SMRs Get Wind in their Sails from 3 Seas Initiative

• U.S. State Dept. Commits $5.3M to Promote SMRs
• Nuclear Energy Developments in 3 Seas Countries – State by State
• US State Department Offers Support for SMRs and 3 Seas but Not in the Same Breath
• Rosatom’s Fennovoima Project Revises Construction License Application for Hanhikivi-1
• TVA CEO: Utility Will Invest in SMRs

U.S. State Dept. Commits $5.3M to Promote SMRs in the Region

A key geopolitical area of competition. between the Baltic, Black and Adriatic seas, for new nuclear reactors deals is heating up. Russia and China see opportunities to deploy financially attractive package deals for their LWR type full size nuclear reactors via state owned enterprises. In contrast, firms from the U.S. are seeking market share in the same region with proposals for small modular reactors (SMRs).

Recently, these efforts got a small boost from an unlikely agency – the US State Department – which rolled out a video by Secretary of State Anthony Blinken and a $5.3M grant program to promote development of SMRs in a 12 nation region in Europe. The double shot of support is intended to blunt Russian, and to some extent, Chinese efforts to dominate the energy supply chain for these countries.

Russia has been seeking to dominate the energy security realm for Europe via provision of natural gas. The big energy bullseye regarding Russian gas projects is the highly controversial Nord Stream 2 pipeline.

If completed it will run from Russian territory under the Baltic Sea and connect to Europe via Germany. Oil and gas interests in the US are pushing Biden to sanction the project mostly as a self dealing move for them. Frankly, few see this administration taking foreign policy advice from Sen. Ted Cruz. US allies in Europe are also weighing in.

The threat of having Russia control the energy security of Baltic and European states has produced a response to pursue initiatives to deter it. Since 2020 an initiative for economic development, including energy security, has been organized as the 3 Seas Initiative.

The countries involved in Three Seas share the same objectives: economic growth, security and a stronger and more cohesive Europe. To achieve these goals, cooperation is promoted for the development of infrastructure in the energy, transport, and digital sectors.

What is the 3 Seas Initiative?

Three Seas is an initiative that brings together 12 EU Member States between the Baltic, Black and Adriatic seas: Austria, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. CRS report – PD file.

The Atlantic Council, which hosted an early meeting of the group of nations in 2015 that are part of it, wrote on its website;

“As the United States looks to confront Russian and Chinese economic and geopolitical competition in Europe and across the world, the Three Seas Initiative offers an opportunity to strengthen the economies of US allies in Central and Eastern Europe and reduce their dependence on Moscow and Beijing’s economic overtures.”

While the nations of Western Europe are linked by roads and railways, power lines, and oil and gas pipelines, countries in Central and Eastern Europe remain comparatively disconnected from one another in terms of modern infrastructure. The deficit is particularly acute along the region’s north-south axis.

Attention was drawn to Europe’s disparity in development in 2014 by the Atlantric Council, a US based think tank, in a report entitled ‘Completing Europe.’ This inspired the then heads of state of two countries – President Kolinda Grabar-Kitarovic of Croatia and President Andrzej Duda of Poland – to launch the initiative.

To date, Three Seas Initiative summits have been held four times at the presidential level. What started out as a platform for the exchange of thoughts among the presidents of the countries involved, has expanded to include an annual business forum and the launch of an investment fund operating on a commercial basis.

Seeking a Way to Boost Economies on a Regional Basis

According to economic statistics released by the group in 2019, the member states comprise 28% of the EU’s territory and 22% of the population, yet only contribute 10% of the bloc’s GDP.

In Tallinn, Estonia, nine member states and fund manager Amber Infrastructure Group pledged a total investment via the 3 Seas Investment Fund of €923 million, while Poland announced a €250 million increase in its investment into the fund.

US Focus on International Collaboration

In April the US State Department announced an initial $5.3 million investment. This amount of funding won’t building anything, but it will help support the kind of international collaboration that IAEA Director Director General Rafael Mariano Grossi talked about this past week in a teleconference with former US Energy Secretary Ernest Moniz.

The state department program will strengthen international collaboration between the U.S. and partner countries seeking to deploy nuclear energy in their clear energy initiatives. This cooperation includes supporting the deployment of advanced nuclear technologies, including small modular reactors (SMRs. (More on this below).

