Finnish nuclear operator Fennovoima Oy scrapped plans to build the 1.2-GW Hanhikivi 1 nuclear power plant in Finland, a joint construction effort with Russian state nuclear power company Rosatom, due to Russia's ongoing war in Ukraine.
Describing "significant delays and the inability to deliver the project" during recent years, Fennovoima said in a May 2 statement that risks had become insurmountable since Russia's invasion of Ukraine in February.
As a result, the company ended its engineering, procurement and construction contract with Rosatom subsidiary JSC Rusatom Energy International, meaning licensing work and other progress at the site will now end.
Rosatom owns 34% of Fennovoima through subsidiary Raos Voima Oy. Fennovoima is majority-owned by Voimaosakeyhtiö SF, whose shareholders include utility Fortum Oyj, steel companies Outokumpu Oyj and SSAB AB (publ), and several Finnish energy companies. Hanhikivi 1 was estimated to cost between €7 billion and €7.5 billion.
Rosatom said in a statement that the decision to cancel the contract "was taken without any detailed consultation with the project's shareholders."
"The reasons behind this decision are completely inexplicable to us. The project has been progressing and we had established a good working relationship with our client, which Fennovoima's CEO had repeatedly communicated to shareholders and in the media," the company said, adding that the project has "scrupulously fulfilled all its obligations."
As recently as January, Fennovoima said licensing work for the facility had "progressed steadily during 2021." It had hoped to obtain a construction license this year and had targeted commercial operation of the plant for 2029.
After scrapping the Rosatom contract, the company's focus is on affected workers in the region, CEO Joachim Specht said in a statement. "In addition, we focus on preserving the site," Specht said.
"The decision to terminate the [Rosatom contract] is not made lightly. In such a large project, there are significant complexities, and decisions are made only after thorough considerations," said Esa Härmälä, chairperson of Fennovoima's board.
Trouble for the project was evident from the first day of Russia's invasion of Ukraine, with Finnish lawmakers voicing concerns over security implications. Liisa Heikinheimo, deputy director-general for nuclear energy and fuels in Finland's Ministry of Economic Affairs and Employment, told S&P Global Platts in a Feb. 24 email that risk assessment is always part of the licensing process for reactors.
"There is a need for a risk assessment for the wider security aspects today," the official added.
A spokesperson for Fortum said in a May 3 email that the company "has fully impaired its ownership in the Hanhikivi project in 2020 and 2021."
Fortum announced May 3 that it is set to record €2.1 billion in pretax impairments in the first quarter relating to its Russian operators, of which about €1 billion is attributed to subsidiary Uniper SE's financing of the now-suspended Nord Stream 2 gas pipeline.
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