The General Shareholders’ Assembly has recently approved the memorandum on the setting up of a joint venture company with China’s General Nuclear Power Corporation for the resumption of the construction of nuclear reactors 3 and 4. What will be the next step in this action?
Indeed, the General Meeting of Shareholders approved the Memorandum of Understanding for the development, construction, operation and decommissioning of the Cernavoda NPP Units 3 and 4. Furthermore, on November 9th, 2015, this Memorandum was signed by both parties: Nuclearelectrica and China General Nuclear Power Corporation, the selected investor, in compliance with the selection procedure and the Strategy for the continuation of the Project, approved by the Romanian Government and the General Meeting of Shareholders of SNN in 2014. The Memorandum of Understanding establishes the main operational, technical and financial cooperation coordinates in order to develop the Project. The nest stage of the selection procedure, and the last one, is the most complex as the Investors’ Agreement and the Articles of Incorporation are to be negotiated for the new Project Company. The new Project Company is going to be a “Joint-Venture” in which the selected investor will own at least 51% of the shares. On a two year period since the set-up of the company, the involved parties will decide the finance structuring of the Project, the optimal support mechanisms necessary to complete the two units and they will initiate the selection process of the contracting party for the key construction services, namely engineering, construction and procurement. EnergoNuclear, the initial Project Company, will be integrated into the new Project Company, the investment in EnergoNuclear being transferred into this new Project Company.
When are the investment works forecast to actually start?
Right after establishing the finance structure and contracting the engineering, construction and procurement services. If things will go on as planned by us, we estimate that the construction period will be initiated in two or three years. The establishment of the financial basis and the contracting of the construction services are essential stages in the subsequent development of the Project and they need to be treated with a lot of responsibility, accountability and rigor in the case of such major project. This is the nuclear industry, everything is analyzed and assessed up to the tiniest detail in order to benefit from optimal results. This is the very lesson of the nuclear industry for every field in this country.
Opinions against nuclear energy are growing stronger at global level, but in Romania as well. How do you see the situation in Romania?
According to the nuclear industry data, in November 2015, 65 new reactors are under construction at global level, 165 planned and 324 proposed. This fact shows a reconfirmation of the nuclear industry, evidently imposed by rationales of the energy system, consumption, environment targets, even long-term planning of the conventional resources in the case of the states with a strong oil industry, and by economic-financial rationales because a nuclear new build project may involve higher construction costs, however, throughtout their entire life span, these costs are lower compared to other resources, which means a predictible and lower production cost. The operation of a nuclear power plant is very efficient from the point of view of production and profitability.
I have not noticed an increase in the anti-nuclear trend neither at global level, nor domestically. The criticism comes from environmental organizations, even though nuclear energy is not polutting, on the contrary, it is a stable, predictible, base-load production source which provides a a major contribution to the decarbonization solution, at least at European level where this policy is already an objective of the energy strategy, strategy also assumed by Romania.
An efficient energy system, a balanced energy mix able to meet long-term needs in compliance with the European and domestic policies, in compliance with the rights of the consumers to an accesible price and clean energy sources must be very realistic. And reality tells us that the one source fits all solution, namely the renewables, cannot meet all these necessities. Let’s take a look at the concrete example of this year drought: the influence of the climate factor has determined the importance of a balanced and diversified energy mix: the entire energy system was based on two major sources: coal and nuclear.
On the long-term, it is natural to expect industrial development and consumption growth. We have to already consider the future energy mix, what we can concretely rely on and how we capitalize on our resources in such a way that Romania is an independent state and an important player at regional level. The purpose of a state is to invest strategically in future necessities.
Green energy, which already has a very important share on the Romanian market, affects the proper functioning of power plants that operate on the basis of fossil fuel resources. Is NuclearElectrica affected by the instantaneous influx of non-conventional energy in the system?
Any conventional source based producer is affected by the impact of the renewables. In case of the coal-based producers, yes, indeed, this affects the proper functioning of the power plants. Nuclearelectrica is not affected by the instantaneous injection into the system: it is a base load nuclear producer, and nuclear safety imposes certain rigors. In the case of Nuclearelectrica the impact comes from the massive drop in prices on the competitive market. There is a need of changes in regulation and legislation which to provide similar conditions for all the producers, there’s a need for mechanisms which to provide equal support to all sources, but which to compel the producer to make the most of its production on the market. Thus, we will also have a really competitive market. One cannot talk about competition when subsidies dictate both the price and profit. One cannot talk about consumer protection when the consumer ends up paying much more than it should.
In your opinion, what is Romania’s optimum energy mix?
The policies and the European energy strategy with clear targets directed towards environmental protection will gradually impose, simultaneously with the reorientation of the member states’ energy mix towards meeting these objectives, a paradigm change in the sense of adopting the eco-economy. Even in this case, a balanced energy mix is necessary, with stable sources which in turn to ensure the stability and robustness of the energy system. We cannot light the candle when the wind doesn’t blow. However, until then, all sources are needed: each source has certain characteristics that serve the energy system. The solution stems from ensuring a level-playing field for all sources. The differences in approach produce benefits for one part of the producers and negative impacts for another part. A functional energy system, a functional energy market cannot operate with such extremes.
Does it affect you that the country’s Energy Strategy has not been completed and that we do not know what the future will be in this sector? Does the Cernavoda nuclear power plant have a secure future in the next decade?
Of course it has an assured future in the next decade and long after that: we currently operate two nuclear units, each with an initial lifespan of thirty years which will be extended through a refurbishment process at the end of the first life cycle with another thirty years. Moreover, all the European energy policies and the Romanian needs pinpoint nuclear energy as a long-term necessary source. Regardless of either using this production internally, or directly exporting, as a result of related legislation changes, Romania will benefit from the nuclear production.
There is an effective energy strategy. There is a dedicated strategy for the continuation of the Cernavoda NPP Units 3 and 4 Project. Starting from the Romanian needs corroborated with the European targets, the nuclear energy will play a major role in any energy strategy. We all know the existing capacities, we can estimate the future of some of these capacities. Units 3 and 4 will cover the consumption needs that will emerge mainly around 2020-2025. These units will ensure, beyond production, security of supply, stability, predictability, a major contribution to meeting decarbonization targets: two operating nuclear units avoid the release of 12.000.000 million CO2 tons, annually, into the atmosphere. This is nuclear energy.