Separately, the US Development Finance Corporation (DFC) has committed $300M to the Three Seas Fund. The funds will advance investment in sectors such as energy, transportation and digital infrastructure in Eastern Europe. The DFC said its aims are to overcome existing market challenges to raise capital for critical infrastructure projects.

Not Everyone is Onboard

Despite these high sounding objectives, some of the member states have widely differing positions on some issues. Hungary remains closely aligned with Russia and has accepted telecommunications infrastructure from a Chinese firm that has been rejected by other nations due to security concerns.

Also, Poland and Hungary has authoritarian regimes that have attempted to squash political unrest in these nations as result of disenfranchisement of some groups. Austria has a an anti-nuclear policy stance and has repeatedly tried to interfere in the plans for it within the European Union.

Interestingly, as a counterpoint to right wing thinking in Europe, the DC-based conservative Heritage Foundation think tank said in a statement of support for the 3 Seas program in February of this year;

“The Three Seas Initiative (3SI) helps the U.S. to build strengthened transatlantic business, energy, and geopolitical ties to Central and Eastern Europe, while also counterbalancing Chinese and Russian efforts to forge inroads to the region. In 2021, the Biden Administration and Congress should continue to feature the 3SI as a central component of U.S. policy in Europe. Bipartisan U.S. support for the 3SI, which encompasses a strategic, long-term outlook and brings along Western European nations as strategic partners, is smart policy that will pay dividends for decades to come.”

Nuclear Energy Developments in 3 Seas Countries

Of the 12 nations involved in the 3 Seas effort, Bulgaria, Czech Republic, Poland, and Romania have been pitched by U.S. firms to build SMRs in competition with Russian and Chinese offers for full size plants. The competitive environment varies significantly from country to country, and a key factor for all of them is how to pay for new nuclear reactors to meet climate goals.

Bulgaria – Efforts to build one or two full size nuclear reactors are complicated by the legacy of an incomplete project to build two 1000 VVER type reactors for the Belene project. Additionally, Bulgaria has indicated to potential bidders that it has no plans to provide government funding for the project nor rate guarantees / subsidies. In October 2020, Bulgaria and the USA signed a memorandum of understanding concerning strategic civil nuclear cooperation.

Bulgarian Prime Minister Boyko Borissov has proposed that the equipment purchased from Russia for the planned Belene nuclear power plant (NPP) be used instead to expand the existing Kozloduy NPP.

Borissov added that two new units could be built at the Kozloduv power station, rather than the single unit previously discussed, using a combination of €600M worth of equipment previously purchased to build two 1000 MW VVERs and new components from other reactor vendors.

Czech Republic – After a false start in 2014 the government is moving towards release of a tender later this year for a 1200 MWE PWR type reactor at Dukovany. The government has blocked China from bidding on the project, by offering its 1000MWe Hualong One, on security grounds.

More recently, it also ejected Rosatom, Russia’s state owned enterprise for nuclear reactor exports, from the bidding, over the recent news that Russian operatives was responsible for blowing up a munitions shipment in 2014 in that country which was meant for Ukraine.

This leaves EDF, Westinghouse, and a South Korean consortium, as the remaining possible bidders on the project. The timing of the tender, expected later this year, could be upended by elections scheduled for October.

Estonia – Fermi Energia, a startup firm, has entertained proposals from several developers of small modular reactors and highlighted each proposal with all the allure, glitz, and energy of a major beauty pageant. Kalev Kallemets, chief executive officer of Fermi Energia, said that Estonia needs to consider new generation SMR technology to maintain energy independence and achieve climate neutrality.

The effort has not gone unnoticed among the other members of the 3 Seas effort which see it, in part, as a public relations effort to create a seawall against encroachment by Russia and China energy proposals in the region.

CEO Kavel Kallemets said in a Tweet this week he plans to fire off a request to the US State Dept for a piece of the $5.3M in cash it just announced to support SMRs in Baltic states among other places..

