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Ukraine crisis raises doubts about Fennovoima nuclear project

Some shareholders want to pull out of a planned nuclear plant to be built by a Russian firm in Pyhäjoki.

Preliminary work has been carried out on the Hanhikivi peninsula since 2015. Image: Fennovoima

Partners involved in a planned Russian-built nuclear power plant in Pyhäjoki, Northern Ostrobothnia, tell Yle they are increasingly doubtful about the project.

Russia's military pressure on Ukraine and uncertainty over the construction permit for the nuclear power plant have already caused some stakeholders to calculate how much they would lose if the plant does not materialise.

The plant, to be provided by a subsidiary of Russian state firm Rosatom as a turnkey delivery, would be Finland's first entirely new nuclear power plant since the 1970s.

According to the original plan, it was to have begun operations in 2020. Now the company aims to begin commercial operations in 2029.

Finnish companies, most of which are municipal energy utilities, have invested some 470 million euros in the Fennovoima venture, according to the Voimaosakeyhtiö SF consortium.

Voimaosakeyhtiö SF owns 66 percent of shares while RAOS Voima owns the rest. RAOS Voima is a Finnish subsidiary of Rusatom Energy International, which in turn is part of the Russian state-owned firm Rosatom.

Voimaosakeyhtiö's biggest stakeholder is steelmaker Outokumpu, with a 21.9 percent share. It operates one of Europe's largest stainless-steel mills in Tornio, some 200 km north of Pyhäjoki.

The second-largest is Suomen Voima, a consortium of 17 southern Finnish municipal energy utilities, who together own 13.1 percent. The other stakeholders all hold less than 10 percent each.

Jouni Haikarainen, CEO of Lahti Energia, which has invested 15 million so far, said that the company may lose all the money it has invested if the project is not completed.

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Jouni Haikarainen has been CEO of Lahti Energia since 2020. Image: Juha-Petri Koponen / Yle

"The situation has been challenging for the past couple of years," Haikarainen said.

SRV's surprise departure

Yle interviewed several of Fennovoima's shareholders after the construction company SRV said it was selling its two-percent stake in Fennovoima to RAOS Voima.

The sale, which would raise the Russian ownership to nearly 35 percent, still requires the approval of the Ministry of Economic Affairs and Employment.

Kaakon Energia, based in eastern Finland, has requested further information from Voimaosakeyhtiö about SRV's withdrawal and whether similar arrangements would be possible. The company is owned by the local energy companies of Imatra, Parikkala and Outokumpu, all municipalities near the Russian border.

SRV's announcement came as a surprise to other shareholders, as other firms have unsuccessfully tried to get rid of their holdings in the past.

For example, dairy firm Valio, which is a shareholder in Fennovoima through a subsidiary, has been trying to find a buyer for its shares since 2015.

Valio has said it wants to divest its holdings because of the uncertainty surrounding the implementation of the project, and since nuclear power is not its core business.

Companies such as Boliden, Ovako and the S Group have also sought to withdraw earlier but have not been able to sell their shares.

Voimaosakeyhtiö chair Timo Honkanen, who is also CEO of Turku Energia, still believes that the plant will be completed. He is confident that over a 60-year period, the project will be profitable.

"As long as sanctions do not materialise, I believe it will be completed. But it's a very long process. It has to be done perfectly right so there are no questions about whether it works exactly as it should," he told Yle. It remains unclear whether the project might be affected by EU sanctions on Russia if it were to attack Ukraine again, as the Nord Stream gas pipeline would be.

Ministry dubious about the schedule

Fennovoima's goal is to obtain a construction permit by next summer and to begin construction next summer.

The Ministry of Economic Affairs is sceptical about the schedule.

According to Riku Huttunen, Director-General of the ministry's energy department, the schedule depends primarily on how Fennovoima delivers required material to the Radiation and Nuclear Safety Authority (Stuk) and when it completes its safety assessment.

Only then can the ministry evaluate the construction permit application and prepare the matter for the government, which makes the final decision.

The ministry's assessment would cover issues such as whether a company has sufficient know-how to build a plant, its financial status, how nuclear waste management would be organised and whether the project is in the overall interest of society.

"Experience has shown that one must be cautious about the schedule," Huttunen says.

For instance, the Olkiluoto 3 reactor at an old power plant in the southwest, is finally expected to begin commercial operations this year – some 13 years behind schedule.

According to Huttunen, the ministry has not yet decided whether a separate security report would be prepared based on the Russian role in the project, as requested last autumn by the Ministry of Defence. According to the ministry, the connections between the state-owned Rosatom and Russia's security policy goals should be clarified.

Rosatom will play a key role in the project, as it would be not only be a major owner but also build the plant and supply its fuel for at least the first decade.

Stuk says that ROAS has not yet provided all the material it needs to carry out the safety assessment, despite repeated requests.

The central part of the power plant, the reactor pressure vessel, is to be built in Kramatorsk, Ukraine. The city is near the current war zone in eastern Ukraine.

Some of the welding work is to be done in Russia. All work abroad must be monitored by Stuk, and would last for at least a year.