Hungarian nuclear power plant construction with Russia goes ahead

By Sergey Kudiyarov

Despite the opposition of Brussels, Hungary has managed to agree on the construction of the second stage of the Paks NPP with the Russian Rosatom. That said, the anti-Russian European front is bursting at the seams

The first stage of the Paks nuclear power plant in Hungary with four Soviet-designed VVER-440 reactors began operating at full capacity in 1987
Atomstroyexport, a specialized division of Rosatom, has just begun work on the main stage of construction of the second stage of the Paks NPP in Hungary.

According to Rosatom, “the work of the main period began after the parties signed amendments to the contract for the construction of two new power units on August 18, and the Hungarian customer of the Paks-2 NPP project, Paks II Nuclear Power Plant Ltd, issued a corresponding official notice on the transition of the project to the second, main stage of construction.

The contractor, the Hungarian company Duna Aszfalt Kft, has begun preparations for excavation of soil from the pit under the future sixth unit. Meanwhile, Bauer Magyarorszag Kft started ground stabilization and continued construction of the impervious protection of the construction site. It is expected that earthworks will be completed before the end of autumn.

“The so-called first concrete will be poured before the end of next year,” said Hungarian Foreign Minister Péter Szijjártó.

Rosatom is actively working in foreign markets, playing a leading role in the creation of new nuclear generation around the planet (see "Huranium rear support", "Expert" No. 11 for 2023). But in Europe, for political reasons, things did not go well for the company: anti-Russian hysteria outweighed the economic benefits. The Paks incident, the fruit of the remarkable persistence of Rosatom and the Hungarian authorities, indicates that the European Russophobic coalition is far from being monolithic.

The Paks nuclear power plant, located near the town of the same name in Hungary, is the only nuclear power plant in the country. All four of its 440 MW units were launched one after the other in the second half of the 1980s. According to the owner company, the nuclear power plant produces more than 50% of the electricity generated in Hungary.

The history of the project is quite typical for this region: having developed good nuclear competencies, the Soviet Union in the second half of the 20th century consistently built nuclear power plants on the territory of its European allies.

The very first Soviet nuclear project abroad was the Bohunice nuclear power plant in the western part of Slovakia (then part of Czechoslovakia). The construction began in 1958, but it dragged on for a long time, commissioning took place only in 1972. Therefore, the Rheinsberg nuclear power plant in the GDR was the first commissioned foreign station of the Soviet design (construction began in 1960, launch in 1966).

In total, before the collapse of the socialist camp, Soviet nuclear scientists managed to build 10 nuclear power plants with 32 reactors (mainly VVER-440) abroad (mainly in Eastern Europe). The construction of another 15 reactors was underway, but was stopped, a number of them were already in a high degree of readiness (it was decided to complete the construction of two such reactors in Slovakia).

Hungary, however, managed to get into the number of lucky ones who, from Soviet bounties, acquired their own nuclear power industry.

The construction of the Paks nuclear power plant began in 1974, and in October 1983 the first reactor was put into operation. In total, until 1987, the USSR built four VVER-440 reactors here. Already in the post-Soviet era, in 2003, it was Rosatom specialists who eliminated the consequences of a serious incident at the station (Expert told the details of this story in the material Za Nami Sredmash, No. 6 for 2007).

The history of the second stage of the Paks NPP can be counted from 2009, when the Hungarian Parliament approved the construction of two new power units. The Fukushima hysteria did not undermine the determination of the Hungarians to develop their nuclear energy, and in 2014 two agreements were signed: an intergovernmental agreement and a contract between Rosatom and the national energy company MVM for the construction of new NPP units (No. 5 and No. 6) with VVER-1200 reactors.

The cost of the project was estimated at 12.5 billion euros. In 2014, Moscow and Budapest entered into an agreement to provide a long-term loan of up to 10 billion euros for the construction of a nuclear power plant.

In April 2017, the EPC contract* came into force in full, including the financial obligations of the parties. The project received an environmental license in September 2016, and a site license in March 2017.