Poland – As one of Europe’s biggest coal users, the country has been trying for the better part of a decade to put together a financial package that would build nuclear reactors to replace its dirty coal plans. Poland wants to build from 6,000 to 9,000 MWe of nuclear capacity based on proven, large-scale, PWR nuclear reactors of Generation III+ designs. Commercial operation of a first nuclear reactor unit in a proposed set of six is earmarked for 2033. Poland has repeatedly made policy level commitments to pursue nuclear projects and then shelved them due to a lack of financing.

Michał Sołowow, billionaire owner of chemical company Synthos SA, is planning to build a 300 MW small modular reactor (SMR) in Poland in the next decade in cooperation with GE Hitachi Nuclear Energy (GEH).

Romania – Completion of Cernavoda Units #3 & #4, which are CANDU type PHWRs, has long been the goal of the Romanian government. In 2020 state-controlled nuclear energy producer Nuclearelectrica terminated an agreement signed with China General Nuclear Power Corporation (CGN) for the construction of Units 3 and 4.

In October 2020 the Trump administration offered Romania $8 billion for US contractors to do the job but progress on the deal had not reached a final signoff before Trump left office. The status of the agreement is unclear.

In February 2021 Nuclearelectrica, said, without mentioning US cash, that a final investment decision for the Cernavoda nuclear power plant expansion project is expected in 2024, with commissioning of unit 3 planned within the next 10 years. An earlier feasibility study put the cost of completing the two units at $8.56 billion.

In March 2019, Romania signed a memorandum of understanding with NuScale power to evaluate the development, licensing and construction of a small modular reactor (SMR).

Hungary – According to World Nuclear News, Russia and Hungary signed an inter-governmental agreement in early 2014 for Russian enterprises and their international sub-contractors to supply two VVER-1200 reactors at Paks, including a Russian state loan of up to EUR10 billion to finance 80% of the project, which is known as Paks II. The high cost has resulting in Hungary recently renegotiating the start date for payments on the loans.

US State Department Offers Support for SMRs and 3 Seas but Not in the Same Breath

Last February U.S. Secretary of State Antony Blinken expressed the Biden administration’s support for the Three Seas Initiative, telling Three Seas foreign ministers in a video address;

“Bringing the private sector to the table alongside governments is a smart way to make big infrastructure projects happen. This support is representative of the type of essential U.S. (and EU) support that will bolster investment, security, and rule of law for Three Seas nations and their partners.” Video https://youtu.be/ZZsNd40DYdE

Support for SMRs

More recently, the State Department announced on April 27, 2021, a ‘Program To Create Pathways to Safe and Secure Nuclear Energy Included in Biden-Harris Administration’s Bold Plans To Address the Climate Crisis’ Press Statement

“Through an initial $5.3 million investment, this program will strengthen international collaboration between the U.S. and partner countries seeking to deploy nuclear energy in their clear energy initiatives. This cooperation includes supporting the deployment of advanced nuclear technologies, including small modular reactors (SMRs), in a manner consistent with the International Atomic Energy Agency’s Milestones Approach for implementing a responsible nuclear power program.”

Here is a summary of the activities the funds will support;

• Provide capacity building support to partner countries consistent with the IAEA Milestones Approach
• Supports building engagements on variety of topics, including SMR technology selection, safety and licensing, financing, workforce development, nuclear security, nonproliferation, project localization, stakeholder outreach, spent fuel management, etc.
• US Govt experts from appropriate agencies will work closely with partner governments to identify gaps which US can help fill
• Experts from both countries work together to assess necessary training, workshops, study tours, table-top exercises, etc.
• Projects to be funded for a one-year period of performance, with possible extensions

While the Department of State did not identify any potential partner countries or funding criteria, it stated the program would engage government, industry, national laboratories and academic institutions. Also, the statement didn’t explicitly mention the 3 Seas program. It may support similar activities outside of Europe.

The State Department does not mention the 3 Seas Initiative in its press statement. The Public Affairs Office did not respond to two inquiries as to whether the effort is in direct support of it. It’s possible this deliberate omission is related to the US not wanting to make too much of a point relative to its relations with Russia.

Clearly, from a geopolitical view, the 3 Seas initiative may be the first of many efforts to prevent Russia from expanding its influence in the region by gaining control of the energy security needs of these nations. It also can be seen as a blockade to China’s Belt & Road initiative which offers infrastructure projects at favorable financial terms.

