Nuclear Power

Cheap Nuclear Reactors Are Russia's Ace


Russia, one of the world's biggest oil and gas exporters, aims to become a global leader in nuclear power, too. State-owned nuclear group Rosatom now has 15 reactors under construction worldwide, more than any other international supplier (table, bottom of story). Five of the 15 are outside Russia, and more are coming soon.

On Sept. 26, Rosatom announced a deal to supply two reactors to China, in addition to two it has already built. "China's not even the No. 1 priority now, as we have larger-scale partnerships in India, Turkey, and in the future, Vietnam," Rosatom Chief Executive Officer Sergei Kiriyenko said.

Emerging-market countries are ordering most of the new reactors nowadays, as projects in developed countries are slowed by political opposition. Rosatom is ready to compete on price: According to the Organization for Economic Cooperation and Development, construction of a 1,000-zmegawatt plant in Russia costs an average $2.9 billion, exclusive of financing. That's 20 percent to 50 percent less than plants built by Western rivals.

The Russians have overhauled their nuclear technology since the Chernobyl fiasco. "The power reactors they are offering the world are the same basic design everyone else is offering," says Mark Hibbs, a Berlin-based senior associate in the nuclear policy program at the Carnegie Endowment for International Peace. "Outside experts judge it to be safe." Nonetheless, he adds, "In some nuclear markets, decision makers both commercially and politically still are a little nervous about this."

Kiriyenko has been pushing to expand global sales since 2005 when he took the helm of Russia's atomic-energy ministry, which became a state-owned company in 2008. The 48-year-old CEO, who served briefly as Prime Minister under Boris Yeltsin, says he wants to boost Rosatom's annual sales from $17 billion now to more than $50 billion over the next 20 years.

As a state-owned company, Rosatom benefits from the Kremlin's help in clinching deals at high levels. Its sale of two reactors to India last March was sealed during a trip to New Delhi by Prime Minister Vladimir Putin, who also agreed to sell the Indians 29 MiG fighters and other arms. The September sale to the Chinese was signed in Beijing the same day as a Russian agreement to supply natural gas to China. Rosatom is also the only nuclear vendor willing to take back spent fuel from its customers, according to the World Nuclear Assn. Most countries, including the U.S. and France, prohibit the long-term storage and disposal of wastes from commercial reactors outside their borders.

Rosatom's toughest rival may prove to be Korea Electric Power. The reactors Kepco builds in Korea cost about one-third less than Rosatom's, according to the OECD. And this year, Kepco inked its first export deal, to supply four reactors to Abu Dhabi for $20 billion. "The benchmark to beat now is the Korean price," says Chris Gadomski, a nuclear specialist at analysis group Bloomberg New Energy Research.

Kiriyenko is still preparing for a boom in sales. To ensure steady fuel supplies to customers, Rosatom spent $610 million in June for a controlling stake in Canada's Uranium One. In an upcoming joint venture with Siemens, (SI) the German company will provide turbines for Rosatom plants. New products are coming, too, including next-generation fast reactors and floating reactors that can be hauled by ship to remote locations.

Rosatom's Reach

Reactors under construction worldwide, listed by supplier (includes exporters only)

Rosatom (Russia): 15
Korea Electric Power (S. Korea): 6
Westinghouse (U.S.): 5
Areva (France): 4
General Electric-Hitachi: 4

Data: World Nuclear Assn., Company Reports

The bottom line: Russia has revived its reactor exports by targeting emerging markets. Rosatom is an industry leader in reactor sales abroad.

With Lyubov Pronina.

Matlack is a Paris correspondent for Bloomberg Businessweek.
Humber is a reporter for Bloomberg News in Tokyo.

Coke's Big Fat Problem
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus