Areva, AECL react cautiously to Turkey's bid for reactors
Marketing executives at both Areva and Atomic Energy of Canada Ltd., or AECL, have expressed reservations about Turkey's third quest for nuclear power reactors, industry sources close to both companies told Platts.
Turkey broke off two previous tenders for reactors, most recently in 2000 (NW, 27 July '00, 1). Last fall, however, Turkey said that it plans to order one or two power reactors after a crash bidding program to be able to generate nuclear electricity by 2012 or 2013 (NW, 28 Sept. '06, 1).
Vendor executives have since confirmed reports from other sources that AECL and Areva have held talks with Turkish counterparts about possible reactor sales. Westinghouse Electric Co. and General Electric Co. have not participated in such talks, at least in part because of internal market appraisal and risk considerations,they said.
Last month, local media reported that the Turkish government had introduced legislation to set up a centralized nuclear power generating and regulating infrastructure in Turkey. According to proposed legislation, the Turkish Atomic Energy Commission,or TAEK, would be in charge of a tender for the first reactor project.
The draft legislation also envisions the establishment of a nuclear regulatory organization, separate from TAEK, and a fund to provide for future decommissioning and nuclear waste management. The bill would also guarantee power purchases from a new nuclear plant for 15 years by requiring distributing companies to have nuclear electricity as part of their supply mix.
According to Western diplomats in Ankara this week, the legislation was drafted in part based on the recommendations of foreign vendors. AECL "explained to Turkey what has to be in place" for AECL to do business there, one Canadian official said, "and what's in that legislation draft is to some extent a reflection of this."
Ankara diplomats also said that foreign vendor companies had expressed concern that, without power purchase incentives or guarantees, Turkish producers might elect, for both political and economic reasons, to instead buy natural gas from neighboring Iran and Turkmenistan.
Lack of confidence about future fuel supply decisions by Turkey's politicians and utilities, sources said, factored into a decision by Westinghouse not to participate in serious business discussions with TAEK so far.
In 2000, Turkey had demanded as a condition of participating in earlier bidding that the selected vendor organize and provide 100% project financing. This time around,in part because vendors anticipate business from less risky markets than Turkey, it will be up to Turkey to show a firm financial commitment, sources said. "Turkey is probably going to have to put money on the table" before AECL will agree to negotiate terms for a reactor sale, another Canadian executive said.
Areva is interested in potential reactor business in Turkey, an Areva spokesman said,"if the conditions are right." He said that those conditions depended in large part on the fate of the legislation proposed last month by the Turkish government. Those measures would provide financial incentives and legal obligations in support of nuclear-generated electricity.
A German executive close to Areva said that Areva will be "very choosy" about terms for doing business with Turkey. Compared to the last time when Turkey conducted a tender -- involving a bid from Areva forerunner Nuclear Power International for a 400-MW Siemens-design PWR -- the company "didn't have any other new reactor business. Now things are different." Regardless of TAEK's current haste, he said,"they may have to wait their turn," since Areva will be working on an EPR in
France, the ongoing EPR at Olkiluoto-3 in Finland, two PWR replication projects in China,and perhaps two EPRs in China, not to mention possible business in the US.
Some industry sources suggested that AECL may not have as much freedom to choose as does Areva because it is marketing unique PHWR designs. Compared to that for PWRs,they suggested, the market for PHWRs will be smaller. Wolsong-4, the last Candu-6 PHWR that AECL sold to Korea in the mid-1990s, has just completed four successive duty cycles without a single interruption. "This is a great achievement," said a Canadian expert. "But will Korea order more PHWRs? No. For some fundamental political and technological reasons, they're not going to do it."
Areva, its spokesman said, would propose a 1,600-MW EPR to Turkey, among "a range of possible designs." One Canadian source, involved in AECL's previous marketing efforts in Turkey, said that, so far, both AECL and Areva appear "still very cautious" about Turkey's prospects.
Nuclear industry officials said that Turkey's finances have improved since the last bidding process. But, the Canadian expert said, there is skepticism that Turkey will make decisions quickly. "A fast selection process? They promised that the last time,too," he said.
One source said the progress of the nuclear legislation through the Turkish parliament could be "very long" if antinuclear forces succeed in slowing it through protests. He noted that political opponents had reportedly collected 100,000 signatures in protest of the nuclear planning bill.
TEAK officials told Platts February 6 that the bill has only begun to be discussed in parliamentary committees and that it was therefore too early to predict that the final language of the legislation would reflect w hat the prime minister's office had proposed last month.
--Mark Hibbs, Bonn; Ann MacLachlan, Paris