraine to sign reactor contract in months. (2014, September 3). World Nuclear News. Retrieved June 5,2015 from http://world-nuclear- news.org/NP-Ukraine-to-sign-reactor-contract-in-months- 03091402.html Ukraine will disable two blocks of Zaporizhzhya NPP for recovery. (2014, December 26). NEWS.RIN.ru. Retrieved June 5,2015 from http://news.rin.ru/eng/news/80217/ Westinghouse xoneT npiixBäTii3iipoBäTb A3C yicpaimbi. (2014, September 1). PoccuücKoe amoMHoe coo6ufecmeo. Retrieved June 5,2015 from http://www.atomic-energy.ru/news/2014/09/01/51144 Westinghouse significantly expands fuel supply in Ukraine. (2014, December 30). Westinghouse News. Retrieved June 5,2015 from http://westinghousenuclear. com/ About/News/View/ Articleld/515/ Westinghouse-Signifi can tly- Exp ands-Fuel- Supply-in-Ukraine World Nuclear Association. (2014). Nuclear Power in Ukraine. Retrieved June 5,2015 from http://www.world-nuclear.org/info/Country-Profiles/Countries-T-Z/Ukraine/ 338 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 339 4.14 Summary of findings 4.14.1 The Sector of Nuclear Energy in Central and Eastern Europe1 Tomáš Vlček As stated above, the aim of the research was to provide an in-depth analysis of Russian operations in the nuclear sector of Central and Eastern Europe. The research sought to unearth whether Rosatom subscribes to specific patterns of conduct with regard to business environment and if so, what are the determining factors of such behaviour. To meet the goals of the study, the following hypothesis was formulated: „Russian state-owned energy companies in the natural gas and nuclear sectors act in order to maximize their influence and market share in CEE markets and strengthen Russian geopolitical leverage and positioning in this region." This section is aimed to address the nuclear sector, i.e. conduct of Rosatom and its subsidiaries in the region of Central and Eastern Europe. The general findings addressing the hypothesis are described below with specific subsections dedicated to findings characterizing the conduct of Rosatom and its subsidiaries in cases under scrutiny. A secondary goal was to identify the behavioural determinants of Russian SOEs and how they differ according to various environments. In the nuclear sector, Rosatom is positioned as the dominant provider of nuclear technology and fuel supplies to the region, in large part stemming from the Soviet legacy in CEE countries. 1 The chapter is partially based on the article previously published in the International Journal of Energy Economics and Policy journal in October 2015, where preliminary outcomes of the research were presented. (Vlček & Jirušek, 2015) Compounding this challenge, nuclear energy is one of the major sources of power generation in CEE. Given the long-time, near monopoly of Russian nuclear technology/design in the region and plans to expand further the nuclear capacity of select CEE countries, the sector requires careful monitoring from both a technical and security-minded perspective. The behaviour of this Russian energy giant in Asia was also examined, due to the regions rise to be the new centre of gravity in the global energy environment and, as such, can offer valuable comparisons to the conduct of these companies in CEE. The nuclear energy sector has a number of structural differences when compared to crude oil, natural gas or coal; most typically it is not dependent on certain infrastructure and the uninterrupted flow of energy supplies. These supplies are also of different nature than those in the gas sector. These wide differences, including safety and other technical concerns, alter the behaviour of commercial actors in this space and make it somewhat more difficult to detect strategically motivated behaviour. Accordingly, the research team developed a specific approach to assess the potential risks associated with three different stages of the nuclear plant life-cycle: (1) the initial stage when the plant is being planned and financing is being secured; (2) the three sub-stages of the nuclear fuel cycle; and the (3) the final stage which is the decommissioning of the facility. The research team examined these three stages individually in order to identify potential risks of strategically motivated conduct of Russian companies. In the case of nuclear fuel, its origin, supply sources, usage and waste management were taken into account. The main findings of this exercise are below. 340 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Finding 1: All Roads Lead to Rosatom Although the research was aimed at the operations of Rosatom State Atomic Energy Corporation (OeAepaAbHoe areHTCTBo no aTOMHofi 3Hcprnn Poccnn, PocAtom), the evidence shows Rosatom operating directly in only three countries (Bulgaria, Hungary and Slovakia). Rosatom is the contractor of a new nuclear power plant (NPP) only in Hungary. However, Rosatom's network of subsidiaries is extensive and the bulk of the Russian Federations nuclear portfolio is executed through these subsidiaries which include, ZAO AtomS troy Export, OAO OKB Gidropress, OAO TVEL and others. The Table 14.4.1 below helps illuminate the network of companies that ultimately reports to Rosatom. All the companies JSC NIAEP, JSC Atomenergoprom, OAO TVEL, OJSC Atomenergomash are fully controlled by Rosatom, and therefore we can use the expression "Rosatom" even when speaking about these companies. In 1992-2008, Rosatom existed as the MinAtom - Ministry for Atomic Energy of the Russian Federation (MhhAtom, MnHHcrepcrBO no aTOMHofi 3Heprnn PoccnncKon OeAepannn). According to the law adopted by the Russian parliament and signed by Vladimir Putin in 2007, the MinAtom was transformed to one of six current Russian state corporations. The company was renamed to Rosatom State Atomic Energy Corporation and is subordinated to the