Akkuyu on track


The Russian consortium developing Turkey’s first nuclear power plant on its southern Mediterranean coast is on track to commission the first of four VVER-1200 reactors in 2020, Alexander Superfin, chief executive of the project company Akkuyu NGS said in an interview July 23. Superfin confirmed that the project company led by Rosenergoatom, the Russian state nuclear power plant developer and operator, had applied for all necessary licenses and permits for the 4,800-MW Akkuyu plant in Mersin Province as stipulated by the intergovernmental agreement signed by Ankara and Moscow in May 2010 and that preparatory construction work was currently scheduled to begin in mid-2013. “The project company was supposed to apply for all major licenses and permits which we have done,” he declared. “Thus far, we have received the site license, which was confirmed earlier this year. The site was assigned for the project back in the mid – 1970s and this license was transferred to the project company in 2011. We provided documentation to confirm that this site’s current conditions are unchanged from when the license was originally awarded,” he explained. “Last year we started full-scale site surveys and have completed the first phase and are continuing on a much wider scale,” he added. “We have also applied for a power generation license, which we expect to receive from the Energy Market Regulatory Authority by the middle of next year. Work is actively continuing on the environmental impact assessment (EIA) by certified Turkish and international consultants and we are scheduled to receive a positive decision on the EIA also sometime in the middle of next year. We are continuing with front-end engineering design and anticipate completing the design some time in the middle of next year. We have also started a dialogue with Turkish regulators concerning the construction license, which we anticipate receiving by the end of 2014,” he continued. “This will enable us to start full-scale construction in 2015”. “The first unit is projected to be commissioned in 2020 and the three other units will each enter service with a one year lag,” he said. As well as being the first nuclear power plant to be built in Turkey, the Akkuyu plant will also be the first in the world to be built on a build-own-operate (BOO) basis. “It will be designed, developed, financed and operated by the Russian consortium based on an inter-governmental agreement signed in 2010,” Superfin stated. It will probably also be the first foreign project by Russia’s state nuclear power company Rosatom to feature its latest reactor design. The project is designed to comprise four 1,200-MW class AES 2006 VVERs -Russia’s third generation pressurized water reactors – that are currently being installed at the two-unit Novovoronezh II plant in the Voronezh region in southwestern Russia and will also be installed at several Russian NPPs, including the twounit Leningrad II plant near St.Petersburg in northwestern Russia and the Baltiyskaya nuclear plant in the Baltic enclave of Kaliningrad. “The same design will be implemented at a number of plants in Russia,” said Superfin. “The first ones are Novovoronezh II, which is actually the reference design for us, and Leningrad II plant, then it will be the Baltiyskaya nuclear plant. We anticipate that Novovoronezh II will be commissioned much before the Turkish project. He said that the award of a construction license is not dependent on the commissioning of Novovoronezh II NPP, though he added that the Turkish authorities may choose to inspect the reference plant in order that they don’t have any reservations.


PPA – “a win-win situation”


Superfin said that the Russian consortium is responsible not only for construction but also for financing of the project, backed by a 15-year Power Purchase Agreement (PPA) with Turkey’s state electricity wholesaler TETAS for around half the total output – 70% of the first two units and 30% of the second two. “This power will be sold at a weighted average price of $0.1235/kWh,” Superfin said. “There is also a ceiling of $0.153/kWh – basically the weighted average price presumes a certain price corridor for price fluctuations,” he added. The Russian project company, he said, was willing to agree a partial offtake agreement because it sees attractive long-term growth in the Turkish market and does not expect to have any problems selling the rest of its output in the open market. In all, Akkuyu is expected to generate around 33 TWh/yr over its operational life of 60 years. “We are pretty confident in the Turkish market’s ability to absorb the balance of power produced by our NPP,” said Superfin. “Our analysis of the Turkish market, which has been confirmed by all other analytical sources, shows that the Turkish power market is growing tremendously in line with GDP growth. For the last ten years electricity demand has grown at an average of around 6% per annum and the same level of growth is projected in the years to come”. “Of course it could change in these uncertain economic conditions, but Turkey has great growth potential and tremendous need for electricity. We are also reassured by consistent Turkish government declarations of commitment to the construction of new nuclear capacity.


