Bulgarian Government Eyes Kozloduy NPP Life Extension over Sinking Belene

As Belene Stalls, Kozloduy Is Back in Favour

The Bulgarian government has formally initiated planning procedures for the extension of the only two operational nuclear reactors in the country, at the Kozloduy nuclear power plant (NPP). Although Energy Minister Traicho Traikov did not release details, he did say that the plants would run until "at least 2030" under the new scheme. The government has flagged up the idea many times over the past few years, but this week's formal announcement is the first step in writing the concept into official policy (see Bulgaria: 7 September 2009: Bulgarian Government Mulls Construction of New Kozloduy NPP Reactor). The announcement comes in the wake of a meeting between Traikov and Jose Gutierrez, CEO and vice-president for Southern Europe of the US nuclear engineering group Westinghouse, while on a state visit to Spain.

Currently, Kozloduy operates only two reactors, Units 5 and 6, which offer a combined generation capacity of 2,000MW, about 20% of the country's total installed capacity. Having shut Units 1 and 2 in 2003, Bulgaria was forced to decommission Units 3 and 4 at the end of 2007 by the European Union (EU), which established the decommissioning of the reactors as an accession requirement for the Balkan state. As a result of the shutdown of these two reactors, the country lost its position as chief energy exporter in the region of south-eastern Europe—something its leaders have been seeking to regain ever since. However, Units 5 and 6 were not affected by the closure plan as they use the more modern VVER-1000 reactors.

Units 5 and 6 were constructed in 1988 and 1993 respectively and are currently scheduled for decommissioning in October 2017 and October 2019. In 2009, they accounted for 33% of total output, but unplanned outages and increasing maintenance requirements have put pressure on Bulgaria's exports to Greece, Turkey, Serbia and the Former Yugoslav Republic of Macedonia (FYR Macedonia). Bulgaria's nuclear regulator announced on 19 October 2010 that cracks had been detected in components of the reactor during maintenance work. Earlier in September, maintenance checks found "mechanic defects [cracks] in the upper part of the protective tubes of three control rods" in the reactor's primary radioactive circuit, a statement on the nuclear regulator's website said.

The government's renewed interest in extending Kozloduy's lifespan comes largely as a result of the most recent failure to agree on the terms of Russian nuclear engineering firm, Atomstroyexport's involvement in the construction of the troubled Belene NPP. Negotiations between the authorities hit a new low earlier in February when a leaked Atomstroyexport memo revealed RosAtom estimated the break-fees arising from ongoing delays on the part of the Bulgarians as potentially more lucrative to the Russians than the project itself and considered this as a viable alternative (see Bulgaria: 9 February 2010: Atomstroyexport's Departure from Belene Could Spell End-Game for Bulgarian NPP). Although the letter may simply be a bluff, it does underline real concerns on the part of the Russian state-owned nuclear corporation over the project and lengthens the odds on its eventual completion. Even if the Russians remain committed to Belene, the episode will at the very least further weaken European investor appetite for the project, eroding the chances of ever finding another strategic partner to replace RWE.

In light of this, the sanctioning of official planning to extend Kozloduy Units 5 and 6 can be interpreted in two ways. First, in pressing ahead with Kozloduy the government is demonstrating the alternatives it has at its disposal to Belene. In this context, the formal planning announcement is simply the latest counter-bluff in an ongoing competition between Russian and Bulgarian parties to seem as disinterested as possible in Belene and thus secure a better deal.

Second, the Bulgarians' priority may have genuinely shifted in favour of Kozloduy; the reactors' extension would maintain spare capacity above 20% in the future and is already receiving solicitations from foreign firms for participation. Indeed, Westinghouse has not only indicated an interest in taking part but also offered to procure uranium for the facility—thereby alleviating part of Bulgaria's energy dependence on Russia. Perhaps most important, the electricity generated from an upgraded Kozloduy would be far cheaper than that from Belene, since most of the required infrastructure is already in place so the project would only incur operational as opposed to substantial capital costs. Maintaining this supply of cheap electricity is a key priority for the government. Despite increasing prices in line with IMF and World Bank requirements, the country's energy regulator SEWRC remains reluctant to expose end-users to high retail rates (see Bulgaria: 2 March 2011: Bulgarian Distributors Unlikely to Be Granted Requested Tariff Hike).

Outlook and Implications

There is nothing to suggest these two possible readings of Bulgaria's move to advance Kozloduy are mutually exclusive. All of the reasons to proceed with the plant serve equally to make any bluff all the more convincing. However, there are clouds on the horizon. To begin with the European Union may well object to the plants' life extension, especially given the scrutiny Bulgaria's decommissioning process has recently come under: in May, the European Parliament approved a EUR300-million (USD418 million) package to assist in the decommissioning of Kozloduy Units 1–4. This came despite much hand-wringing over the destination of spent nuclear fuel rods from Bulgaria and Eastern European government's general approach towards nuclear waste. This opposition would probably be compounded by accusations of corruption in the running of Kozloduy. In November, reports surfaced of capacity being sold without any bidding procedures, allowing "favorite customers" to benefit from a EUR10/MWh discount on power bought from the facility.