Government of Russian Federation. Sector of Nuclear Energy in Central and Eastern Europe 341 Tab. 4.14.1: Ownership Structure of Russian Nuclear Energy Companies Company Shareholders Share (%) Rosatom State Atomic Energy Corporation Government of Russian Federation 100 ZAO AtomStroyExport Rosatom State Atomic Energy Corporation AO VPO Zarubezhatomenergostroy OAO TVEL OAO Gazprombank 78.5362 9.4346 1.3303 10.6989 OAO OKB Gidropress Experimental Design Bureau OJSC Atomenergomash 100 OAOTVEL OJSC Atomic Energy Power Corporation Atomenergoprom 100 JSC NIAEP OJSC Atomic Energy Power Corporation Atomenergoprom 100 JSC Atomic Energy Power Corporation Atomenergoprom Rosatom State Atomic Energy Corporation 100 JSC Inter RAOUES Rosneftegaz Group FGC UES Group Minorities* INTER RAO Capital Norilsk Nickel Group VEB RusHydro Group 27.63 18.57 16.65* 13.93 13.21 5.11 4.92 OJSC Atomenergomash OJSC Atomic Energy Power Corporation Atomenergoprom CJSC AEM Leasing INTERNEXCO GMBH OFEJSC Techsnabexport LLC Energomashkompleks 80.6296 2.3673 9.0896 2.8481 0.0453 * Minority shareholdings include ZAO AtomStroyExport, OJSC Rosenergoatom Concern, Rosatom Securities Limited. All these companies are part of the Rosatom which owns a 13.42% stake in JSC Inter RAO UES through these minorities. Source: compiled from open sources byT. Vlček 342 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 343 Finding 2: Path Dependency is an Important Factor Evidence of relatively strong path dependency was found in the nuclear sectors of the CEE countries. Of the twelve countries analyzed, six house a nuclear power plant on their soil and all plan to expand current capacity or construct new NPPs. The six countries referenced are Bulgaria, the Czech Republic, Hungary, Romania, Slovakia and Ukraine. Bulgaria proved to be an anomaly in that it has two WER-1000 units in operation and yet awarded Westinghouse Electric Company LLC the contract for the construction of Kozloduy 7, despite previous experience with only Russian technology. All of the other countries referenced have followed the path dependency related to previously implemented nuclear technology. Historical experience in the construction, commissioning and operation of reactors as well as downstream industries, education and training systems factor heavily in tender decisions. These ties to selected technology and infrastructure are a strong prerequisite for future decisions in public tenders. The existence of a nuclear power plant of one kind in the country is a strong factor for decisions about constructions of a new NPP of the same kind. The Russian Federation therefore has a better business starting position in CEE nuclear sectors due to historical and structural reasons. While it is generally the case that Rosatom is strongly advantaged in these tender scenarios, historical experience can also have the opposite effect. The operating phase is also dependent on a sufficient number of well-trained staff able to operate the facility. The uninterrupted development of a country's nuclear sector can greatly assist in maintaining this vital know-how. From this perspective, securing operation of nuclear units within a country is often key to Rosatoms future business development for the contractor as well as the customer country's preferences. Russian companies generally have the advantage of long lasting cooperation with countries in the region and know-how related to the nuclear units in the region built according to Russian design. In the decommissioning phase, no threats directly related to Russian involvement were identified. The decommissioning process is regulated by strict rules of treatment of the potentially hazardous materials. Although the amount of waste produced by nuclear plants is usually not an issue in terms of quantity, the question of its ultimate storage remains, as generally little has been done in terms of building final depository underground storages. It is thus rather a question of competence and capacity of particular state authorities to act in order to deal with this issue. Finding 3: Russian Nuclear SOEs Adapt to the Specific Needs and Conditions of the Operating Country The enormous cost of every NPP construction project makes such business extremely attractive for contractors given the limited number of such projects worldwide. The financial burden of such projects, however, often requires contractors to offer large-scale, low-cost financing packages in order to win tenders or be selected on a sole-source basis (i.e. with no tender process — a standard Russian sales goal). Smaller countries such as Slovakia, the Czech Republic and Hungary (not to mention the Baltic States) cannot hope to shoulder these multi-billion-dollar price-tags on their own. Quite understandably, in such situations contractors try to decrease the risk of financial loss or at least to secure their position in terms of future revenues by employing various financing schemes. In certain cases, they are also obliged 344 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 345 to secure financing of the project appropriate to their share in the joint-venture as, for instance, in the case of Bulgaria. Rosatom is a very flexible and adaptive entity when it comes to addressing the exact needs and conditions of the prospective sovereign client. Sales techniques and options that are widely accepted — and are also used by Russia — include: vendor investments (favored in the Czech Republic); strategic investment in the project itself (e.g. sharing the financial burden in exchange for a stake in the project and future (as took place for the Czech Temelin NPP and Romanian Cernavoda NPP); providing financial loans through national and/or private banks (as in the cases of the Bulgarian Kozloduy NPP, Ukrainian Khmelnitsky NPP and Hungarian Paks NPP); and