2023-10-22 13:27:21
BelNPP. Photo: TUT.BY
Alexander Lukashenko considers the nuclear power plant project “very, very profitable” and would like to build a second such station. Here are four arguments that cast doubt on this.
The first argument is a huge loan
For the construction of the nuclear power plant, the Belarusian government took a loan of $10 billion from Russia. This debt will most likely be paid from the budget. On average, it turns out that for every resident of our country, including babies, there is about $1,087 of this debt, excluding interest.
It is not known for certain how much of the loan was spent. If we assume that the entire amount has been spent, and take into account that the contract requires payment of the debt for 15 years, starting in April 2024, then the annual loan payments will amount to more than $666 million (also excluding interest).
Moreover, a tenth of the investments in construction were planned from the budget. Additionally, there were expenses for infrastructure, including loans for the construction of peak reserve capacities, without which the operation of nuclear power plants is impossible. That is, the state (and therefore taxpayers) has already spent an additional significant amount on the station.
At the same time, industry representatives estimated the payback period of the BelNPP, according to various sources, at 15-20 years (here and here). At the same time, independent experts in a study by the public association “Ecodom” named a much longer period – about 60 years. This is the same as the operating life of the BelNPP. But even if we proceed from the data announced by officials, the payback was estimated based on the operation of two power units at 100% capacity. In the meantime, the prospect of operating two units simultaneously, according to industry experts, looks vague. This is due to the fact that there is currently nowhere to export electricity, and the domestic market does not need such a volume (more on this below). Therefore, it will pay off later.
It is unlikely that in this case we can talk about the financial benefits of even an already built nuclear power plant, not to mention a second one of the same kind.
The second argument is lost markets
The domestic energy market consumes 38.6 billion kWh of electricity per year. Last year, users in our country reduced their electricity consumption by 4%. For comparison, in 2017, consumption volumes were 36-37 billion kWh (at that time the nuclear power plant was not yet operating). That is, there has been no significant growth over five years. Why is it important?
When two power units operate, the BelNPP generates 18 billion kWh of electricity per year, that is, almost half of the total consumption in our country. As a result, after the station is launched at full capacity, excess electricity will be generated. They will be partially reduced by curtailing the operation of gas-fired thermal power plants. But during construction (until approximately 2017), officials advocated that the benefits from the nuclear power plant would also come from the sale of electricity for export. However, it turned out that Russia did not need it. Lithuania fundamentally refused to purchase energy from the BelNPP at the political level. After this, Ukraine seemed to be almost the only potential sales market. As a result, in July 2017, when construction was in full swing, Lukashenko called on officials to think about where to send electricity after the commissioning of a nuclear power plant.
After Russia’s military aggression against Ukraine, which was supported by the Belarusian government and Alexander Lukashenko, Kyiv will most likely turn away from such an opportunity for a long time. It seemed that Moscow came to the rescue, promising to buy our electricity in 2024. But it seems that this issue still remains at the level of statements and not decisions.
It turns out that there is nowhere to export electricity, and the domestic market will not be able to consume its entire volume if the station is fully operational. Consequently, it will most likely be necessary to adhere to the principle that one nuclear power plant unit is operating, and the second is undergoing “scheduled maintenance.” In this case, the question of the prospects for its recoupment arises.
As for the domestic market, if earlier it was stated that the nuclear power plant would replace the use of 5 billion cubic meters of gas, now here too officials have backed down. Now, according to Alexander Zakharevich, Deputy Head of the Department of Energy Efficiency, Ecology and Science of the Ministry of Energy, plans to replace about 4-4.5 billion cubic meters of imported gas. That is, plans to reduce gas consumption, which were initially discussed, are also not being implemented.
The third argument is reducing dependence on one supplier
Promoting the initiative to build a nuclear power plant, Alexander Lukashenko and officials following him echoed that it would reduce dependence on one supplier of raw materials that is used to produce electricity, that is, diversify suppliers and types of fuel. Gradually, the rhetoric changed to moving away from one type of fuel used.
But the reality turned out to be such that Belarus slightly reduced the supply of Russian gas to our country, but at the same time tied the operation of the nuclear power plant to another Russian resource supplier. We will only be able to buy nuclear fuel for the operation of the BelNPP from Russia. Moreover, we have committed to sending our spent fuel there for reprocessing.
It turns out that Minsk has exchanged one type of dependence on Russia for another. But given that many economic decisions in the neighboring country are made based on political interests, the essence remains the same – there has been no diversification of suppliers, and with them no risks.
The fourth argument is forgotten promises of cheap tariffs
During the construction of the BelNPP, officials regularly said that it would be a profitable project for Belarusians, because the electricity produced at the station was cheaper than from other resources.
“Experts have already calculated how much the cost of electricity generation in the country as a whole will decrease with the commissioning of a nuclear power plant. Now it is being determined how tariffs will be reduced for the real sector of the economy,” said Mikhail Mikhadyuk, who then held the post of Deputy Minister of Energy, in 2018.
In the same year, then Deputy Prime Minister Vladimir Semashko expressed the idea of increasing tariffs for the population and avoiding cross-subsidization. According to him, this meant an increase in the cost of electricity for people.
Around this period, officials began to say that after the commissioning of the BelNPP, electricity tariffs for industrial enterprises would be reduced. In fact, if tariffs for the population were increased and cross-subsidization was abandoned, the cost for legal entities would decrease regardless of the presence or absence of nuclear power plants. However, cross-subsidization still persists. But a change nevertheless appeared in the system – officials introduced economically justified tariffs for the so-called parasites.
Recently, Deputy Energy Minister Denis Moroz said that Belarusians should already feel the benefits of the operation of nuclear power plants, because there are “a sufficient number of different tariffs that stimulate electricity consumption.”
— We have introduced a tariff for electric heating. For example, this is a very low price of electrical energy if you use it for heating and hot water supply,” he said.
Indeed, in 2022, for some categories of consumers, electricity has become slightly cheaper, but only when it is used for heating and hot water supply. Compared to the initial promises of the authorities, the innovation looks rather modest.
As for the cost of electricity, here, too, everything turned out to be not so clear. As calculated by Evgeniy Makarchuk, a specialist in the iSANS energy security department, from the moment the first power unit of the nuclear power plant was launched in 2020, interest payments for using the loan should have amounted to $346.5 million (Minsk began paying interest on the loan before the principal debt). “This means that in the produced electricity only the investment component is equal to 3.7 cents/kWh,” the expert noted. “For comparison, the cost of producing electricity from gas is 4.2 cents/kWh, but the difference is that this cost already includes all costs, not just investment ones.”
Under such conditions of operation of the first power unit, even without repaying the loan (but with the payment of interest on it), the cost of generating electricity at a nuclear power plant will most likely be more expensive than when generating electricity at gas-fired power plants, he calculated.
Experts of the Ecohome project in 2020 also estimated the cost of electricity produced at the BelNPP to be 2.5 times more expensive than that produced from gas at that time.
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