Fortum Concludes Nuclear Feasibility Study: Continues To Develop Nuclear As Future Option
Fortum said Monday it has concluded its extensive feasibility study exploring the commercial, technological, and societal prerequisites for new nuclear in Finland and Sweden. The two-year study covered both small modular reactors (SMRs) and conventional large reactors, and involved in depth discussions with several technology vendors, potential partners and customers as well as societal stakeholders.
Fortum will now continue to develop its capabilities to have new nuclear as an option to meet future customer demand in the Nordics in the longer term. In addition, Fortum sees the development work as a step in preparing for the eventual replacement of the existing nuclear capacity.
“Decarbonisation of industries and societies through electrification is expected to significantly increase, even double, power demand in the Nordics towards 2050. Meeting such a demand increase with intermittent renewables only could lead to a very volatile power system with limited predictability in terms of availability and price, which would not be desirable for our customers or society. We at Fortum believe it makes sense to keep all low-carbon production technologies in the toolbox also in the future and that’s why we will continue to develop our nuclear capabilities as a long-term option,” says Markus Rauramo, President and CEO of Fortum.
“In the next 5-10 years, new demand in the Nordics will be primarily met with new onshore wind and solar power coupled with flexibility and storage solutions as well as lifetime extensions of existing nuclear power plants. To prepare for the growing needs of our customers, we are developing a ready-to-build renewables pipeline, exploring pumped hydro, and extending the lifetime of our Loviisa plant. New nuclear could provide new supply to the Nordics earliest in the second half of the 2030s, if market and regulatory conditions are right,” he concludes.
New nuclear requires visibility on income, a solid financing framework and technology-neutral treatment in regulation
Most large industrial customers value a stable electricity supply profile and want to secure deliveries with long-term contracts, which nuclear power already today provides. Maintaining a balanced power mix brings also benefits to security of supply and stability for all customers and society. At the same time, the main risks of new nuclear projects relate to the long construction times, high capital requirements, and market price of electricity post commissioning.
A conclusion of Fortum’s study is that with the current power market outlook, new nuclear is not economically viable on a merchant basis only. However, based on the analysis Fortum conducted and based on newbuild projects ongoing in other western countries, new nuclear projects can be manageable with a solid risk sharing framework – like the one being prepared by the Swedish government – when matched with increased customer demand.
“We have competitive advantage through our deep and broad expertise in nuclear power, but will need strong partners for future projects. As a next step, we will continue to develop a business case and actively pursue partnerships to test interest in co-developing and co-investing in a new nuclear newbuild project with us,” says Petra Lundström, Executive Vice President, Nuclear Generation at Fortum.
An important part of de-risking new nuclear is also regulatory harmonization and political stability beyond electoral cycles on both EU and national levels. Crucially, nuclear power should be treated on equal footing with other clean production technologies when it comes to financing and as raw material for low-carbon products such as hydrogen, fertilizers and clean steel. In addition, maintaining a sound operating environment for existing nuclear operations is essential for anyone considering future investments.
Fortum deepens collaboration with selected technology providers
During the feasibility study, Fortum’s nuclear experts spent thousands of hours evaluating different large and small modular reactor (SMR) designs together with vendors. Fortum will now continue to deepen the collaboration with two conventional reactor technology providers, EDF and Westinghouse-Hyundai, and one SMR developer, GE-Hitachi.
“From a project execution perspective, it is essential to ensure the maturity of the technology, limit the country-specific requirements and verify the vendor’s competencies already in the pre-investment phase. Our plan is to collaborate with three plant suppliers to mitigate project risks before we would consider an investment. De-risking the licensing of a plant design as far as possible before construction is a must to reduce the likelihood of costly design changes, which can lead to delays in project execution,” says Laurent Leveugle, Vice President, New Nuclear at Fortum.
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