the turnkey option (exercised for the Belarusian Ostrovets NPP and the Slovakian Jaslovske Bohunice NPP). Indeed, Rosatom was the first contractor to arrange payment for the entire construction phase of an NPP project. Quite recently a new type of contract has been introduced to the nuclear industry, namely the "Build-Own-Operate" (BOO) model or "Build-Own-Operate-Transfer" (BOOT). Rosatom markets this type of contract to "newcomers" that require an elaborate support structure. This sales model was applied in the case of Turkeys Akkuyu NPP, which will be that country's first nuclear power generating facility. In the BOO model, the contractor builds the plant and also operates it, while serving as the principal owner. Although it defies logic at some level, in effect, to turn over a strategically-sensitive national asset like a nuclear power complex to another country — particularly one like Russia — some states are content, via the BOO model, to exchange favorable financing for merely hosting the facility on its soi2. Among the several potential dangers of this scheme include the sovereign client becoming a "hostage" of the contractor who will be operating the facility. The popular view, however, is that the contractor would never abuse its position, as it could estrange potential future clients. This is especially true given the fact that Russians claim the BOO scheme is the best way to attract newcomers to the nuclear club. (Sokolov, 2013) The BOO contracts is certainly a proof of Russian strive to penetrate new markets with more open public procurement procedures and to root into these regions to exploit these countries' potential path dependency in the future. A little desperation might be seen in this strategy, as Rosatom takes the risk of not being paid for their constructions and services. The principal loan is usually to be paid including interest in fixed time (usually 10-20 years), however, when the construction of the NPP faces delays, it becomes difficult for operating countries to pay the loan within the original time. This is likely the reason why other nuclear companies worldwide do not plan to react to Russian BOO contracts with their versions of similar contracts. As mentioned, Rosatom operates through many different subsidiaries, in part to blur its identity, as illustrated in Finding 1. Although some of these subsidiaries were, no doubt, formed as a consequence of commercial circumstances, others were established to assist with Rosatom's reputational challenges. 2 Under the "Build-Own-Operate-Transfer" variant the facility is transferred to the state after certain, previously agreed, period of time. 346 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 347 Finding 4: The Sector is Strongly Driven by Economics Generally, the nuclear sector offers limited opportunities to exert influence because of the specific nature of the sector itself which shapes the behavior of respective actors and provides a framework for operational interaction. In fact, it is primarily the economics of a nuclear power project, driven by extraordinarily high costs of construction and the longevity of the projects (e.g, as many as 30 years or more), that provides Russia, in particular, with substantial advantage in the bidding process. Few, if any, countries and/or companies are able to build and finance an entire nuclear power plant. This makes the initial stage, where financing and identifying a strategic partner takes place, crucial and simultaneously the most sensitive in terms of the potential influence that can be exerted by an external actor. Given the limited amount of contracts in the nuclear sector and the revenue implications of each one, any attempt to use a nuclear contract as leverage on a particular country would cause substantial damage to any contractor's reputation. This fact diminishes the possibility of a nuclear contractor exerting political pressure over a sovereign client, as contractors with damaged reputations would find themselves in a difficult situation regarding future business prospects worldwide. Rosatom probably calculates that it cannot afford to be found guilty of abusing a particular project to advance its political/strategic goals, as it would essentially harm not only its long term future but also its immediate market capitalization. Naturally, no one could guarantee that no political pressure may take place during the bidding and procurement processes. The rather scarce contracts are usually worth several billions and it is thus natural that contractors give each potential contract high priority and are often backfired by their home governments by various means (rhetorically, formally by officials during state visits, by foundations and partnership programs, state guarantees, etc.). The scale of NPPs often requires Head of State attention and bargaining for some of the reasons mentioned above. Financing is the key issue of every project to ensure that initial costs are repaid during a reasonable period of time (i.e. before the life-cycle of the plant comes to an end). This very much depends on the electricity price in the client country, which has been an issue for some time in Europe due to relatively low and unpredictable prices that have undermined the commercial viability of certain nuclear projects. Obviously, this is an overarching concern, not exclusively related to the operations of Russian SOEs. On the other hand, Russian SOEs operating in the sector often come with a model that gives them a sizeable advantage over Western competitors in the sector as described in the following section. Finding 5: Rosatom Comes with Attractive Financing There are five countries in which public procurements have taken place or are underway where Rosatom is a player. These are Belarus, Bulgaria, the Czech Republic, Slovakia