JSC Rusatom Overseas and Fennovoima have signed a plant supply contract to construct a nuclear plant of the AES-2006 pressurized water reactor design (Figure 1) in northern Finland, the companies announced on Dec. 21.

1. The AES-2006 is the latest upgrade to the Russian VVER unit. Currently, 18 VVER units operate in European Union countries. In Finland, two VVER-440 units have been operating for several decades. Courtesy: Fennovoima

The plant, to be called Hanhikivi 1 Nuclear Power Plant, is to be constructed on a site near the coastal municipality of Pyhäjoki, located in Northern Ostrobothnia on the shore of the Baltic Sea (Figure 2).

2. The Hanhikivi Peninsula in Northern Ostrobothnia, Finland, site of the proposed Hanhikivi 1 Nuclear Power Plant. Courtesy: Fennovoima

Fennovoima is a Finnish Mankala company, which brings together 46 companies and municipalities. Mankala is a widely used business model in the Finnish electricity sector, whereby a limited liability company is run like a zero-profit-making cooperative for the benefit of its shareholders. Each of the owners receives a share of the generation—at cost— based on its ownership percentage.

Two other agreements between parties associated with the project were also signed. Fennovoima and JSC TVEL signed a nuclear fuel supply contract for the future plant, while Voimaosakeyhtio SF—parent company of Fennovoima—and JSC Rusatom Overseas signed an agreement establishing areas of responsibilities and shares in the project. If the final investment decision is approved, which is expected by the end of February 2014, JSC Rusatom Overseas will also acquire a 34% stake in Fennovoima. JSC Rusatom Overseas parent, Rosatom, is also expected to play a large role in arranging debt financing for plant construction.

The plant is expected to begin commercial operation in 2024. According to Fennovoima projections, the price of electricity for its shareholders will be less than €50/MWh ($68.50/MWh) including all production costs, depreciation, debt interest, and waste management.

That price compares quite favorably to the recent agreement signed between EDF Group and the UK Government for the planned Hinkley Point C nuclear power station, in which the strike price was set at £92.50/MWh ($149.45/MWh).

Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)