Does Ukraine need five Westinghouse nuclear units?

Author : Olena Holubeva

Source : 112 Ukraine

Where to find $ 30 billion for the implementation of the project? And how to avoid the flooding of Ukrainian uranium mines, whose products will become even less in demand?
20:00, 2 September 2021

The announcement by the President's Office of the intention to build five nuclear power units in Ukraine, enshrined in a memorandum signed at the headquarters of the US Department of Energy in Washington, during the visit of President Volodymyr Zelensky, caused a flurry of questions and critical opinions in the expert community. The main ones are - is there a real need for Ukraine to build five new nuclear power units? Looking ahead, we can say that so far everything looks like the decision to implement the project is based not on pragmatic assessments, but on the urge to sign something in the United States and demonstrate that the visit was not empty.

There is also no understanding of where to find $ 30 billion for the implementation of the project, although the real amount may turn out to be much higher. And how to avoid the flooding of Ukrainian uranium mines, whose products will become even less in demand?

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One of the main questions that arose on the agenda of expert discussions in connection with the signing of a memorandum with the American Westinghouse at the headquarters of the US Department of Energy in Washington on the construction of five nuclear power units using AP1000 technology is who needs them and why? There is no clear answer to this question, although given the scale of the project and in the context of Ukraine's desire to integrate into the European energy system ENTSO-e by 2023, the answer to this question must be mandatory. The price of the issue is $ 30 billion.

Experts note that the Ukrainian energy system is experiencing an acute shortage of precisely maneuverable capacities, with the help of which it would be possible to smooth out consumption peaks in the system. Nuclear energy has exactly the opposite properties - it operates on an even schedule and does not allow a quick response to an increase or decrease in energy consumption in the interconnected energy system.

Ukrenergo has repeatedly stressed that one of the key problems of the Ukrainian energy system is the lack of flexibility.

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The system operator warned that if Ukraine does not ensure the implementation of measures to maintain the required level of basic and semi-peak generation, the unified energy system of Ukraine will face a deficit of generating capacity at the level of 2.5 GW from 2025 with a further increase to 9 GW in 2031.

The press service of Ukrenergo told that the Ukrainian energy system needs highly maneuverable capacities to balance solar and wind power plants, the installed capacity of which in the structure of generating capacities is growing from year to year. At the same time, SES and WPPs are characterized by a sharply changing (stochastic) nature of work, depending on weather conditions (the presence of sun and wind).

To ensure the integration of renewable energy sources, it is necessary as soon as possible to ensure the presence in the power system of at least 1 GW of highly maneuverable capacities, which will be capable of starting and stopping at least 4 times a day with a control range of at least 80% of the installed capacity and with a full activation / stop time no more than 15 minutes from the moment of receiving the corresponding command. Most of all these requirements can be met by gas turbine plants and gas piston engines. To maximize the production of electricity from RES and, accordingly, to minimize their limitations, it is advisable to ensure the construction of at least 2 GW of highly maneuverable capacities. The system also requires 500 MW (0.5 GW) of energy storage systems.

And for these, just more than topical issues, neither the Ministry of Energy, nor the Office of the President are particularly concerned about. Nothing is being done to attract investors and stimulate the construction of projects that are truly necessary for the energy system. But a memorandum is being signed for the construction of five nuclear power units.

Where to get $ 30 billion?

Press releases from the Office of the President and Energoatom state that the estimated cost of construction of the five power units will amount to $ 30 billion. At the same time, according to Olga Kosharnaya's observations, Energoatom changed the figure on the website - initially the state company announced $ 25 billion of investments, but then revised it to match the release from the Office of the President.

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Where this money will be taken from is not reported. Obviously, Energoatom does not have them. "The state-owned company has no money for the implementation of its own small investment projects, there is no money even for the current repairs of nuclear power units. In August, Kotin said that they already had a debt of 0,5 billion USD to suppliers of goods and services," says Kosharna. The state-owned company has reduced tax payments to the budget, and last year it had to attract bank loans to pay salaries.

The reason for such a deplorable state of affairs is that Energoatom sells the bulk of electricity for 15 kopecks. per kWh (at a tariff of 1.68 UAH/ 0,06 USD per kWh) within the PSO of the population. Free electricity, which the state-owned company sells under commercial contracts, is often sold extremely inefficiently and at prices below market prices.

In December, Energoatom sold 13.03 million MWh of baseload electricity at UAH 1,150/ 0,037 USD per MWh to a United Energy trader who is linked to Ihor Kolomoisky. The media noted that the purchased volume significantly exceeds the consumption of the largest enterprises of the Kolomoisky group, therefore, part of the purchased electricity will be resold on the day-ahead market (DAM), which will bring good profit, which will settle not in the accounts of the state company, but in the pockets of the oligarch.

Against the background of a decrease in the price of electricity for the population to 1.44 per kW from October 1, the financial situation of Energoatom may worsen even more.

"Westinghouse itself will not find such investments. Lately, the corporation has experienced many cataclysms, which have significantly undermined its financial strength," Kosharna notes.

She believes that it is possible and not to meet the $ 6 billion in the construction of the Westinghouse AP1000 blocks. The amount may be much larger. Investments in the construction of nuclear power units using the same technology, which are now being carried out at the Vogtle nuclear power plant in the USA, have already grown from the initial $ 7 billion to $ 25 billion in two units. "The EBRD, one of the banks that gives moderate interest on loans, does not fund nuclear projects in principle. Commercial banks are prohibitively high-interest rates," says Kosharna.

How to avoid flooding uranium mines?

It is logical that the blocks, the construction of which is planned, will operate on nuclear fuel produced by Westinghouse.

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Uranium mines in Ukraine have been in a deplorable state for several years. At the same time, 5300 miners are employed in the production. The state-owned enterprise VostGOK includes Ingulska, Novokonstiantynivska, and Smolynska mines, as well as a division in Zhovti Vody. Information that the authorities are considering the possibility of closing the enterprise and flooding uranium mines recently made a lot of noise, and the Ministry of Energy had to justify itself, assuring that it had no such intentions. At the same time, without additional incentives, the enterprise is not able to work fully. It cannot pay salaries without state support. Based on the results of 2019, VostGOK received USD 25 million in losses. In 2020, losses amounted to USD 20 million. This year VostGOK reduced the production of uranium oxide concentrate by 7.1% to 743.7 tons.

Despite this, the authorities do not save the enterprise, which provides 5,000 jobs, but continue to finish it off, increasing the volume of purchases of Westinghouse fuel, to which the units of nuclear power plants are being transferred. The fuel of the American company already accounts for about half of the specific volume of Energoatom's needs. According to the acting president of Energoatom, Petro Kotin, by the end of the year one more unit of the Rivne NPP will be switched to American fuel.

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