and Ukraine. Russia has selected financing as its "tip of the spear" in these competitive circumstances, some of which are referenced below. In the case of Belarus, Russia's Vnesheconombank, provided the Belarusian commercial bank Belvnesheconombank a subsidized USD 6 billion loan for the construction of the Ostovets NPP site in a remote area in the north of the country (Schneider 8c Froggat, 2014, p. 26). This loan was renegotiated 348 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 349 in 2009 and 2011 to end up at USD 10 billion, including investment in new infrastructure. The loan has a term of 25 years and will finance 90% of the total contract cost between AtomStroyExport and the Belarus Directorate for Nuclear Power Plant Construction. The Bulgarian Belene project, which was originally set to utilize the Russian WER-1000 design, has been offered a large-scale Russian loan several times to support the AtomStroyExport-led consortium. These offers have, thus far, been rejected for primarily political and security-related reasons. The project was eventually scrapped and attention shifted to a new unit at the Kozloduy site where Westinghouse Electric Company LLC was selected to be the contractor. In the Czech Republic, two vendor financial offers were made towards the end of the public procurement process for Temelins 3 and 4 units. Rosatom offered 100% coverage of project costs (through its JSC Rusatom Overseas subsidiary). Westinghouse, in turn, arranged a U.S. Exim Bank credit covering 50% of project costs. This one example speaks volumes about the respective levels of financial competitiveness of the two sides. In the end, no agreements were concluded and CEZ, a.s. cancelled the whole procurement procedure in April 2014. A major reason for the cancellation was the Czech governments announcement that it will not provide any electricity price guarantees for construction of the NPP A less public reason could be that Rosatom was set to win the tender, but it was judged too controversial for the Czech government to award Moscow the tender in the midst of the Ukraine crisis. In the case of Slovakia's Jaslovske Bohunice project, Rosatom expressed the willingness to purchase a 51% stake in the project company Jadrová energetická spoločnosť Slovenska, a. s., thus making it both the technology provider and strategic investor. Rosatom sought a guaranteed long-term electricity price of EUR 60-70 /MWh and possibly a BOO (build-own-operate) arrangement. As the Slovak Minister of Economy, Tomáš Malatinský, was unwilling to meet these conditions, the offer was rejected. The Slovaks eventually ended negotiations with the Russians at the end of 2013, as Rosatom continued to insist on guaranteed electricity prices. Shortly thereafter, at the beginning of 2014, Rosatom changed course abruptly and stopped insisting on a price guarantee. Indeed, it is now prepared to consider any form of support from the Slovak side, which will ensure that the project is economically viable for investors as well as for creditors (Holes, 2014a). Moreover, the new Minister of Economy of Slovakia, Pavol Pavlis, who entered office in July 2014, is inclined to offer such electricity price guarantees. Concerning Ukraine, in February 2011 Russia's ZAO AtomStroyExport and Ukrainian SE AtomProektlnzhiniring (a subdivision of DP NNEGC Energoatom) signed an agreement to complete reactor units 3 and 4 at the Khmelnitsky site. The following year, the Ukrainian Parliament adopted legislation to create a framework to finance the project, which included a plan to attract 80% of the necessary funds from Russia (Schneider 8c Froggat, 2014, p. 138; "Contract agreement", 2011). The terms of the agreement were that Russia would provide a loan for 80%-85% of total project cost (estimated at EUR 3.7 billion) and the remainder would be financed by Ukraine. To date, Ukraine and Russia have not agreed on a government guarantee for this loan or on the interest rate. One of the principal 350 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 351 conditions for the loan was a Ukrainian government guarantee that has not been granted to the necessary extent. As a result, Sberbank offered Energoatom a credit to implement the project on commercial terms, to which the Ukrainian side has not agreed ("Russia to credit", 2012; "Further construction", 2011). There has been generally no progress in the case since 2012, and current Russia-Ukraine relations do not bode well for the deal being concluded. Hungary is a rather special case. Rosatom was victorious in providing an expansion of the Paks NPP complex with no public tender whatsoever. It was rather a classic "backroom" deal concluded by the two Heads of State in a highly secret framework. In fact, the Hungarian Parliament was pressured by the Hungarian Prime Minister to pass legislation making it a crime to reveal the terms and conditions for a 30-year period. A EUR 10 billion loan was offered by the Russian Federation to co-finance the project3 and the deal was eventually cemented in January 2014, when Hungary entered into an international agreement with the government of the Russian Federation on the cooperation in peaceful use of nuclear energy (Balogh, 2014). The deal will reportedly involve the Russian Federation granting Hungary an interest-only loan at an annual rate of 3.9%, starting in 2014. Once construction is completed in 2026 (the expected operational date), the principal balance will be amortized over 21 years, with an interest rate of 4.5% for the first seven years, 4.8% for the next seven, and 4.95% for the final seven. ("A Brief Summary", 2014; "Kiderultek a reszletek", 2014). 