Fennovoima…

I was involved in the financing of all of Finland’s existing and coming nuclear plants in my work as a banker over 45 years. Imatran Voima’s 2 plants in Loviisa were planned and built in a very different world, a world nobody wants to see again. The Soviet Union made a fixed price offer, had great engineers and Siemens had the best control systems. Finnish paper and steel factories needed energy at an attractive cost and that was really guaranteed by the supplier in return for “self-censorship”.

The next project, installed by Asea Atom, was also a good deal without any surprises. The Swedes offered long term financing for functioning plant at a fixed price, also when Finnish energy intensive industries, the shareholders, were peaking.

The third investment is still in the making. Areva and TVO are arguing about the huge costs of the 10 year delay in court and whatever the conclusion it will not be a good deal for either party. The original plans, at best, were optimistic and did not foresee the fall in energy prices, the complexity of an untested plant and Fukushima’s fallout. Areva, TVO’s shareholders, its management, their advisors and bankers are no fools when dealing with such projects, but mistakes were made and the costs have mounted up to unacceptable levels.

The Fennovoima project is a very different animal. The political climate is very different. The big private companies, present in the first projects, have stepped aside and the majority of Fennovoima’s present shareholders are local municipal energy companies that basically operate at the local taxpayers’ risk. They have a lot in common with Migrit! Fortum’s belated involvement is welcome but they are only seeking to increase their investments in Russia. SRV came in to receive a juicy project management contract and will probably receive more fees than the size of their investment. Outokumpu is a company whose financial standing has been weak for many years. At the same time, Finland’s energy intensive industry base is greatly reduced and new technology for energy production without subsidies is on the horizon. Finally, the Nordic countries are investing heavily in new transmission networks and true renewables with Western Europe to reduce energy dependence on Russia. Fennovoima will take 2 more years at least to plan and many more years to build. During that time we will see huge developments in the energy markets – particularly in the areas of energy efficiency and biofuels.

I am staking my professional reputation that this last project will be regarded by our sons and daughters as a big mistake. Let’s call this “forward looking hindsight”. See you here in 20 years’ time for a health checkup…