State Support Makes Russia’s Nuclear Power Sector Competitive, Report Says

Russia’s nuclear power sector “continues to benefit” from supportive government policy, says a new report by global ratings agency S&P, according to World Nuclear News.

The development in Russia is in contrast to “tighter restrictions” in Western Europe owing to environmental concerns and growing competition from renewables, the agency’s analysts say.

Russia’s nuclear power industry consists of 89 enterprises that are owned by the state-run joint stock company Atomic Energy Power Corporation (AEPC), or Atomenergoprom, its Russian name. The country has been one of the world’s leading countries in nuclear power generation, S&P says, and it plays an important role in all parts of the nuclear cycle, from mining to construction.

The report, titled “What Makes Russia’s Nuclear Sector Competitive,” says state support includes capacity-supply agreements, ad hoc equity contributions from the government and low nuclear liabilities that accrue only after 2011.

In contrast to global peers, Russian nuclear power generation is cost competitive compared with other fuel types, the report adds, thanks to low construction costs and supportive electricity market design.

The country’s construction costs for new plants are “well below” European levels thanks to vertical integration, the “lasting effects” of local currency devaluation in late 2014, and the “learning-curve effect” as Russia was among the few countries in the world that recently commissioned several new plants.

“We expect domestic nuclear capacity to increase only moderately because electricity demand in Russia is stagnating, given only modest GDP growth, a significant potential for energy savings, and the government’s intention to avoid raising electricity prices through additional increases in capacity payments,” the report says.

Although Russia is involved in a “record number” of international nuclear power construction projects, the prime contractor is AEPC’s engineering division Atomstroyexport, and AEPC is only directly involved in two projects, Hanhikivi in Finland (34%) and Akkuyu in Turkey (96%), the report notes.