3 The Russian side was allegedly the only one prepared to offer financing to support the project. The loan equals to 80% of the total costs of the project ('A Brief Summary, n.d."). Romania also stands aside as the public procurement process was without Russian bid due to the nature of the project. The project is actually a completion of Cernavoda units 3 and 4 on building foundations from 1980s. Analogical is the situation in Lithuania and Poland, where the public procurement process have been without Russian bid, too. Russian bids are not allowed in the public procurement process in these countries, which is related to the business environment. Finding 6: Business Environment Sets the Operational Framework Historical ties and traditional policies play an important role in the operational framework of Russian state-controlled companies. The research indicates three categories of "nuclear energy" states in the region. First is the Western-leaning countries of Bulgaria, the Czech Republic, Romania and Slovakia. These countries are enmeshed in EU structures, policies and procedures, making it more difficult for Russia to cut "sweetheart" deals of the type on display in Hungary. The interconnection with EU legislation also reduces the space for shadowy undertakings. EU procurement procedures and related documentation is formulated quite precisely, according to respective regulations and laws, especially those related to promoting fair competition. These positive features of EU integration and involvement in other Western political structures however, is accompanied by a tedious and complicated bureaucracy. The second category is non-nuclear states that seek to enter the nuclear club, but have more negative relationships with the Russian Federation. These countries include Poland and the 352 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 353 Baltic states. For example, the Lithuanian government explicitly excluded a Russian design in its tender for the Visaginas NPR Rosatom, through its subsidiary JSC Inter RAO UES, sought to oppose the project by offering its own alternative in Kaliningrad's Neman NPP announced in 2008. This effort however, was unsuccessful. The actual tender in Poland has not yet been opened, but it is also likely that there will be no Russian contractor or subcontractor allowed to bid on the project due to Polish very strong traditional anti-Russian feeling stemming from historical Russian-Polish relations. The third category consists of CEE nuclear countries that remain close to the Russian Federation for political, historical and economic reasons. These countries include Belarus and Hungary. Not so long ago, Ukraine would have appeared in this category, but, obviously, not now. These countries favor Russian energy enterprises, and Rosatom in particular. In addition, the business and political environments are more accommodating for Russian companies. As referenced earlier, special attention is warranted in the case of Hungary. It now fits in this third category, despite its EU membership, for ignoring proper procurement procedures and including state subsidies being granted to MVM Group. The EU has not sought to unwind the Rosatom contract for the Paks NPP, despite every necessary justification to do so, and instead concentrated on reducing Rosatom's monopoly on nuclear fuel supplies from twenty years to ten years. The decision to grant the project to the Russians was made by the Prime Minister and his closest collaborators without any official procurement procedure or even consultations with other interested parties, industry experts or the public at large. In sum, Rosatom is most often forced to operate within specific local, political, economic and regulatory frameworks, which means the business and political environment has a great deal to do with determining tender winners and losers and the operations of these facilities. In this regard, the importance of multilateral regimes, especially the EU, is as clear as it is necessary to discipline's Rosatom's behaviour, which is often more strategic, under Kremlin oversight, than it is commercial. Finding 7: Delays Are Natural Part of the Process When examining the nuclear industry, one of the key issues is actually the construction itself. To build a nuclear power plant is a complex undertaking that typically takes some five to seven years. Currently in countries such as South Korea and China, construction timetables range from four to six years and in European countries between six and eight years (Nuclear Energy Agency, 2012). Delays and additional work are natural components of the process. For example, the in-service dates of the pilot project of the Westinghouse's AP1000 design at the American Vogtle NPP in Georgia (in the United States) has been recently moved from April 2016 to December 2017 (unit I) and December 2018 (unit II) with additional work costing some $650 million. Rosatom's WER-1200 design at the Russian Novovoronezh II site has been postponed from the original in-operation date (2012 for unit I and 2013 for unit II) to 2014 for unit I and 2016 for unit II ("2014 startup", 2012). Moreover, this project is likely to be postponed again. AREVA's pilot European Pressurized Reactor (EPR) design at Finland's Olkiluoto-3 site has also been postponed several times. The original date of in-service (2009) has been recently changed 354 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 355 once again to the end of 2018. Olkiluoto-3's construction costs were first estimated at 3.2 billion euro. Later in 2012, the CEO of AREVA estimated the overall cost would end up closer to 8.5 billion euro (Rosendahl 8c De Clercq, 2014). These are only a few examples of the challenges of NPP construction that have reportedly afflicted some 50 of the 67 reactors under construction in 2014. The delays have stretched from several months to several years. All of the 17 remaining units are currently in their initial stage of construction, making