The Chernobyl Replacement Project

Abstract

By the time this article is published, the European Bank for Reconstruction and Development (EBRD) and the European Commission (EC) may have finally approved the loans necessary to finance the so-called ‘Cherbnobyl replacement project’. This project involves the completion in Ukraine of two 1000MW Russian-designed nuclear power plants, Khmelnitsky 2 and Rovno 4 (K2/R4) of the WWER design, on which work stopped ten years ago. SInce 1993, proposals to complete these units have been part of the negotiations between the West and Ukraine to agree terms to allow the early closure of the Chernobyl nuclear power plant, although it had not always been clear from which side the impetus has come to complete them. The Chernobyl site originally had four 1000MW Russian-designed reactors of a type, RBMK, that Western experts regarded as unsafe. Unit 4 was destroyed in the 1986 disaster and its highly radioactive remains need much further work to be made safe. Unit 1 was permanently closed in December 1996, rather than spending the large sums of money necessary for essential repairs. The turbine hall in Unit 2 was destroyed by fire in October 1991, probably making it too costly to return to service, although it has been claimed that the reactor is in good condition and could be restarted at reasonable cost by connecting it to the turbine of Unit 1. Unit 3 remains in operation and the Ukrainian authorities have repeatedly stated that they will keep it in operation unless the West funds the completion of K2/R4. The West, through G7 and the EC, has long agreed to provide grants to fund the direct costs of Chernobyl’s closure and the work necessary to make safe the remains of the unit crippled in the 1986 explosion. It has also agreed to provide loans to fund the indirect costs of closure (replacement capacity) via the International Financing Institutions (IFIs), essentially the World Bank., the EBRD and the European Commission’s lending arm, the European Investment Bank (EIB). Completing K2/R4 had always been likely to be a major element of the loans package. However, the World Bank does not lend money for nuclear projects and the IFIs are required to operate under sound banking principles. The funding for K2//R4 must therefore come largely from the EBRD and the EIB, and K2/R4 has to be shown to be ‘least cost’, i.e. they must show a higher expected economic return than alternative projects in the electric power sector. Whether K2/R4 meets this criterion remains the question. This article outlines the background of ‘the Chernobyl replacement project’. It then Energy & Environment, Vol. 10, 1999, No. 3 325