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Paks powers up for nuclear expansion

While the public debates the merits of renewables versus fossil fuels in power generation, Hungary is quietly preparing to build new units at the Paks nuclear power plant, making a significant – and carbon-free – contribution to the country's future energy supplies.

The state-owned Paks nuclear plant, Hungary's largest power plant with 2,000 MW generation capacity, plans to at least double its capacity by adding two new units in the 2020s. If the project clears financial, regulatory and political hurdles in the coming years, it may help Hungary achieve a sustainable and competitive energy mix.

While it is fashionable to speak of a nuclear renaissance, nuclear power in Hungary never really went away. Built with Soviet help through the mid-1980s, Paks has reliably contributed almost 40% of Hungary's electricity. The plant has operated relatively problem-free (aside from a botched fuel-rod cleaning operation in 2003), and produces the cheapest electricity in the country. As a result, popular acceptance of the nuclear plant has remained exceptionally high, and no serious political party has ever called for the plant's closure.

While early plans to expand were shelved due to the industrial downscaling that accompanied the democratic transition, in the late 1990s Paks began to raise the capacity of its existing units from 440 MW each to an eventual 500 MW in the following decade through technical upgrades. Paks also started a lifespan extension project, seeking regulatory approval to prolong the licenses of its existing units by 20 years after the original 30-year licenses expire in 2012–2017. While this is still ongoing (nuclear licensing typically lasts several years due to the complicated technical and safety concerns involved), it is almost certain that the existing Paks units will be allowed to operate until the mid-2030s.

However, with many fossil-fuel power plants in Hungary scheduled for decommissioning in the 2010s, the country needs thousands of megawatts of new power plants. Recognizing this, Paks's state-owed parent company MVM began in 2007 to study the possibility of new units at Paks. In a rare show of bipartisan support, Hungary's Parliament voted almost unanimously in early 2009 to back the expansion of the Paks plant. Preparations began immediately, with plans to launch a new unit in 2020 and another one sometime after 2025.

According to the project's timeline, Paks is expected to issue a tender for the new reactors in late 2011, while simultaneously submitting environmental and other permit requests. Once a supplier is selected, construction could start sometime after 2013, with equipment installation, testing and final permitting taking place in the second half of the decade.

Mix and match

As the number of potential suppliers is fairly limited, Paks is already talking to some of them, zooming in on a few potential reactor types. Suppliers in contact with Paks include US-based Westinghouse, Russia's Atomstroyexport, French-German Areva, French-German-Japanese consortium Atmea, and Korea's Kepco.

According to company officials, each proposed reactor has its pros and cons. Westinghouse's AP1000 is cheap and easy to build, but some of its parts are not yet suitable for European-standard grids, and it also needs more frequent refueling. Atomstroyexport's AES-2006 is an indirect successor to Paks's existing units, meaning it could be the easiest to adopt and operate by current personnel; disadvantages include its inability to run on reprocessed fuel. The ATMEA1 reactor, while having good characteristics, is a new and relatively untried reactor. Areva's 1,600-MW EPR reactor may be too big for the Hungarian grid to accommodate (the other reactors are 1,000–1,200 MW each), while the Korean APR1400, though cheap, has less-developed safety features than its rivals.

Since MVM plans to offer a minority stake in the project to a strategic investor, Paks is also in talks with such potential investors – Atomstroyexport, France's EdF, Germany's E.ON and RWE, Finland's Fortum and Swiss Alpiq – to help finance and build the new units. However, this could complicate the reactor selection, as most potential investors (with the exception of RWE and Fortum) have their own reactor preference.

Money talks

While the advantages of the new nuclear units are clear – including carbon-free operations and reliable, cheap power – the project must still overcome hurdles and answer a few concerns. One is cost; while nuclear plants can generate cheap electricity thanks to relatively low fuel costs, the initial investment can be prohibitively expensive, with reactors at €4–5 billion apiece. It is unclear how Hungary's cash-strapped state will be able to finance this.

Paks must also stay ahead of its regional rivals, as expansion only makes economic sense if import competition from similar plants is minimal. In this respect, the regional picture is mixed; while no new nuclear capacities are expected in Austria, Serbia or Croatia, Paks is running head-to-head with planned new reactors in Slovenia and the Czech Republic, while Slovakia, Romania and Ukraine are all completing projects started earlier.

And then there is politics: the project has already suffered delays as this year's change of government brought management reshuffles at Paks and MVM. Meanwhile, the Paks expansion was reportedly lumped into a wider package of energy policy and trade issues discussed recently by the governments of Hungary and Russia, prompting speculation that Hungary may simply hand the project to the Russians in return for concessions in other areas. (Balázs Szládek)