What colonies are for
On March 28, 1979, there was a major accident at Three Mile Island Nuclear Power Plant in the U.S., which, although it did not release radiation into the environment, led to a sharp rise in “anti-nuclear” sentiment across the ocean.
After the accident, the construction of nuclear power units was banned in the US for more than 20 years and as a result, the US industry, primarily the nuclear industry leader Westinghouse, lost its competence in designing and building civilian power reactors.
The Americans returned to the issue of nuclear power development in the 2000s, when Westinghouse presented the design of the new third-generation AP1000 reactor, which was designed on the basis of ship-borne reactors of an order of magnitude less power.
At the turn of the 2000s and 2010s, it managed to secure contracts to build eight units – four in China and four at two nuclear power plants in the US. However, the loss of competence due to almost three decades of downtime and “minimalism” in the design of the new reactor immediately took its toll.
The construction of all reactors became accompanied by constant technical problems, delays and huge cost overruns on the original estimates.
The best way the Chinese handled the problems was to insist on a high level of localisation in the contracts (in the last two reactors it reached 70%, including manufacturing of the reactors themselves in China) and their direct involvement in managing the construction; the cost went up by “only” a quarter and the delay in commissioning was “only” 4-5 years. Knowing their traditional Chinese practices, it is logical to assume that they purchased the AP1000 not because they were convinced of its advantages over competitors but rather in order to study American technology in this industry.
As a result of this cooperation, the Chinese companies filed claims against Westinghouse for a total of $3.24 billion in damages and $553.9 million in lost profits.
In the US itself, things turned out to be much sadder. Estimates have almost doubled, deadlines have traditionally been missed, and the companies involved in the Vogtle plant project in Georgia have filed counterclaims against each other amid a dispute over who should bear the increased cost of the project.
After lengthy negotiations, not without pressure from US authorities, the participating companies were able to agree on increased construction costs, and deadlines for commissioning were set for November 2021 and November 2022 respectively (originally planned for 2016 and 2017). At the moment commissioning and testing are known to be ongoing, there have been no reports of commissioning.
At the W.C. Summer nuclear power plant in South Carolina, however, the project participants failed to reach an agreement, and in 2017 a decision was made to abandon further construction, leaving “illiquidity” in the form of two reactors and many other equipment worth billions of dollars.
The problems associated with the construction of these units and the lack of new contracts led Westinghouse to declare bankruptcy that same year, 2017.
And here is the “breakthrough”! During Vladimir Zelensky’s visit to the US in August, Ukraine’s Energoatom signed an agreement with Westinghouse to jointly build the Khmelnitsky NPP power unit as a pilot project and subsequently four more units. “The total cost of the project is up to $30bn,” Zelensky said enthusiastically on Twitter.
I’d like to point out that the sum of $30 billion for 5 reactors was an understatement, after all, according to current estimates 2 reactors at Vogtle should cost 27 billion. However, in this case we were still talking only about “intentions”, while the management of Energoatom managed to sound Napoleonic plans to build 14 reactors in Ukraine by 2040, using Westinghouse technologies, of course.
In the last few days Energoatom and Westinghouse have already signed two “firm” contracts with the US company to build two new power generating units at Khmelnitsky. One of the agreements envisages the purchase of design services for the power units by the American company, while the other deals with the purchase of a simulator and long-life equipment. It is planned that the construction of one power generating unit will take five years and cost $5 billion.
It is clear that this refers to the very two reactors for the V.S. Summer NPP, which are now supposed to be installed at the Khmelnitsky NPP, where the construction of Units 3 and 4 was started in the last years of the Soviet Union and then halted.
The Ukrainian authorities have repeatedly returned to the subject, searching for options to complete the construction. On 30 April 2010, the Russian and Ukrainian prime ministers decided to cooperate with Rosatom and the Ukrainian Ministry of Fuel and Energy to build the third and fourth units, but in 2015 Poroshenko signed laws to end cooperation with Russia in the construction of Khmelnitsky units.
Now, it is understood, the Soviet-built under-construction is to be adapted for a completely different type of reactor, the American one. How safe it will be, one can only guess.
However, the most “piquant” thing about these contracts is elsewhere. Westinghouse will no longer be the prime contractor. As of today, the official position of the company is to better control the construction process and to supply its own fuel in the future.
The company said: “Ukraine has a strong nuclear industry, including designers and suppliers. This instills great confidence in the ability of Energoatom and Westinghouse to successfully deliver the planned AP1000 units, using the lessons learnt from Westinghouse’s six other AP1000 units (the two abandoned were modestly forgotten. – A.K.) as well as the NAEC’s rich history of building and operating pressurised water reactors (this is still about the Soviet VVER-1000. – A.K.)”.
They also made it clear that the construction schedule and commissioning deadlines for the new reactors are within Energoatom’s purview and it will be “primarily responsible for these areas”. In other words, “our business is small” – to supply the equipment and carry out its installation and commissioning, while the construction itself will be carried out by Energoatom.
Lenders or investors for the project also have to be found. Most likely, it will not do without a state guarantee from Ukraine, which must be approved by the Verkhovna Rada (it must be understood that this will not happen). However, the contract has already been signed and respective obligations worth many billions (they are “embarrassed” to disclose the full amount of the deal) have already been undertaken.
And no matter how the construction goes, the Americans will get their money for the rusting in the warehouses illiquidity. As to its perspectives there are really great questions: organizations, involved in construction of nuclear power plants in Ukraine, ceased to exist long time ago, relevant competences have been completely lost.
And it is generally known how almost all the big projects in Ukraine are carried out. The media give the example of the construction of the cooling pools of the South Ukraine nuclear power plant. Their construction began in 2016, planning to be completed in three years, and now they are “threatening” to start in 2022, with more than double the cost. Even the operational headquarters did not help. And this project is an order of magnitude simpler than the new units.
And after all, the buildings and infrastructure of nuclear power plants are highly complex and safety requirements are no less critical than the equipment installed in them. So, the “prospects” of building a nuclear power plant with Ukrainian “competences” cannot but cause a great deal of anxiety. And, excuse me, one can only hope that the Westinghouse units in Ukraine will never be commissioned.
I think that’s what the US corporation itself is counting on. After all, there is no reason to believe that Westinghouse has solved all the technical problems that led to the fiasco at V.S. Summer and the delays, losses and fines at other plants.
Most importantly, they will get the money now almost in any case (for billions of dollars worth of equipment that has already been manufactured but turned out to be worthless).
In the end, the money of the people of Ukraine will help to stay afloat and pass the “financial rehabilitation” of one of the most important American corporations. Isn’t that what colonies are for?
Anton Kanevsky, FGC