— What global trends do you see in the nuclear power industry?

— There is a firm understanding globally that nuclear is indispensable as a power source that is reliable, cheap, safe and environmentally friendly. Europe is perhaps the most telling example, with nuclear stations now built in Hungary, Slovakia, Finland and France. Noteworthy is that five reactor units constructed in Europe use the Russian-designed VVER technology.

Also worth mentioning is that major economies do not drive the nuclear industry expansion anymore as Southeast Asia, Latin America, Africa and the Middle East have taken the lead and strive to gain access to the benefits of nuclear power. Even hydrocarbon producing countries are no exception. Algeria, Saudi Arabia and Nigeria have taken a great interest in the industry, following the example of Brazil, Vietnam and the UAE. Incidentally, Saudi Arabia’s Oil Ministry was renamed the Ministry of Energy, Industry and Mineral Resources, with plans to build at least 16 reactors in the coming years. The decision of the undisputed oil market leader to develop the nuclear power industry is deeply symbolic for us. It testifies to the fact that the world is changing dramatically and natural resources are no longer a key driver of the national economic development.

According to IEA and WNA estimates, we need 1,000 GW of new nuclear generation capacity by 2050 to restrict the global warming to only 2ºС for the same period. This can only be achieved by bringing 35 new units online annually, while we now have just 10–15 units commissioned per year. It means that the industry is expected to grow threefold by 2030, or 8–9% in annual terms.

Technologies keep evolving, and we are witnessing a considerable extension of life cycles in the nuclear industry thanks to the introduction of new construction materials and steel grades. As we announced earlier, new steel grades for reactor vessels have been tested and approved as capable of maintaining its functional properties in neutron flux for more than 100 years. Service life extension projects are not rare anymore as new technologies help making the life of almost any nuclear facility much longer.

Kilowatt hour of electricity is becoming an established measure of the end product, edging out kilowatt of installed capacity. Today, customers discuss both BOO and PC contracts in terms of costs per kilowatt hour produced. This greatly expands the agenda of contract talks and the scope of cooperation to include such aspects as maintenance costs, maintainability, fuel supplies, and decommissioning and waste disposal technologies in addition to the conventionally discussed equipment costs, engineering solutions and infrastructure. All these are no longer issues that are put off for tomorrow – every aspect is handled early on as part of commercial negotiations.

Another major change is the growth of expectations and requirements from emerging nuclear countries. Whether a country or a large corporation, every customer makes it absolutely clear now that a nuclear station, cheap and reliable power source and secure fuel deliveries are far from being everything what they want to receive. Additionally, countries embarking on national nuclear programs want to receive highly-skilled new jobs, tax revenues, higher quality of education, new stimuli for the development of technology and science, and improved legislation. Establishing a nuclear power industry in a country with no previous experience in the field produces a large-scale cumulative effect for the national economy and technology. In other words, every customer country now expects a comprehensive approach that will secure access to all the benefits offered by the nuclear industry. This is what puts more responsibility on nuclear nations. The responsibility of a vendor country supplying nuclear technologies now extends to the entire life cycle of both the nuclear station and related infrastructure.

— A notable trend on the global energy market is the prioritizing of renewable energy sources. The example of some European countries shows that renewables attract a portion of funds intended for the nuclear industry development. Do you feel this trend?

— The world is now debating over the decision made at the conference on climate change in Paris to prevent the rise in global temperatures. This decision makes us face a new challenge of transitioning to low-carbon energy. However, the dilemma of nuclear and renewables makes no sense. The essential question is not which power source is better, but what share each source will have in the energy mix. Nuclear power and renewables are not competitive and far less mutually exclusive – each has its advantages, application patterns and limitations.

We need to support renewable energy, yet realize that the non-carbon energy mix should be based on nuclear power for a number of reasons.

Firstly, nuclear power stations have prevented 56 gigatons of carbon dioxide from being emitted into the atmosphere globally for the last 45 years, according to the International Energy Agency. This amount is equal to two-year emissions of the global power industry at the current generation rate. We have prepared similar statistics for Russia. The nuclear power stations to be built by 2030 in Russia will cut down CO2 emissions into the atmosphere by 711 million tons every year, which is equivalent to emissions of all the cars in Russia for more than 6 years. By the same 2030, the Russian-designed nuclear stations all over the world will annually lower emissions by 2.4 billion tons, which equals emissions of all the Russian cars for over 20 years.

Secondly, there is no alternative to nuclear stations as base load power sources. Everyone in the world wants to have light and heat from renewables. But let us be realistic. There are, for instance, 70–75 sunny days in Moscow or Saint Petersburg, 200 days in Foggia (Italy), 300 days in Greece, and only 8 sunny days a year in Iceland. Power consumption peaks, however, do not coincide with sunny days and fall mostly on cloudy weather. Nuclear stations do not depend on the power of rivers, number of sunny days per year, or wind rose patterns. While maintaining a low-carbon energy mix, they can provide almost any country with a large-capacity power source.