At the end of August 2022, the Hungarian Atomic Energy Authority issued Rosatom a permit for the construction of the fifth and sixth power units of the Paks NPP. And in May 2023, the European Commission already approved amendments to agreements on the construction and financing of the facility.

*Contract, involving the implementation of a full range of engineering works, from the English. EPC: Engineering - survey, design and approval work; Procurement - procurement: selection and purchase of materials and equipment for the project; Construction - construction.

Eurocollisions
What are these amendments to the agreements and what does the European Commission have to do with it?

“As far as we know, the European Commission had no fundamental claims,” says Alexei Faddeev, head of the IPEM Special Projects Department. - The bottom line is that according to the agreement on Euratom (European Atomic Energy Community. - "Expert"), draft interstate agreements in the field of atomic energy should be sent to the European Commission for consideration. Previously, a decision was made to amend the agreement between Hungary and Russia, in connection with which it had to be sent to the European Commission, which, in turn, did not express fundamental objections.”

What specific changes are in question, is not specified. However, Szijjarto noted that Rosatom and MVM signed a contract for the construction of new NPP units in 2014, the conditions were agreed at the same time, and since then “the life and technological situation has changed so much that now they may be subject to sanctions.”

There have been no technological revolutions in the construction of reactors of this type over the past decade. Therefore, it is worth assuming that the point is precisely in the “life situation” after returning to the world of geopolitics.

Directly Rosatom, as well as specifically the project of the second stage of the Paks NPP, did not fall under the sanctions of the collective West. In October 2022, Hungary, during a meeting of permanent representatives of the EU countries, ensured that sanctions against Russia did not affect nuclear energy in general and the construction of new power units at the Paks NPP in particular.

The Minister of Foreign Affairs and Foreign Economic Relations of Hungary Péter Szijjarto: “If we analyze the impact of the sanctions, it is clear that they did not live up to expectations… Russia is not on its knees, and the war is not coming to an end. And the European economy is suffering more from sanctions than the Russian one” (from an SNBC interview in January 2023 on the sidelines of the World Economic Forum in Davos)

“We managed to get nuclear energy out of sanctions, so these sanctions do not apply to the construction of new power units of the Paks NPP. In addition, not a single institution that is important for cooperation in the field of nuclear research and development has been included in the sanctions list, ”Peter Szijjarto said on this occasion.

There are still many reactors operating in Europe using Russian-made fuel assemblies, and there are still significant supplies of enriched uranium from Russia to the EU. According to foreign trade statistics, in 2021 Russia exported nuclear equipment and TVEL (TN VED 8401) worth $1.1 billion, with a total world export of $3.7 billion.

Rosatom provides about a fifth of the enriched uranium needed for 92 nuclear reactors in the United States, and utilities in Europe rely on Rosatom to generate electricity for 100 million people, Bloomberg reports. The US and its European allies considered sanctions against Rosatom from the beginning, but concluded that cutting off their own nuclear industry from Russian supplies would be too economically painful.

However, the financial model of the project for the second stage of the Paks NPP was designed in such a way that it flew under the sanctions “on two legs”.

In accordance with the basic agreement in 2014, Russia provided Hungary with a state export loan in the amount of up to 10 billion euros to finance the construction of two power units of the Paks nuclear power plant (the total cost of the project is estimated at 12.5 billion euros). Until February 2022, the debtor fulfilled its payment obligations in a timely manner and in full, using the right to early repayment of the debt.

And in February 2022, the United States and the European Union imposed anti-Russian sanctions that made it impossible for Russia to receive payments from debtor countries, including Hungary, in dollars and euros.

In April 2023, Russia and Hungary signed a protocol to amend the loan agreement for the Paks NPP. According to the protocol, Hungary is granted a deferment on accrued interest on a construction loan, as well as a commission on the unused loan amount in 2021-2022. Loan payments must be made in euros from the account of the Hungarian side in a Russian bank. The new financial model is not formally subject to sanctions.

