THE ENERGY INDUSTRY TIMES - MAY 2018
Special Project Supplement
Hanhikivi 1 builds
momentum
Building any new
nuclear plant is a
huge task – one
that often results
in protracted
construction times.
Fennovoima is
looking to buck
the trend, as site
preparation makes
progress at its
Hanhikivi 1 plant.
Junior Isles
The plant will be located on
the Hanhikivi peninsula on
the shore of the Baltic Sea
in Northern Finland, near the
municipality of Pyhäjoki
3D model of the Hanhikivi 1
nuclear power plant
early 2014.”
Hanhikivi 1 will require a total investment
of €6.5-6.7 billion, depending
on the cost of interest payments.
About 25 per cent of the required
project financing (about €1.7 billion
at the time of plant start-up) will be
provided as equity from the owners.
The remaining 75 per cent will be
in the form of debt financing. It has
already been agreed that about half
(€2.4 billion) of this debt financing
will be sourced from the Russian
Federation National Welfare Fund.
The other half of the debt (about €2.6
billion) is currently under negotiation
but will be covered by export
credit agencies and foreign commercial
banks. These loans will predominantly
be used to cover the
supply of power island equipment
and reactor components.
The project is by far the biggest in
Finland and one of the largest in
Europe. It will have a significant
impact on both local and national
economics. According to Finnish
research organisation VTT, the project
will increase GDP by 0.25 per
cent in the best year during the
2020s.
It will also have a significant impact
in terms of job creation. During the
peak of construction, it is estimated
that there will be about 4000 people
on site. Hemminki noted: “There
will be more people working at the
site at this point than the current
number of people in Pyhäjoki. And
during the operation phase we will
employ 450-500 people.”
Yet one of the key plus points of the
plant, said Hemminki, will be its
contribution to tackling climate
change. “We strongly believe that we
are part of the solution in the fight
against global warming,” he stressed.
“Industry and analysts are asking:
how do we stay within the 2°C limit
set in the Paris Agreement in order to
avoid climate change? Here nuclear
plays quite a significant role.
“Currently, global nuclear production
is about 2500 TWh annually.
For some perspective, our plant will
produce 9 TWh. If we want to succeed,
according to the International
Energy Agency’s 2°C scenario, we
would need to increase global nuclear
production to 6100 TWh per year
by 2040. This means we would need
to add one Hanhikivi 1 plant per
month between now and 2040. ”
This may be a tall order, especially
for a technology that faces strong
headwinds in some parts of the
world. Yet nuclear certainly makes
sense for Finland.
Jorma Aurela, Chief Engineer at
the Ministry’s energy department
Despite the well-publicised delays
at the Olkiluoto 3 (OL3)
project in Finland, the country
has not been put off the idea of building
new nuclear plants. In 2010, the
government granted Fennovoima a
permit to build a new nuclear plant,
which, when completed, will play a
key role in providing zero-carbon
base load power at a competitive
price.
Since receiving the government’s
blessing, Fennovoima has been meticulous
in the project’s development,
doing its best to learn lessons from
OL3. It is an approach that has seen
the project reach an advanced stage
of site preparation just five years after
signing the engineering, procurement
and contruction (EPC) contract
with Rosatom.
Known as Hanhikivi 1, the plant
takes its name from the Hanhikivi
peninsula where the site is located. It
is a coastal site near the municipality
of Pyhäjoki in Northern Ostrobothnia
on the shore of the Baltic Sea in
Northern Finland.
The project’s origins date back to
2006-07 when several Finnish industrial
companies and electricity suppliers
began looking at how they
could have electricity at a competitive
and stable price in their own
portfolio. This led to the establishment
of Fennovoima in 2007.
Voimaosakeyhtiö SF, a Finnish
holding company, owns 66 per cent
of the shares in Fennovoima. Its
shareholders include dozens of major
Finnish industry corporations such
as Outokumpu and Fortum, and local
energy utilities. As these companies
require a high amount of energy for
their operations, a reliable and stable
priced power supply is crucial for
their businesses.
RAOS Voima, a 100 per cent Finnish
subsidiary of Rosatom, owns the
remaining 34 per cent of the shares
in Fennovoima. RAOS Voima plans
to sell its share of the electricity from
the plant on the NordPool market.
Fennovoima operates under the
“mankala principle”, i.e. it will sell
all the electricity generated by the
plant to the owners at cost price in
proportion to their ownership. This
price includes operating and financing
costs, as well as the organisational
costs of the company. The
mankala principle has been widely
used in Finland’s energy sector for
decades – about 40 per cent of the
electricity in Finland is produced by
the mankala companies.
With its organisational structure in
place and having secured the green
light for the project from Parliament,
Fennovoima began the process of
site selection. The company studied
four potential sites and, based on
environmental and geological characteristics,
chose the Pyhäjoki location
in 2011. This site will host a
single reactor capable of generating
1200 MW of electricity.
Hanhikivi 1 is based on tried and
tested Russian nuclear technology. It
will employ a 3+ Generation VVER-
1200 pressurized water reactor that
has all the safety features proposed
by the various authorities post-Fukushima.
Steam from the reactor will
be used to drive a 1200 MWe Arabelle
steam turbine supplied by GE
(formerly Alstom).
Importantly, the VVER has a
proven track record. There are about
37 VVER plants operating well
around the world and the technology
has demonstrated outstanding operation
at the Loviisa plant in Finland.
According to Fennovoima, the availability
of the Loviisa units is among
the top five in the world.
Yet the decision to partner with a
Russian supplier was not solely dictated
by technology.
Toni Hemminki, CEO, Fennovoima,
explained: “When we moved
from 1600 MW to 1200 MW in the
negotiations, Rosatom was the best
candidate to provide the best business
case. It was the total business
package – the financing and technology
– that allowed Fennovoima to
make the final investment decision in