Thirdly, renewable sources need large areas to generate much power. A 4 GW wind farm, for example, needs an area of 207,925 football fields, while a similar capacity nuclear station needs only 387 football fields. Topaz, one of the world’s largest solar farms, occupies 25 square kilometres in California (USA) and generates 550 MW of electric power. For reference, Russia’s Kalinin NPP generates more than 4,000 MW with its 4 reactors occupying an area of only 2.87 square kilometres. We should not forget about the cost of renewable energy.

Both renewable and nuclear power sources are more eco-friendly than hydrocarbons and are applicable in different spheres, which turns them into allies rather than rivals. Nuclear power is an indispensable part of the global low-carbon energy mix since it provides required base load and secures long-term power supply at predictable prices, with no CO2 emitted into the atmosphere. These are the main reasons why nuclear and renewable sources should be balanced. We do not deny the importance of wind, solar and geothermal power generators – each of them will contribute to the fluctuating load. The transition to renewables is an absolutely positive sign in this sense. The base load in the low-carbon environment will be provided by nuclear and hydro power plants where possible.

— Why has Rosatom embarked on wind farm projects? Why now?

— Rosatom is a major global player on the non-carbon energy market. We have always claimed to be committed to a safe, reliable and clean energy.

Renewable energy is expanding globally at a quick pace – the wind farm capacity to be commissioned in the next 15 years exceeds 1,000 GW. Renewables have developed to become capable of triggering changes in business models of large generating companies.

Rosatom has always been a producer of non-carbon energy. What we do now is just adding another promising product to our portfolio. From now on and for several years to come, we plan to expand into Russia’s wind energy industry with prospects of entering international markets. For a long time we have been analyzing technology and a business model of introducing renewable sources of power into the national generation industry. Our efforts materialized in OTEK, a company founded in 2013 to manage Rosatom’s non-nuclear assets. Its task is to develop renewable power generation and establish Rosatom’s second core energy business.

Earlier this year, a number of renewable energy projects were put out to tender by the Russian government. The contract was finally awarded to OTEK’s subsidiary VetroOGK, which will have to build 610 MW of wind farm capacity by 2020 inclusively.

We plan to commission the first 150 MW for the domestic market as early as in 2018, to be followed by 200 MW and 260 MW in 2019 and 2020 respectively. This is about 17% of the total wind power capacity to be commissioned in Russia by 2024.

Investments in the project will total almost 80 billion roubles. Fulfilment of the Government’s plans to bring 3.6 GW of wind generation capacity online will require 450–500 billion roubles in additional investments. We hope that our first step in this direction will motivate other investors and market players to enter the wind power sector. We are not going to stop at this point and will continue bidding on new contracts, hopefully together with other market players.

We approach the wind power business in the same way as nuclear energy, traditionally offering end-to-end services that range from engineering and construction to operation and management. Rosatom is a company that possesses unparalleled competencies required to enter the market. We understand the energy market, own production facilities to manufacture the equipment needed, have expertise in building power plants, and know how to sell electricity and raise project finance. As a vertically integrated company, Rosatom is able to make the new task a success.

— What were the changes in Rosatom’s contract portfolio over the last year? What new projects or business areas have been added?

— Presently, Rosatom is a leading nuclear company whose history dates back more than 70 years. We continue building up our portfolio of foreign projects. Over the last three years, Rosatom’s 10-year international contract portfolio has grown from 72.2 to 110.3 billion US dollars. It includes contracts for nuclear construction, LEU supplies, fuel assemblies and more. The plans are to increase our international portfolio by 20–25% by the end of 2016.

We have 36 reactor construction projects around the globe, all in a different phase, including Europe, Southeast Asia, North Africa and the Middle East.

At present, Tianwan Units 3 and 4 are under construction in China; India’s Kudankulam Unit 2 is being prepared for grid connection. As for Kudankulam Units 3 and 4, the contracts have been signed and are being performed to supply long lead equipment and develop engineering documents. Construction of the first nuclear station in Belarus is in full swing. Construction projects are also underway in Finland, Iran, Bangladesh, Jordan and other countries. We have a life extension project that is now in progress at the Armenian NPP. Besides, we have signed an agreement with the Egyptian government for the construction of four power units.

Additionally, there are eight reactor construction projects in Russia, all in a different phase. I also cannot resist mentioning an event that has become a landmark for Russia and can be justly considered a milestone in the global nuclear industry. I am talking about the world’s first Generation 3+ unit that was brought online at Novovoronezh in August. We can proudly say that it is Russia that has commissioned the world’s first Generation 3+ unit, which can now serve as a reference project for this generation of nuclear reactors.

