TVO delays 1.6GW Finnish nuclear plant to May 2019

Source: Heren


Finnish utility Teollisuuden Voima Oyj (TVO) on Monday announced a further delay to the launch of its 1.6GW Olkiluoto 3 nuclear reactor, pushing back the start of commercial operations to May 2019.

This may drive an increase in the slim discount held by the Nordic power Year 2020 product to Year 2019 at the Nasdaq Commoditoes exchange.

TVO expressed concerns in mid-September that French company Areva Group – responsible for the construction of the unit – lacked the “financial, technical and human resources”, as the result of a restructuring programme, that were needed to complete the endeavour (click here to read story).

Project head Jouni Silvennoinen said in a statement on Monday there was still “substantial work to be accomplished” in the project.

The beleaguered nuclear project has been under construction since 2005 and was originally due to become fully operational in 2009.

But the project has been hampered by repeated delays and was initially pushed-back to 2014, before subsequently being deferred to 2018.

The latest proposed completion date therefore pushes the plant’s delay past the decade mark.

Market impact

The shape of the Nordic power futures curve in recent weeks has indicated waning confidence that the plant would be completed in 2018 since TVO expressed its concerns publicly over the restructuring of Areva.

On that day, the contract for baseload delivery in 2019 was valued on the Nordic forward curve more than €2.00/MWh below the 2018 contract, reflecting the expectation of addition supply in 2019.

This substantial premium has since narrowed as the likelihood of further delays to the Olkiluoto project has increased.

On Monday morning the Nordic Baseload 2019 contract was priced just £0.90/MWh below 2018 according to Nasdaq exchange data.

The backwardation shape is even less pronounced further out on the curve, with the 2020 product sitting at a €0.35/MWh discount to 2019.

It may be the case that the 2020 contract widens its discount to the previous year in coming sessions, as 2020 is now expected to be the first full calendar year during which Olkiluoto 3 is operational.

Finnish prices are often the highest in the Nordic region due to the country’s ongoing coal phase-out and increasing reliance on imports. Finland is physically connected to Sweden, Norway, Russia and Estonia.