Nordic Nuclear Reactor Delayed Again When Markets Are Stretched

(Bloomberg) -- The start of a giant Finnish nuclear reactor that will boost supplies in the Northern corner of Europe's stretched energy market keeps getting pushed back.

The 1,600-megawatt Olkiluoto-3 on the nation's west coast will now start on March 15, after another delay of four days to connect it to the grid, power producer Teollisuuden Voima Oyj said. The reactor has been delayed many times from its initial 2009 start date. Regular production is slated to begin by the end of July.

The facility will, eventually, open in an era of record European power costs with the war in Ukraine and the energy crisis showing how crucial domestic supplies are, even with markets more connected than ever. Finland's Baltic neighbors this week said they are cutting imports from Russia to safeguard stable supplies into their grids.

“The timing is extremely bad, it could not be worse,” Fabian Skarboe Ronningen, an analyst with Rystad Energy AS, said. “The Olkiluoto-3 would have contributed a lot to the supply of power in the Nordic region.”

Reliable Alternative

Finland has long relied on power imports from neighbors -- mainly Russia and Sweden -- to keep the lights on, something the new facility may help to one day end. While nuclear reactors are hugely expensive and take years to build, they're a reliable alternative to wind and solar farms and produce no carbon emissions.

Power prices spiked in the past year as Russia restricted gas flows to Europe, tightening an already constrained market. Millions of homes face soaring fuel bills, and war in Ukraine makes the supply outlook of both natural gas and power from Russia more uncertain.

Nuclear is rapidly gaining favor again to reduce Europe's reliance on Russian gas. German nuclear operators have said they are open to discussing extensions to the life of their plants.

Finland imports about a fifth of its power, with flows from Russia peaking at about 15% of consumption in 2009. Swedish supplies became more prominent after a change in Russian export tariffs a decade ago.

When Olkiluoto-3 starts, analysts expect it to lower Nordic prices. It's also good news for some utilities and energy-intensive users in sectors including forestry and chemicals that are co-owners and can access electricity at production cost. Costing Teollisuuden Voima Oyj roughly $6.4 billion, Olkiluoto-3 will cut Finland's imports by as much as 60%.

Once set to be the world's biggest reactor, the 1,600-megawatt Olkiluoto-3 facility became a poster child of a nuclear industry promoting itself as a stable and virtually emissions-free power source as renewables expanded. Construction began in 2005, but huge cost overruns and disputes between the operator and builders saw the start delayed many times.

There are a handful of other reactors being built or planned in Europe. They include Electricite de France SA's Flamanville-3, which has also been plagued by delays, and Hinkley Point C in Britain.

New reactors would be ideal in situations like the recent crunch because they're not exposed to gas-supply issues or rallies in other fossil fuels and carbon permits, said Henning Gloystein, a director of energy, climate and resources at Eurasia Group. But drawbacks include huge upfront costs and concerns over waste storage, he said.