In August 2016, Beloyarsk Unit 4 based on the BN-800 fast neutron reactor reached full capacity. This is the world’s only nuclear power unit boasting a reactor of this type and capacity. Besides, we have an operating MOX fuel plant. Russia is the only country that is working to ‘close’ the nuclear fuel cycle by involving the fast neutron technology. It is expected to eliminate the need for nuclear waste disposal in the future.

Alongside nuclear station construction projects, Rosatom is building up its non-energy competencies. This pertains primarily to the construction of research centres and research reactors.

For the last 50 years, Rosatom has built over 100 research reactors in Russia and 19 other countries. Many reactors commissioned 40–50 years ago are still in operation, particularly those in North Africa, Europe, Central and Southeast Asia. We estimate the market for research reactors, nuclear research centres and related technologies at approximately 5–6 billion US dollars, and have excellent prospects for winning a market share of 2–3 billion US dollars. As you know, we signed an agreement last March to construct a research centre in Bolivia. A similar centre is now under construction in Vietnam. Much interest to research reactors is paid in Africa, Southeast Asia, Latin America and the Middle East. It is no coincidence that earlier this year we signed an agreement with the Nigerian government for the cooperation in building a nuclear science and technology centre. Our plans for this year are to sign similar agreements with Tanzania and Belarus.

Apart from the conventional nuclear energy business, Rosatom expands into non-nuclear and non-power areas, such as nuclear medicine, nuclear technologies in agriculture, sterilization of medical devices, water treatment and desalination solutions, petrochemical equipment, and security systems.

— Has Rosatom changed priorities in expanding its international footprint?

— Paraphrasing a well-known expression, the world is the limit. We are restricted to neither geography nor areas of cooperation. Globally, there are nearly 50 countries considering nuclear programs to be carried out both in energy (as Brazil, Argentina or South Africa) and non-energy sectors (as Bolivia). International market drivers, such as South Africa and countries in the Middle East, Southeast Asia and Latin America are focused on the implementation of their own national nuclear programs, thus becoming Rosatom’s potential customers. As I have mentioned, Rosatom is now engaged in 36 nuclear construction projects abroad. We believe that our total revenue will grow significantly through projects in new areas, such as nuclear medicine, broader isotope supplies, petrochemical equipment, and other non-power and non-nuclear fields.

International business becomes increasingly more important for Rosatom. The market waits for no one as innovative products appear on sale and make it almost impossible to sell their predecessors. It is no less impossible to fully understand local market specifics and requirements without a representative office in a country or region even though present-day business processes are more or less standardized. This was the reason why we founded Rusatom International Network two years ago. Its task is to establish, develop and manage a network of regional offices to support international sales and promote products of Rosatom’s subsidiaries on international markets. As an outpost of Rosatom in foreign countries, it contacts our partners in their language.

— Rosatom is now active in emerging nuclear countries. What problems do you have to address before launching a nuclear station construction project in such countries?

— It is an extremely challenging task for any emerging nuclear country to implement a national nuclear program in the absence of nuclear infrastructure. There is a range of issues to be addressed. They have to establish a licensing system, build a regulatory framework, select an investment model, define technical and economic parameters of the project, do all the engineering and design work, and set up a contractor selection procedure. It is not enough to build a nuclear station though. They also have to ensure its stable operation and economic feasibility. For that purpose, the country needs to have an established system of comprehensive professional training and a fully functional regulatory body. Besides, it has to tackle a great deal of other issues, particularly those related to the disposal of spent nuclear fuel and radioactive waste, fuel logistics, and so on.

This is a very ambitious task. Every customer country now expects to receive a comprehensive offering that will provide a solution to the issues mentioned above. And the winner is that who is able to make such an end-to-end service offer to customers. In other words, the decision to launch a national nuclear program is not about power generation only. It is a large infrastructural project that usually serves as a driver for the entire national economy.

End-to-end offerings have become a new trend on the nuclear market, and Rosatom was among the first to make them. Every time we enter a new market, we say that we are prepared to build the nuclear infrastructure from scratch and solve all related issues from A to Z. Our services are not limited to delivering a successful Generation 3+ VVER-based project, a project that has been tested in Russia and proven safe by long-term seamless operation abroad. We assist in staff training, licensing and standardization. We supply fuel throughout the entire life cycle of a nuclear station, provide maintenance and modernization services, dispose of radioactive waste and, if needed, help setting up the national regulatory framework. Finally, we are prepared to provide finance for the project and offer flexible financing solutions. This trend has recently had a new development. However advantageous a comprehensive offer may be, the customer does not simply want to be sure that the selected nuclear technology is the best and the service package will be sufficient to maintain the nuclear station throughout its 100-year life cycle. The customer wants an economically feasible and justified solution, which is more attractive than other sources of power. The cost of kilowatt hour becomes increasingly more critical, and we cannot but mention that nuclear stations are more cost-efficient than any other generation facilities although they are more capital intensive during the construction phase.