it difficult to assess whether they are on schedule or not (Schneider 8c Froggat, 2014, p. 34). Either the construction process or the public procurement process, were behind schedule in each of the CEE countries analyzed. Although the reasons for these persistent delays and cost-overruns are often not made public, they are generally caused by rising material costs, delayed subcontractors' work, accidents, increasing safety requirements and public opposition. It seems clear that these set-backs are a natural part of the process of building highly complex nuclear units. There was no evidence of any delays motivated by political considerations, but this is not to exclude the possibility. Such irresponsible actions would mean substantial damage to the contractors reputation, given the complexity and strategic nature of a nuclear power plant for the client. As there are a limited number of such high cost contracts, the suppliers have to proceed very carefully not to compromise their position for future projects. In this sense, any effort to use delaying tactics concerning a nuclear contract for geopolitical purposes would be perilous for the contractors reputation in the markets, as was pointed out earlier. That said, Russia's efforts to derail Lithuania's NPP involved trying to delay the procurement process by introducing its own alternative in Kaliningrad to confuse the process. Should, for example, Rosatom politically manipulate the time of the construction process of its projects, it will likely never get another job overseas. Quite naturally, every contractor aims to highest possible capitalization within each contract, but this is neither exclusively related to a specific companies nor to the Russian ones. Although it is rumored that there were some unusual delays caused by not merely technical difficulties in some cases4, neither the contractor — and Rosatom is without any doubt no exception — can simply afford to be convicted for misusing the particular project for political goals of the homeland government. Such reputation would make any future projects impossible to reach for such contractor. Recommended tactic for any contracting party is thus to ensure that the procurement procedure and all the related documentation is formulated very precisely, leaving no room for further "behind-the-scenes" negotiations. Naturally, no one could guarantee that no political pressure may take place during the bidding and procurement processes. The rather scarce contracts are usually worth several billions and it is thus natural 4 Examples of these alleged non-standard delays are for instance the construction of Iranian Bushehr NPP and situation of the Czech Temelin NPP in early 1990s. The Iranian Bushehr NPP built by Russian companies was a subject to major delays that prolonged the original construction time to more than three times its original length. It is rumoured that Russians used this opportunity for consolidation and capitalization of their nuclear industry after it was seriously harmed by the collapse of the Soviet Union. Although this may be partially true the major reason for those delays was the vast complexity of this project that was originally built by Germans, then abandoned and damaged during the war between Iran and Iraq (Khlopkov 8c Lutkova, 2010). The Czech example relates to the situation when Russian engineers were forced to leave the project of Temelin NPP due to political changes following the fall of communist regimes in CEE countries. The hand-over of the project documentation was in this case slower than it should have been. But again, this was rather caused by the financial situation and the fact that Russian companies were losing their ground in the formerly closely tied economies. But even if the delays were financially motivated it was no way near political motives which, as stated above, would make a serious and lasting damage to the contractor's reputation. 356 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 357 that contractors give each potential contract high priority and are often backfired by their home governments with by various means (rhetorically, formally by officials during state visits, by foundations and partnership programs, state guarantees, etc.). Finding 8: Dependency of Operators of WER Reactors on OAO TVEL Fuel Not surprisingly, for the WER reactor design, the dominant supplier is the Russian company OAO TVEL. This company supplies nuclear fuel for each of the analyzed countries, except for Romania and partially Slovakia and Ukraine. The WER type fuel assemblies are hexagonal, while the Western reactor fuel employs square-shaped fuel assemblies. Although the WER type fuel can be produced by Western companies, Russian experience and facilities are difficult to beat in terms of price of the product. Even though Westinghouse5 and other companies6 are capable of supplying the client country with WER design fuel assemblies, they cannot do so at competitive prices7. For example, Westinghouse says it could resume WER fuel rod production with an investment of $20 million, if 5 The Czech experience: The long-time fuel supplier for the Temelín NPP was the Russian company TVEL. Since 2002, when the plant was launched, to the end of 2009, fuel for the Temelín NPP was supplied by the American company Westinghouse Electric Company, LLC. It is well-known that the fuel rods were deflective in the active zone of reactor at that time. This was caused by the different shape of the fuel assemblies which Westinghouse produced. Hexagonal assemblies for Temelín were initially provided by Westinghouse Electric Company LLC, but the fuel rods suffered from torsion, which resulted in forced operational interruption, limited production and inability to produce electricity at full capacity. These issues occurred mainly due to Westinghouse's short experience with WER design fuel assemblies, as they began providing this product only in 1997. In 2010, a selection process for a new supplier took place and was awarded to the Russian TVEL, which submitted a financial offer that was substantially below other offers. TVEL will now be supplying nuclear fuel to the Czech Republic until 2020, and is now the exclusive fuel supplier for both Czech nuclear power plants. 