HS analysis The world fears a Russian invasion of Ukraine, and at the same time a nuclear power plant is being built in Finland with Russian money – the Pyhäjoki nuclear power plant became an important project for Putin that will not be allowed to crash

If everything is going according to plan, russian Rosatom will start construction of a nuclear power plant in Pyhäjoki towards the end of the year or early next year.

The project has suffered from severe initial difficulties and has been delayed during the permitting phase, but now Rosatom and the customer Fennovoima have succeeded in beating their operations. The Radiation and Nuclear Safety Authority (Stuk), which supervises the design work, says that it has started preparing its safety assessment. A positive safety assessment is a condition for granting a building permit. Fennovoima’s goal is to obtain a building permit from the Government later this year.

The timing is embarrassing for Finland, again.

Fennovoima received a permit in principle in December 2014, just months after Russia had occupied the Crimean peninsula. Since then, preparatory construction work in Pyhäjoki has progressed at the same pace as the increased aggressiveness of Russian foreign policy. Now the building permit decision looms in a situation where Western countries fear Russia’s full-scale invasion of Ukraine and threaten the country with new economic sanctions.

That’s right did not have to visit. Fennovoima was originally a project of Western companies. The Germans Eon and Siemens withdrew from the project after Germany decided to abandon nuclear power in the aftermath of the Fukushima nuclear accident. Rosatom came from the back left to rescue a project that was about to crash.

At the same time, the number of parties ready to build nuclear power in Finland had fallen from three to one. Olkiluoto 3 was in such deep trouble that the customer, TVO, did not have the means to promote the construction of another reactor. Fortum’s application for a permit, on the other hand, had previously been denied and the company was no longer interested in building a new reactor, although when the Fennovoima decision loomed, efforts were made to persuade it to revive its old plans.

The decision was so difficult that it tore the lines of the government, but eventually permission came.

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Preparatory construction work in Pyhäjoki has progressed at the same pace as the increased aggression of Russian foreign policy.

Traditionally it is thought that the granting of a license in principle is a political step in the licensing of a nuclear power plant. At that stage, the government and Parliament will consider whether the project meets the key requirement of the Nuclear Energy Act, according to which the use of nuclear energy must be in the general interest of society and safe.

After that, the building permit is not a political decision: if Stuk considers the plant to be safe, the government will grant the building permit.

In this way, Fennovoima should be an unstoppable project.

Now, however, it seems that Fennovoima’s licensing process is not necessarily going so smoothly. There may be a broader consideration ahead of the “overall good of society”. This is at least what is hoped for in the Ministries of Foreign Affairs and Defense.

Ministry of Defense proposed in the autumn that Fennovoima’s building permit application be accompanied by a broader risk analysis of the project’s geopolitical and economic risks.

“Significant projects related to national security of supply must always be subject to a security risk analysis, especially when committing to cross-border actors and suppliers,” explains in a statement submitted to the Ministry of Employment and the Economy (MEE).

“The risk analysis should include a clear look at, for example, how any new sanctions on Russia would affect the project and how they would be treated. Account should also be taken of the Rosatom Group’s links with the Russian defense industrial complex and related measures to pursue Russia’s security policy goals. “

For the time being, there is no decision to commission a risk analysis, but the Ministry of Foreign Affairs wants to wait for the completion of Stuk’s safety assessment first. However, it would be a drastic decision if the Ministry of Foreign Affairs decided not to carry out the analysis, contrary to the express request of the Ministry of Defense.

Also the Ministry of Foreign Affairs calls for a broader risk assessment.

In a statement issued in December, the Foreign Ministry believes that the risks to the project’s financing of the strained relations between Russia and the West and a possible sanctions spiral should be clarified. The financing for the construction period of the power plant will come from Russia.

In addition, the ministry is concerned about how at least a 60 percent domestic ownership will be secured throughout the lifecycle of the facility. Fennovoima has suffered an investor escape, and last Friday the construction company SRV said it would sell its 1.8 percent stake in the project to Rosatom. The share of domestic ownership fell to just over 64 per cent. According to public information, many other Finnish owners have also tried to get rid of their holdings.

According to Fennovoima, its shareholder agreement secures domestic ownership in all circumstances.

The Foreign Minister made a number of critical remarks about the project as early as 2016. In its December statement, it states that those remarks are still valid.

“The risks associated with the project should be considered as a whole when assessing whether the project meets the conditions set by the Nuclear Energy Act for granting a building permit,” the opinion states.

Both Ministries want to ensure that decisions about the power plant are always in Finnish hands.

Along the way, the Ministry of Defense has been concerned about the lack of decentralized procurement of fuel. Dependence on one foreign fuel supplier may jeopardize the retention of decision-making power in Finland.

Fennovoima has committed to procuring nuclear fuel for ten years from Rosatom’s subsidiary TVEL. The problem is that TVEL is so far the only manufacturer in the world to produce fuel suitable for the Hanhikivi reactor.

Fennovoima has allayed its concerns by stating that it is seeking to find an alternative fuel supplier and maintain a two-year fuel inventory in the event of supply disruptions.

The Ministry of Defense believes that the obligation to decentralize fuel procurement should not be relaxed. It considers the decentralization of procurement to be “very important”. The Ministry of Foreign Affairs believes that it should be ensured that spare parts and components are also obtained from alternative suppliers.

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There may be a broader consideration ahead of the “overall good of society”.

In Finland German support for the Nord Stream 2 gas pipeline has been updated loudly, but it has been difficult to talk about Fennovoima. Public debate has been in the interests of a few.

However, following statements by the State Department and the Ministry of Defense, it is difficult for the government to hide behind Stuk’s estimates. The weight of a possible geopolitical risk analysis or its conclusions in the final decision is still difficult to predict. Alongside the risks, it is worth remembering that when completed, the Hanhikivi power plant will reduce Finland’s dependence on imported Russian electricity.

However, it is clear that stopping Fennovoima would be behind a terribly high threshold. The project has already swallowed large sums of money, and the need for clean electricity in Finland will grow strongly in the near future.

In addition, and above all: nuclear energy is a strategic sector for Russia in the future and an important opening for Fennovoima Rosatom in the Western market. Vladimir Putin has said Russia will do its utmost to make the project a reality.

Already Fennovoima’s history to date shows that this is a project that will not be allowed to fail. This is evidenced by the summer 2015 owner visits. At the last minute, Migrit Solarna from Croatia, who soon turned out to be a Russian bulwark company, appeared to be the financier of the project. The game was still not whistled, but Fortum, who soon left the project once, announced – obviously reluctantly – that he would return as a financier.

Fennovoima is not just about business, it is a politically significant project. Quoting the statement from the Ministry for Foreign Affairs: “If the project progresses smoothly, it will have a positive effect on relations between Finland and Russia.”

What would happen in the opposite scenario can be deduced from this.

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