The Three Seas Initiative can be seen as a counter weight to Russian and Chinese influence by creating economic growth and regional prosperity that doesn’t depend on Russian natural gas. The effort also has another effect and that is to promote open societies against foreign and domestic forces that spread distrust of democratic institutions.

The State Department said in its press release that the effort “strengthens the USA’s relationships with international partners, including through government, industry, national laboratory, and academic institution engagements.”

Fennovoima Revises Construction License Application for Hanhikivi-1

(NucNet) A flagship effort by Rosatom, Russia’s nuclear energy export state owned enterprise, to build a state of the art 1200 MWe PWR type nuclear reactor in Finland has hit another delay.

Finnish company Fennovoima said on April 28, 2021, that it “updated” the application for a construction license for the Hanhikivi-1 NPP. The Hanhikivi-1 project provides for the construction in Pyhajoki of a single-unit nuclear power plant based on a Russian-design VVER-1200 generation 3+ reactor. A construction license had been expected in 2021.

The Finnish utility was quick to act to address the announcement about the delay. Joachim Specht, CEO of Fennovoima, said, ““The rationale for the project is unchanged, and the scope of it will not be affected by the update.”

Fennovoima said changes are related to design solutions, supply chain, environmental issues and site security and preparedness arrangements. The key operating principles of the power plant have not changed.

He said that Fennovoima now estimates that it could obtain the construction license by summer 2022 and that construction of the power plant would begin in the summer 2023. Commercial operation of the plant would begin in 2029 instead of 2028.

Fennovoima also revised the total investment costs of the project. Instead of the previously announced €6.5-7 billion ($7.7-8.5bn), the estimated total cost is currently €7-7.5 billion.

In terms of global exports, Rosatom is building four of the 1200 MWe VVER at two sites in China. It has two of four planned units under construction in Turkey, and another four units are in the planning stages in Egypt.

TVA CEO: Utility Will Invest in SMRs

According to wire service reports, TVA President and CEO Jeff Lyash said last week during an online energy conference hosted by the Atlantic Council that to reach the 100% reduction goal, the utility will need technological advances in energy storage, carbon capture and small modular nuclear reactors. (YouTube video) Lyash said TVA is on track to reduce greenhouse gas emissions by 80% by the year 2035.

Lyash said TVA can reach an 80% reduction in greenhouse gas emissions over 2005 levels “with existing technology and without raising price or adversely impacting reliability.”

But to do that, it will need to extend the life of the utility’s existing nuclear fleet. The final 20% will be harder, especially considering the new energy demands that are expected from electrification of transportation, Lyash said.

Lyash said the utility will position small modular nuclear reactors as integral to that goal. He added that government support is needed to push forward new technologies that are currently under development.

“TVA is ready to lead in this area if the nation needs it to lead and with the right level of support, we can build small modular reactors as a lead plant at the Clinch River site.”

“First-of-a-kind risk and cost are substantial,” Lyash said. He added that the investment would help the U.S. achieve a low-carbon future and create a valuable export.

In 2019 TVA received a preliminary site permit from the NRC for a small modular reactor at the Clinch River site. The utility has not selected set a date for a license application nor indicated a preference for a specific design or vendor.

Coal Plants Converted to SMRs?

Lyash said that the hundreds of shuttered US coal power plants could be repurposed as small nuclear reactor sites citing easy access to water resources and existing power grid connections. “I see those sites as very viable small modular reactor (SMR) sites.”

Lyash does not see coal as part of the utility’s future, saying TVA will continue to phase it out over the next 15 years because its coal plants are reaching the end of their lives.

Sen. Joe Manchin, D-W.Va., who also attended the virtual meeting, agreed, “You could come online much quicker and we could accomplish this at a much faster rate than anything else we could do.”

“Some of our better manufacturing sites are the coal-fired power plants,” said Senator Joe Manchin, a Democrat from West Virginia. “You could come online much quicker and we could accomplish this at a much faster rate than anything else we could do,” he said about the SMR potential.

In fiscal year 2020, the portion of TVA’s power that came from nuclear was 42%. Gas accounted for 28%, coal for 15% with hydro generation just behind at 12%. Only 3% of TVA’s power came from wind and solar.

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