Since 1990, 14 Soviet-built reactors have been decommissioned in Europe. Not a single new one has appeared, except for the ongoing completion of the Soviet VVER-440 reactors at the Slovak nuclear power plant Mochovce

The French will help them
According to the original plans, the German Siemens Energy was supposed to supply control systems for the new power units of the Paks nuclear power plant, but with the start of the NWO, the German government blocks these deliveries, arguing that they are dual-use products subject to sanctions. It is noteworthy that the German authorities also did not issue a permit to Siemens for the supply of electrical equipment for the Turkish Akkuyu nuclear power plant, which is being built by Rosatom.

However, as Peter Szijjarto stated, this will not stop the implementation of the project in Paks. The place of the Germans in the supply of process control systems for new power units will be taken by the French Framatome.

“We counted on a German-French consortium in the supply of process control systems, but the German government does not allow a German company to participate in this, so the French will take their place in the supply of control systems,” the Hungarian minister said. “The participation of France was significant, and now we intend to increase it even more. The knowledge, technology and experience of EDF guarantee the continued success of the Hungarian nuclear industry.”

By the way, while on a visit to France in June this year, Szijjártó met with representatives of the Framatome and EDF energy concerns. The latter is notable for the fact that in November 2022 it entered into an agreement to acquire GE Steam Power, a division of the American General Electric holding specializing in the production of turbines for power plants. Physically, however, this production is concentrated in the south of France, being part of the French corporation Alstom until 2014.

Refuseniks
However, this success in the European market will most likely be the only one for Rosatom in the foreseeable future.

“In the near future, the appearance of new contracts of Rosatom in the EU countries is extremely unlikely,” says Alexei Faddeev from IPEM. - The probability of resuscitation of the Belene project in Bulgaria in the near future is small in principle, not to mention the Russian participation in it. In Europe, in general, NPP units are now being built in single quantities - one each in France and Slovakia, two in the UK - which do not allow compensating for the mass decommissioning of old units.

In general, since 1990 in Europe (not counting the former Soviet republics) 14 Soviet-built reactors have been decommissioned. Not a single new one has appeared, except for the ongoing completion of the Soviet (began to be built in 1987) VVER-440 reactors at the Slovak nuclear power plant Mochovce. The third power unit here was completed in 2022, the commissioning of the fourth is planned for next year. And that is all.

Of the new projects in foreign Europe, one can note the attempts of Rosatom in Finland and Bulgaria.

The EPC contract for the Hanhikivi 1 nuclear power plant in Finland was signed in 2013. According to him, a single-unit (VVER-1200) power plant was to appear in the north-west of this country.

However, the practical implementation of the project has not yet begun. Finally, in May 2022, when the SVO flared up in Ukraine and Russophobia in Finland, the latter terminated the contract with Rosatom for the construction of a nuclear power plant. According to the Finnish Fennovoima, which was the formal customer of the nuclear power plant, it was "forced to refuse cooperation with Rosatom because of the risks associated with the situation on the territory of Ukraine."

Industry experts, however, consider this not the worst outcome for Rosatom. The Hanhikivi-1 NPP project not only went under the furious howl of the local "greens", but its financial model left much to be desired. With a total cost of 6.5 billion euros, Finland paid only 1.5 billion, while Rosatom itself had to raise the remaining amount, including from the National Welfare Fund. This is a unique case, because usually an interstate loan is issued for such projects (in Hungary, such a scheme has been implemented). So the Finns actually refused the royal gift - and we are better off. Against the backdrop of Finland's political course, it is especially clear that it was not worth investing there.

Another relative success was the Belene NPP project in Bulgaria. The nuclear power plant near the city of the same name in the USSR began to be built back in 1987, in a two-reactor design (VVER-1000).

But in 1990, with the collapse of the socialist camp, all work was stopped.