It is our expectation and conviction that we will be able to sell the remaining approximately 50% unguaranteed power on the open market,” he stated. Superfin described the PPA as “a win-win situation for both sides”. Of course, any seller would like to sell it at a higher price while the Turkish side, like any buyer, would prefer to reduce the price. I think what we have achieved in the negotiation and fixed in the IGA is a mutually acceptable compromise. We have a 15-year PPA, which is a very reliable assurance that the project is financeable. For the Turkish side, they have received a reliable source of power on very good terms so as a result the agreed price suits both parties”. At current prices the deal looks a good one for the Russian consortium. The CEO of Akkuyu NGS said the Turkish wholesale price currently is in the range of about $0.08/kWh with the average retail price ranges between $0.12-17/kWh. “The average weighted price of $0.1235 is higher than the current level of prices in Turkey but it will compare well to the market price in eight years from now when we start operation,” he noted. The project including all associated infrastructure will cost in the region of the previously reported $20 billion, Superfin confirmed, though this, he added, was a rough estimate to be confirmed by the ongoing design study and he was confident that the project developers could turn the project around at a lower cost. “It is of course our objective to minimize the cost and it seems that we will be able to do so but until we have completed the engineering design it is a little premature to speculate about the final cost,” he added.


Strategic investors welcomed


 Superfin would also not be drawn into revealing possible future strategic investors in the project, other than to reiterate that non-Russian investors would be most welcome to acquire up to 49% of the equity. The Project company is currently 100% Russian owned with -Rosenergoatom acting as the principle shareholder with 92.85%. The state power sector holding Inter RAO UES and Atomstroyexport each hold 3.47% stakes with shares of 0.1% owned by two other members of the Rosatom group: Atomenergoremont, which is responsible  for the maintenance and upgrading of nuclear plants, and Atomtechenergo, which is in charge of start-up and commissioning of nuclear plants. “The intention remains, in accordance with the IGA, to have third party investors in this project. We would welcome in particular Turkish investors. Certain investors have exhibited interest and we are conducting preliminary discussions with both Turkish and international companies,” he explained. “All discussions are still very preliminary, which is natural in this phase of the project and we don’t expect any concrete deals immediately. It is very important for potential investors to see that the project is on a firm footing and to see that the project has secured its major licenses – primarily power generation and construction licenses – which will occur in 2013 and 2014, respectively, and by that time we would have to come up with a shortlist of investors willing to step in”.


Turkish training


The project company will primarily utilize staff from Rosenergoatom to operate the future plant but, according to Superfin, also plan on using Turkish engineers. “We plan on using Turkish personnel and are developing a strategy for developing their skills. To date, we have brought 50 Turkish students to study in Russia nuclear university and will bring an additional 75 students this year. The idea is that these students will go through a full cycle of education at Russian institutions and will obtain their degrees and have real training at Russian nuclear plants before returning home to work at the  Akkuyu plant,” he explained. “We will continue this type of program and at the same time we will most likely use other ways of training such as by placing certain courses at Turkish universities. The idea is that all nuclear plant operators must have a working level proficiency in  Russian and knowledge of English as a second language, which will be helpful in communications outside of the plant in contact with regulators and grid operators,” he said. Speaking at Platts’ nuclear conference on June 25, Alexey Kalinin, head of international business at Rosatom, meanwhile also stressed that the Project would be implemented in close cooperation with Turkish partners, and would involve local suppliers mainly in çivil construction, in line with its policy of harnessing the national supply chain in each market where it operates. In its bid to build Temelin 3 and 4, the Czech-Russian consortium of ASE, Skoda JS and OKB Gidropress is offering up to 80% of the contracts to Czech suppliers, he said. And in the UK, where Rosatom is interested in building new nuclear capacity, Rolls-Royce could act as its local supply chain integrator. Rosatom and Rolls- Royce have no contract yet to work in Turkey, but he said he would be “hugely disappointed” if Rolls-Royce does not participate in the Akkuyu project. Turkey plans to construct three nuclear power plant of up to 5,000 MW each. Negotiations for a second plant at Sinop were conducted with South Korea’s Kepco, which pulled out after Turkey refused sovereign guarantees for the plant’s output, and subsequently with Japan’s Tepco, which withdrew after the Fukushima disaster. Turkish energy minister Taner Yildiz told CNBC-E in late June that Turkey is still talking to Japan and South Korea, as well as China and Canada, concerning the construction of the Sinop plant, but declined to be drawn on the current state of negotiations. 


Source: Energy in East Europe