6 For example, since 2010 part of the nuclear fuel supplies for Chinese WER design reactors has been produced by Chinese China National Nuclear Corporation. ' Westinghouse, for example, now supplies WER design fuel assemblies to Ukraine. Although the price of the contract was not published, the logic is clear. The Ukrainians made a political decision aimed at diversifying the supply of nuclear fuel even at a higher cost. Although some problems similar to those allowed back into the market. Such a plan, however, would take at least two years. (Lenoit, 2014) The economies of scale play into the hands of Russian TVEL. The logic chain is as follows: Westinghouse will reenter the market only if customers can be found; these will be found only if the product is offered at a competitive price; the product will be offered at a competitive price only if the existence of customers allows investment into production capabilities; the investment in production capabilities will be allowed only if customers can be found. Accordingly, the situation resembles a kind of a vicious circle that can be breached but is unlikely to be anytime soon. It is also worth noting that TVEL manufactures nuclear fuel assemblies for Western type reactors as well. This feature of the nuclear sector is currently being addressed at the EU level, as the European Commission offered a research grant of EUR 2 million for safety analyses, tests and further study into the licensing of other than TVEL-produced nuclear fuel ("Kdo nahradí ruské", 2014). Such an allocation supports the diversification of nuclear fuel supplies and also serves as indirect support of TVEL competitors in the EU market, especially Westinghouse. It is also clear evidence of the fact that political will can change a seemingly unchangeable pattern, at least from a commercial perspective. In sum, the nuclear fuel cycle does not represent an unworkable, one-sided dependency on Russian supply. This is, in part, because of the global abundance of uranium and a highly competitive uranium market, enabling countries to switch between suppliers more easily. On the other hand, faced by the Czech Republic have surfaced, after the Russian annexation of Crimea the contract with Westinghouse was extended until 2020, validating the politicization of the decision. 358 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 359 Rosatom's fuel subsidiary has some sizeable advantages over other suppliers stemming from long-term, technology-specific relations with CEE countries, experience and technological compatibility based on the prevalence of nuclear units built according to Russian design. This results in better pricing — also occasionally lowered for political purposes — and generally smoother operation of those fuel assemblies provided. Switching to another provider is possible, but may be accompanied by higher prices and operational difficulties in the early stages. Finding 9: Spent Fuel Treatment Procedure Poses Only Standard Risks There are two types of nuclear fuel cycles that differ in the last phase. When the fuel is not reprocessed and is disposed after use, it is called the "open" or "once-through" nuclear fuel cycle. If the fuel is reprocessed, the nuclear fuel cycle is referred to as "closed". Fuel reprocessing is nowadays technically and financially demanding, which only a few countries in the world are willing or able to afford8. In the next 50 years, this may become common practice. Currently, nuclear fuel is reprocessed only by countries with a broad portfolio of nuclear power plants (such as France, Russia, UK, Japan and certain others). The fuel is reprocessed only by countries with a broad portfolio of nuclear power plants (such as France, Russia, UK and some others), where it makes economic sense. The global recycling capacity is presently some 5,370 tons annually, which is only around 8.7% of global uranium demand. Far more usual is the open nuclear fuel cycle option. 8 In 2011, it was only China, France, the Great Britain, India, Japan, Pakistan, Russia and the USA. After removal from the reactor, three phases of fuel disposal follow. In the first phase, fuel cassettes are actively cooled in a pool next to a reactor. After at least five years they are moved into dry containers and then passively cooled in interim storage facilities. The interim storage units are built with the capacity to last for several decades, at least for a period exceeding the lifespan of the power plant itself. The second phase includes safe transport to the final waste disposal site. The third phase, disposal, is understood to be the final operation, which is why the depository for the spent fuel needs to offer impenetrable protection. None of these phases generally pose a risk related to Russian SOEs. Constructing a deep geological repository is a very complicated process which requires confident data regarding its locality. In terms of its radioactivity, spent fuel becomes safe at least for 300 years after its removal from a reactor, which is accordingly the period for which a repository has to function without difficulty. In that relation, we can mention an interesting aspect of a nuclear sector, namely that spent fuel also alone protects itself against abuse, because its removal from the protection containers would, during this period, mean a deadly dose of radiation (Vlcek 8c Cernoch, 2013, p. 137). The possible abuse could be actually a dirty bomb production only (in the "closed" cycle) or also nuclear bomb (in the "open" cycle). Unlike with the reprocessing, storage is always managed by the home country, unless the return of the used fuel to the possession of the producer is not a part of the contract9. The risks within the 9 Currently, this is for example a part of the contract between the Russian Federation and Hungary (Digges, 2014). But the so-called Commercial Nuclear Fuel Leasing might become an interesting future's option, as it might very positively relate with nonproliferation efforts and spent fuel management. 