Rhein on Energy and Climate

The signing of an agreement for the construction and operation of a 4.8 GW (!) nuclear power plant by the Russian President and the Turkish Prime Minister, May 11th 2010, was anything but a trivial event.

It underlines the determination and capacity of the Russian nuclear industry to win contracts across the world wherever opportunities arise, whether in China, India, Pakistan, Turkey or Syria. It also shows its competitive advantage. Atomstroyexport was able to offer conditions that “Western” competitors were unable to match: invest $20 billion for building, owning and operating the plant at its risk, with an option to sell up to 49 percent of its shares to Turkish and European investors at a later stage.

It also undertakes the reprocessing of the used plutonium and possibly also the final storage of nuclear waste.

French, American, Japanese and South Korean nuclear engineering companies had preferred not to participate in the Turkish tender, probably because the conditions seemed too risky.

The deal will set a precedent; in the future nuclear engineering companies will often have no choice but to build, own and operate, as utilities will find it more and more difficult to shoulder the huge financing burden required for nuclear power plants.

For Turkey this will be the first nuclear power plant. It will render less dependent on imported oil and gas and enable it to master the technology.

The EU should draw the right lesson from the Turkish-Russian deal, which follows the French defeat against South-Korean competitors in the Gulf. It should consider establishing a multi-billion financing facility for big “Build-Own-Operate” power projects in emerging countries, which would be C02 emission-free. This might contribute to combating climate change while creating qualified jobs in Europe.

Brussels 14.05.10 Eberhard Rhein

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