Westinghouse moves forward with Kozloduy 7

Friday, 1 August 2014

Westinghouse plans to hold a competitive tender "within the next year" for construction of a seventh reactor at the Kozloduy nuclear power plant in Bulgaria. The AP1000 reactor is projected to be online by 2023.

The site is already home to two operating Russian-designed VVER-1000 pressurised water reactors, Kozloduy 5 and 6, as well as four shut-down VVER-440s.

Westinghouse, part of Japan's Toshiba group, announced the target date following its signing today of a shareholder agreement for the Kozloduy nuclear power plant expansion project. A source close to the talks in Sofia told World Nuclear News the agreement decides the ownership of project company Kozloduy NPP - New Builds plc, of which Kozloduy NPP plc and Westinghouse will own, respectively, 70% and 30%.

The agreement followed consultations with all of Bulgaria's political parties, Westinghouse said in a statement. This and subsequent agreements for the project will be subject to future government oversight, it said. Bulgaria will have an interim government for two months, following the resignation of prime minister Plamen Oresharski's government last week and a snap election in October.

The agreement also formalizes the selection of an AP1000 design reactor by Bulgarian Energy Holding EAD (BEH EAD), Kozloduy NPP plc and Kozloduy NPP – New Build plc. These parties entered into exclusive talks with Westinghouse in December 2013, following a feasibility study conducted under a competitive tender. Westinghouse will provide all of the plant equipment, design, engineering and fuel for the new unit.

A tender for the plant's construction will follow European Union and Bulgarian public procurement rules, Westinghouse said. This process is expected to involve Bulgarian and global construction companies.

Bulgaria's council of ministers approved an economy and energy ministry report on the shareholder agreement on 30 July, BEH EAD said yesterday. The agreement – including the financing terms of an engineering, procurement and construction (EPC) contract for the project - will enter into force after approval by the next government, it said.

No guarantee

 

Today's agreement does not in itself mean that Kozloduy 7 will be built, however.

"Any future build will be dependent on future agreements such as an EPC.  It will also require mutual agreement on financing terms and conditions," Westinghouse spokesman Hans Korteweg told World Nuclear News.

"This agreement does not identify any specific assumptions on state support of any kind. It allows both Westinghouse and Kozloduy to engage international finance entities to determine best conditions for both parties.  If this is not realized, the project will not go forward," Korteweg said.

"This agreement in no way creates a binding decision to proceed – by either party. What it does do is to provide a basis for the project to go forward through a working partnership in reaching the next key agreements and obtaining attractive financing," he said.

Some commentators in Bulgaria have said discussion about the project had lacked transparency, but Korteweg said this assertion was false.

"The process is similar to those conducted in France and the UK, for instance, where a partner and a technology are selected from current viable alternatives," he said. "Specifically, there are only three PWR reactor designs certified in Europe – AP1000, EPR and MIR.1200. The Westinghouse AP1000 meets the criteria of diversified technology from existing reactors and 1200 MW maximum in size due to Bulgarian grid limitations," he said.

Prior to today's announcement, Kozloduy NPP and Westinghouse were bound by confidentiality common in all industries before release of the parameters of an agreement, he said.

Bulgarian owner

 

Although he would not confirm the share ownership of the project company, Korteweg said Westinghouse will not remain an equity investor once the reactor has been completed.

"We believe this is a national asset for Bulgaria and do not wish to dictate or otherwise influence the decision-making of its owners and operators. Bulgaria will have 100% of the revenue and profits of this plant," Korteweg said. "Westinghouse's stake in the project company during construction incentivizes Westinghouse to build a plant that meets international and Bulgarian safety standards, on schedule and within budget," he said.

Bulgaria has an oversupply of electricity, but supply will fall in the mid-2020s with changes in the country's energy mix, including fossil fuel plant closures due to CO2 emission reduction requirements and relative competitiveness of renewable energy, he said.

Additional nuclear power capacity during this timeframe "can certainly be utilized domestically and in export growth," he said. Kozloduy 7 also represents the "smooth and eventual" replacement of units 5 and 6 in the next 20-30 years, especially after units 1-4 were shut down as part of Bulgaria's accession to the EU in 2007, he said.

Asked if there will be a guaranteed power price for the reactor once it comes online, Korteweg said today's agreement does not mention this.

"While many EU countries will be utilizing this tool, such as the UK, this is the decision of the Bulgarian government and its energy regulator to decide. The most important point is that the project produces power at the most competitive price compared to alternatives. This is something we are confident will be achieved," he said.

Korteweg would not comment on the cost to build Kozloduy 7, but said Westinghouse has "offered a commercially attractive price to Bulgaria to provide diverse energy security without greenhouse gas generation."

The company has "full confidence" that the conditions of this and future agreements for the project will meet EU rules, he said.

Energy diversification

Korteweg referred to the European Commission's publication in May of a Communication outlining its recommendations for the establishment of a European Energy Security Strategy.

"Central to that strategy is the urgent need for the EU to increase its indigenous energy production, reduce its dependence upon external suppliers, and encourage diversity in the energy mix in order to meet its energy needs," he said.

A European Council decision in late June to diversify energy supplies from Russia is also consistent with the Kozloduy 7 project, he said, as currently Russian companies have a monopoly supply of fuel to the plant.

"Westinghouse is not an integrated vendor and must therefore contract with local suppliers," Korteweg said. "A significant amount of the project will be done in Bulgaria and is expected to significantly boost local, regional and national Bulgarian economies. Bulgarian companies are currently heavily involved with other contracts that Westinghouse has with units 5 and 6," he said.

At the height of construction of the new unit, close to 3500 local workers will be employed on site, with an additional 15,000 workers involved in the associated supply chain, he said. Regional unemployment around the construction site could be reduced to 9% from the current rate of 13%, he said. Once the reactor is completed, its operation will require between 500 and 800 highly-skilled specialists, he said.

Westinghouse is also prepared to integrate Bulgarian companies into other ongoing and prospective projects, such as in the UK, he said.

Westinghouse recently announced an agreement to supply three Westinghouse AP1000 nuclear reactors to the NuGeneration Limited's Moorside project in West Cumbria, England, in partnership with Toshiba and GDF Suez.

Researched and written
by World Nuclear News