360 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises Sector of Nuclear Energy in Central and Eastern Europe 361 storage are very low given to strict security measures by respective national nuclear safety authority, the Non-Proliferation Treaty and the International Atomic Energy Agency regulations. A deep geological repository is meant to be a final repository of spent nuclear fuel. It is questionable whether it should be technologically implemented, so as to make it impossible for already deposited waste to ever be picked up again, or to enable deposited waste to be extracted and processed in the far future. Even though experts are rather inclined to the second alternative, because spent nuclear fuel represents a very valuable material which can be used as fresh fuel after being processed or even as fresh fuel without previous processing10, economic reality suggests the first alternative11. The most expensive feature of a repository is its operation, which makes it economically unreasonable to keep a repository open for decades. This means it is better to store spent fuel on a long-term basis in interim storages and only when so decided, to deposit high-activity radioactive waste rather at once, and to do it definitely (opening and using it again would be impossible). A deep geological repository is constructed under the assumption it will work for the next hundred years (Vlcek 8c Cernoch, 2013, p. 137). The countries analyzed, can be divided into two basic categories. Those countries in the first category (i.e. Belarus, Bulgaria and Ukraine) send their spent fuel to the Russian 10 Some of the current fourth generation reactor projects plan to use as a fuel previously spent fuel. 11 The assumption that using reprocessed fuel is not economically viable under the current conditions (i.e. world abundance of uranium and highly competitive global market) has been also confirmed by, for instance, the updated interdisciplinary MIT study on nuclear energy from 2009 (Deutch et al., 2009) and very little has changed since then. Federation for reprocessing. It is not actual reprocessing per se, as the same reprocessed fuel is not returned to the country. Rather, as a part of their contracts, the fuel is "leased" and repatriated after use. Only the separated wastes are returned to the country for storage. The states in the second category (i.e. the Czech Republic, Hungary, Lithuania, Romania, Slovakia and partly Ukraine) purchase fuel from Rosatom and spent fuel management is completely done by them. This option is much more common. So, as part of the Belarusian-Russian contract, for the life of the plant the used fuel will be repatriated to Russian Federation. It will be reprocessed there and the separated wastes returned to Belarus eventually. The same logic is applied in Bulgaria where used fuel is being sent for reprocessing to Russia under the agreement from 2002 for USD 620,000 per ton. Spent fuel from all Ukrainian NPPs, except for Zaporizhzhya NPP, is removed to the Russian Federation according to the contract with OAO TVEL at a cost to Ukraine of over USD 100 million per year, and the high-level wastes from reprocessing Ukrainian fuel was to be returned from Russia to Ukraine to be stored in Ukrainian Central Spent Fuel Storage Facility (CSFSF). The CSFSF facility construction has commenced in August 2014. The states in the second category (Czech Republic, Hungary, Lithuania, Romania, Slovak Republic and partly Ukraine) actually purchase the fuel and the spent fuel management is completely theirs. This option is much usual. In the Czech Republic, spent fuel is owned by the operator of the nuclear power plants and stored in interim dry storages in the areas of the Dukovany andTemelin NPPs. The used fuel in Hungary is stored in domestic interim and long-term storage facilities of 362 Energy Security in CEE and the Operations of Russian State-Owned Energy Enterprises the state owned Public Limited Company for Radioactive Waste Management (PURAM). In Lithuania, the spent fuel is partly stored in storage pools next to the reactors, and partly in dry storage at the Ignalina NPP site. The used fuel in Romania is stored in the Interim Dry Spent Fuel Storage Facility (DICA) at Cernavoda NPP. The whole Back End of the Nuclear Fuel Cycle in Slovakia is managed by Jadrová a vyraďovacia spoločnosť (JAVYS), and there is a standard procedure with Interim Spent Fuel Storage at the Jaslovské Bohunice site with plans for expansion as well as for construction of another one in Mochovce. Used fuel from Ukrainian Zaporizhzhya NPP is stored in interim dry storage facility on site. The facility is always under control of the respective state. The spent fuel (or back-end) treatment procedure is nothing extraordinary. It is a fairly common procedure and no threats or abuses appear to be related to Russian involvement, as the nuclear fuel cycle is regulated by strict rules due the potentially hazardous materials involved. Although the amount of waste produced by nuclear plants is usually not an issue in terms of quantity, the challenge of its ultimate storage remains. Little has been done in terms of building final underground storage facilities.