In 2005, an agreement was reached to complete the construction of the station by the Russian Atomstroyexport. Equipment for two reactors of the station was delivered to the Belene site. However, in 2012, the pro-Western government of Boyko Borisov abandoned the construction of the Belene nuclear power plant.

True, the need for energy has not gone away, even in the order of depopulated and deindustrialized Bulgaria. In 2018, the same Borisov declares that the Belene NPP will still be built, but the construction tender needs to be held again. No competition was ever held.

But in 2021, the Bulgarian government, on the “wise” advice of its friends from the American Westinghouse, proposed using the equipment already delivered to Bulgaria instead of the Belene NPP to complete the construction (of course, by the Americans) of another reactor at the Kozloduy NPP.

The latter is currently the only operating nuclear power plant in the country (two VVER-1000 units), and in 2006, at the request of the European Union, it noticeably “thinner” (four VVER-440 reactors were closed).

As a result, in 2022, the Bulgarian government announces a complete abandonment of the Belene NPP project.

Then, in January 2023, a decision is made to conclude a contract with the American Westinghouse (of course, without any tenders) for the construction of two AP1000 reactors at the Kozloduy NPP.

And in July of this year it became known that Bulgaria plans to sell the equipment delivered in Belen to Ukraine. There are indeed difficulties. It is impossible to pull off such a deal without the consent of Rosatom, and the “square” one is completely independent of everything, including the money to pay for such a supply. And supplying nuclear equipment to a war zone is, to put it mildly, a controversial idea.

Poland, which did not have time to acquire a "Soviet" nuclear power plant, has an ambitious plan for the development of nuclear energy. Warsaw, as stated by Polish Prime Minister Mateusz Morawiecki, expects to receive 9 GW of nuclear generation by 2033. The first Polish nuclear power plant in the area of ​​the village of Khoczewo on the coast of the Baltic Sea is to be built by the American Westinghouse, then it is planned to attract the South Korean KHNP.

In general, overseas owners, first of all, and Korean friends (Poland actively buys armored vehicles and artillery from South Korea) also did not go unnoticed. Who will pay for this attraction of unprecedented generosity is another matter: Poland is a net recipient of EU subsidies, and “old” Europe (read: the payer of these subsidies) with its own energy equipment suppliers will clearly not be happy with such spending of their funds. Rosatom, of course, against the backdrop of the Russophobic hysteria traditionally reigning in the country, does not shine.

Lets recall that even before the SVO, in 2021, and in the traditionally less Russophobic Czech Republic, Rosatom was, in principle, not admitted to the competition for the design of a new reactor for the Dukovany nuclear power plant (construction should begin in 2029). And without hiding at all that for political reasons.

When energy comes before politics
In order to understand what the Europeans are losing in their political games, let us conclude with the example of Belarus, where the construction project of the Belarusian nuclear power plant (two VVER-1200s) is being implemented. The first power unit is already in operation, and testing of the second power unit is to begin in September this year.

“The Belarusian nuclear power plant was almost immediately considered as an internal source of energy for Belarus,” says Aleksey Faddeev. - Therefore, in Belarus back in 2016, an energy development plan was approved, which involves the integration of the BelNPP into the national energy system. It also assumes the withdrawal of obsolete capacities to thermal power plants.

According to Deputy Minister of Energy of Belarus Mikhail Mikhadyuk, with the commissioning of the second power unit in commercial operation, the nuclear power plant will generate about 18.5 billion kWh of electricity per year, which will replace about 4.5 billion cubic meters of natural gas. For a small country, the value is tangible, especially against the backdrop of the high cost and shortage of this same gas.

At present, an agreement has been signed by Rosatom on the construction of a nuclear power plant in Uzbekistan (two VVER-1200, in Farish, Jizzakh region), the possibility of building a nuclear power plant in Kazakhstan (the village of Ulken, Almaty region), where the executor with a high degree of probability will also be Rosatom, is being considered. There, too, is energy before politics.
This article originally appeared in Russian at expert.ru