• Finance remains 'crucial constraint' of nuclear newbuild



    Dr Nina Ivanova has worked in the nuclear industry for almost 10 years, mainly in finance and management.
    She is currently Head of Administration and Finance for Kozloduy Nuclear Power Plant – New Builds, Plc, which is investigating opportunities for building a new nuclear power plant at the site of NPP Kozloduy, Bulgaria.


    6-minute read

  • Q. Could you tell us about your current position and activities?

    A. Since 2012 I have been working for the special purpose company Kozloduy Nuclear Power Plant – New Builds plc. Its main activity is investigation of the opportunities for building ra new nuclear power plant at the site of NPP Kozloduy, Bulgaria.

    As a Head of Administration and Finance, my main duties include financial analysis and modeling of nuclear newbuild investments, risk assessment, preparation of periodical business plans, programmes, financial analyses of Bulgarian, European and world nuclear energy markets and tendencies, analyses of electricity price and national energy mix, strategy and human resource management plans, and others.

    Since 2013 I have participated in a Research Coordination Project of IAEA: Financing Nuclear Investments as a chief scientific investigator for Bulgaria with a project titled Assessment of the Nuclear Power Investments in the Bulgarian Electricity Sector.

    The main purpose of the project is to determine the economic and financial viability of the investments in a new nuclear power plant, generation III-III+, with installed capacity around 1200 MW, at the Kozloduy site, taking into account the liberalised market and EU climate regulations. The project includes in-depth analysis of the EU and Bulgarian energy sector – demand, supply, share in the GDP, energy mix, wholesale energy market prices, tendencies and prognoses, identification of the different types of ownership, contractual varieties, conventional and alternative approaches for financing nuclear power generation projects, building a model for financial estimation and risk assessment, etc.


    From your experience working for NPP newbuild projetcs, what do you see as the main issues/tasks regarding the financing for such projects?


    Exact figures for the construction of nuclear power plants are often commercially sensitive and hard to provide. For example, a typical cost for construction of a Generation III or III+ reactor in OECD countries is higher than in non-OECD countries such as China, where the cost of reactors is lower. Generally reactors which are first-of-a-kind are more expensive to build than those which are built in a series with previous experience of construction. A NPP project will run over many years and will involve many different activities. Various project stakeholders will carry out a range of different functions, such as designing the NPP, operating it, disposing of used fuel, and so on.  

    All discussion of nuclear financing must inevitably focus on one essential principle: A good project structure will attract financing at the lowest possible cost. Structuring a nuclear new-build project for success requires the identification and understanding of the various risks associated with a project of such magnitude and complexity. Some risks are quite similar to those in any power investment project; others are clearly unique to nuclear.


    What are your biggest challenges?


    The availability of adequate and secure financial resources is probably one of the most crucial constraints affecting the implementation of NPP projects. Total financing arrangements for implementing new NPP projects are influenced by overnight costs, construction time and the cost of capital. Depending on factors such as the world region, plant size, construction time, financing terms, interest rates and others, costs have ranged in big intervals. It is expected that new reactor designs will reduce capital costs and construction time of NPPs. Although the costs of NPP projects stay high.

    The biggest challenges in the financing of nuclear power projects are determined by political uncertainties and public acceptance; requirements for the highest level of safety; high capital intensity and long project lead times; uncertainties related to licensing, planning and construction period including supply chain and changing regulations; nuclear licensing procedures at the EU level; market conditions (e.g. volatility in the price of carbon credits); requirements and costs for nuclear spent fuel, waste management and decommissioning, etc.

    Another big challenge in the successful realization of the NPP project is the lost nuclear knowledge and unavailability of qualified human resources. Lots of efforts should be directed in that direction on national and international level.


    Does the financing process depend on the type of NPP? 


    Of course, there are differences in the financing process according to the type of NPP as well as the installed capacity, number of units, geographic location and others. The type of the NPP reflects on the investment costs, directly on the capital costs and indirectly on the operational and maintenance (O&M) as well as the fuel cycle costs. We must bear in mind that in the overnight costs of nuclear power plant projects, the share of capital costs is about 60-85%, O&M costs about 10-25% and fuel cycle costs about 7-15%.

    There are factors that can create differentiable outcomes – usually cost-related, among technology options. For example:

    • licensability – those designs that have been certified and possess existing licences provide greater certainty of meeting current regulatory requirements;
    •  codes and standards – it is important to be used internationally accepted codes and standards for safety and quality;
    • design completion – a common driver of cost overruns in nuclear projects is the failure to have completed, standardised and detailed unit designs in hand at the start of construction.

    Other important factors are:

    • design complexity – the overall difficulty of building and integrating the disparate parts of a new nuclear unit;
    • constructability – schedule length and the potential for overruns throughout the construction duration of the project and the ability to support efficient construction techniques and activity;
    • logistics – the physical characteristics of the majority of the new nuclear plants’ components which determine the ease, speed, dependability and cost of transportation from place of origin to the build site and others.


    Q. Are there particularities in the financing of NPP linked to the Bulgarian context? Could you tell us about your current position and activities?


    Sure, there are. The construction of a new nuclear power plant in Bulgaria should fully follow the EU's competition policies and trends related to the development of a common energy union as well as the national energy policy.

    By 2025, the Commission envisages a decline in the production capacity of nuclear energy in the European Union, taking into account the decision of some Member States to phase out nuclear energy or reduce its share in the energy mix. This trend is expected to reverse in 2030, predicting the linking of new reactors to the grid and extending the lives of others.

    Investments to replace existing capacity by 2050 are expected to be made in new generation reactors such as EPR, AP 1000, VVER 1200, ACR 1000 and ABWR and others. Taking into account the objectives of COP 22, the European energy policy, the goals of the National Energy Strategy and energy policy, the possible decommissioning of thermal power plants and their substitution with renewable energy sources, the modernisation of Units 5 and 6 of Kozloduy NPP, their future decommissioning, maintenance of a balanced national energy mix and liberalised energy market, the bad example of the cancelled Belene NPP project, requires in-depth analysis for introducing a new nuclear power plant in realistic timeframes, in line with the energy needs.

    The higher the uncertainties anticipated for the investors, the higher the capital costs for nuclear projects are. Too many risks would prevent investors and lenders from financing nuclear projects. Therefore, a stable and predictable legal and regulatory framework, sound national energy policy and stable political background will help provide a solid basis for nuclear investment. Also predictable electricity market conditions are necessary for investors to be able to evaluate the investment.


    From your experience working alongside international organisations for the financing of NPPs, would you say that international cooperation is an important issue for the nuclear field?


    International cooperation is extremely important issue in financing nuclear investments. I went through many IAEA nuclear energy management schools, technical meetings and a technical coordination project of IAEA which I mentioned earlier, on financing nuclear investments. By participating in meetings, you receive structured and valuable information, different tools including software, which is hard to receive somewhere else.

    Also you learn from other participants’ experience – possible approaches for successful realisation of large-scale infrastructure investments such as nuclear power plant projects, concerns, risks, etc. I deeply recommend participation in international meetings, conferences, schools, exhibitions, etc.


    What would you expect to gain from WNE 2018?

    I learned about WNE from Linkedin and also read an article about it at the Bulgarian website If I participate in the exhibition, I would expect to meet vendors of nuclear equipment from all over the world. Also I will be glad to be introduced first-hand to the latest nuclear equipment, with the advantages and disadvantages of one or another technology or reactor type. I would be pleased to meet investors and build partnerships for the successful realisation of nuclear new build projects.


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