Below please find my analysis of the day’s Sinop related announcements. I have laid them out in bullet points:
- Taner Yildiz told reporters that the guaranteed cost per-kilowatt-hour for the Sinop site will be $11.8 US cents per hour. The Russian Akkuyu consortium agreed to $12.35 cents per hour.
- For reference, Turkey has agreed to buy 70% of the output of reactors one and two at 12.35 US cents per- kWh for 15 years, or until 2030. Ankara has also agreed to purchase 30 percent of the electricity produced at the same price over 15 years from reactors three and four. Rosatom expects to recoup its investment in 15 years and will then begin to pay 20 percent of the company’s profit on annual basis to the Turkish government.
- Japan will reportedly provide 70% of the financing and the other 30% will come from Turkey, which means that EUAS will be investing a substantial amount in the program.
- The Mitsubishi-Itochu-GDF Suez consortium formally submitted a bid for the tender on 5 March 2013. Three days after the consortium’s initial bid, Turkish officials were quoted as saying that it was the strongest. (It wasn’t.) And just one month later, Nikkei reported that the Japanese/French consortium had won.
- China’s Guangdong Nuclear Power Group had agreed to build the reactor using the Russian no-guarantee BOO model. Japan did not. The rapid awarding of the tender to the Japanese/French consortium suggests that China never had a real chance and was only used to secure more favorable terms from other potential suppliers.
- The real turning point was the entrance of GDF Suez, which agreed to operate the reactor. Mitsubishi indicated in August 2011 that it was not interested in operating the reactor.
- Turkey’s announcement that EUAS will take a 49% stake in the company is a key departure from previous Turkish policy, but Yildiz told reporters that “up to half of EUAS’ shares might be sold either through public offering or block sale.”
- Turkey is overselling itself. Ankara has had significant difficulties attracting long-term investment. Other public offerings have failed to attract significant interest and have been plagued by delays. There is no reason to believe that the nuclear offering will be any different.
- Where will the money come from? Turkey has plans to build a second canal, the world’s biggest airport, a new city along the new canal, and, hopefully, an Olympic complex. All of these projects require considerable financing. Where will the $4.5 billion in private financing come from? For that matter, where is the government getting all of this money?
- A note of caution – While I do think that the two sides will reconcile the outstanding issues, Canada’s AECL got to this stage in 1985, but the deal was cancelled after financial institutions refused to provide loans for the complicated financial scheme. This is certainly a possibility for the Sinop site.
- One question I keep asking myself is what will Turkey do with the spent fuel? Russia agreed to take back the spent fuel from Akkuyu. Both France and Japan have well established waste-management facilities, so I am assuming that one of them would take back the spent fuel once it has cooled for 3-10 years in an onsite spent fuel pond. However, the issue of take backs could be politically problematic in both countries. No voter likes the idea of nuclear waste. In turn, this raises questions about Turkey’s long-term waste storage policy. As of now, we don’t know the details, so we should refrain from speculating, but it is not outside the realm of possibility that Ankara could be asked to dispose of the spent fuel on its own.
I will be sure to update the blog as new information comes in. And, as always, tweet @aaronstein1 with comments, criticisms, or questions.
Stay tuned . . .