Completing the Khmelnytskyi NPP: Why Bulgaria ditched "nuclear samovars" and does Ukraine really need more reactors

Contents

1. What’s the story with the long-delayed units at Khmelnytskyi NPP
2. The South Korean contract that could have completed Khmelnytskyi NPP
3. Does Ukraine really need more power units at Khmelnytskyi NPP?
4. How Bulgaria ended up with surplus power units Ukraine was eyeing
5. What’s the risk of buying equipment Russia's Rosatom sent to Bulgaria?
6. Where’s the money coming from to finish Khmelnytskyi NPP?

What’s the story with the long-delayed units at Khmelnytskyi NPP

Khmelnytskyi NPP is the youngest and smallest in Ukraine. Construction of its four power units began in the 1980s but was mostly halted after the Chornobyl disaster. In 1987, only one unit, which was already completed, went online. The second unit didn’t start operating until 2004. After that, plans were made to finish the other two units.

In 2008, Atomstroyexport, a subsidiary of Russia's nuclear power agency Rosatom, won the tender to complete units 3 and 4. In 2011, under Yanukovych’s presidency, Ukraine's Verkhovna Rada ratified an agreement with Russia to collaborate on the project. That agreement was canceled in 2015.

Also in 2015, Ukraine started discussing the possibility of using reactor vessels made by Czech company Skoda JS. At the time, Skoda JS was owned by the Russian holding “United Machine-Building Plants,” which was controlled by Gazprombank. However, since November 2022, Skoda JS has been owned by Czech energy giant ČEZ, which is government-controlled.

The feasibility study for completing the units was reportedly based on Skoda JS reactors and was approved in 2018. At 2017 prices, the project was estimated to cost UAH 72.44 billion.

The South Korean contract that could have completed Khmelnytskyi NPP

“In reality, the deal wasn’t with a Czech company. We already had a signed contract with a French-Polish company,” said Ihor Nasalyk, Ukraine's Minister of Energy from 2016 to 2019, in an interview with Espreso. “This contract planned to install South Korean units. According to the agreement, the third unit, which is already 75% finished, was supposed to go online in 2021. Most importantly, the state wouldn’t have spent its own money on this – the cost would’ve been covered by future electricity exports to the EU via Rzeszów.”

The former minister added that the project also included developing an additional 2,500 MW power transmission line for exports.

“If this project hadn’t been canceled in 2019, we’d not only have extra capacity now, but we’d already be paying off the construction with export revenues. Plus, the extra power line could now be used to import electricity into Ukraine,” said Ihor Nasalyk.

“But in 2019, the argument was that Europe was moving away from nuclear energy and that we didn’t need it. Now, six years later, this government is back to finishing Khmelnytskyi NPP, but with Russian units that are gathering dust in Bulgaria. And that’s after we did everything to cut ties with Russia. We even took out a $500 million loan to build our own nuclear waste storage and paid it off in two years. Before that, we were paying Russia $250 million every year to get rid of nuclear waste.”

Does Ukraine really need more power units at Khmelnytskyi NPP?

Authorities say adding nuclear power units is an investment in Ukraine's energy security, especially after thermal power plants were destroyed. But experts disagree on whether more nuclear units are necessary.

"Until the war ends, there's no point in completing the nuclear power plant. We've lost major electricity consumers. We need to review the system and predict whether Ukraine needs this much base generation when we're short on maneuverable capacities," says nuclear energy expert Olha Kosharna.

The issue is that thermal power plants can adjust quickly to changes in electricity demand, increasing output when needed and reducing it when not. Nuclear plants, however, can't adjust as swiftly.

"This war shows we need to rethink our power grid strategy," says Oleh Dudar, head of global innovative technologies in nuclear energy, R&D Centre, in a comment to Espreso.

"President Volodymyr Zelenskyy previously mentioned the need for distributed generation. Now Kotin and Halushchenko (Energoatom President and Ukraine's Energy Minister - ed.) are planning the largest nuclear power plant in Europe. This return to gigantomania doesn’t align with Ukraine's wartime needs. Large plants are vulnerable, and losing one massive unit has serious consequences for the grid."

Oleh Dudar believes funds would be better spent on modern cogeneration units that produce both heat and electricity. These units can be placed near large enterprises or towns.

"When they argue that finishing Khmelnytskyi NPP units is about energy security, that's misleading. It’ll take 6-7 years to complete them, and that’s assuming everything goes smoothly with materials and equipment," Dudar says.

"The same goes for small modular reactors. We can only consider them in five years. I doubt Ukraine will be a priority buyer, as they're already contracted out. If we want them, we need to sign contracts now for delivery in a few years. But we don’t have the money for that or for completing the Khmelnytskyi units."

On the other hand, Ihor Nasalyk supports completing the Khmelnytskyi NPP.

"We should finish the nuclear units because they’re the only generators that haven’t been bombed," says Nasalyk. "We lost the Zaporizhzhia NPP – Europe’s largest. We need replacements. Sure, the economy is down and energy demand isn’t what it was before the full-scale invasion, but we’re on the edge. If temperatures drop to -15°C , 30-40% of Ukraine could face power outages."

How Bulgaria ended up with surplus power units Ukraine was eyeing

The Belene Nuclear Power Plant on the banks of the Danube in Bulgaria has been an ongoing project since the late 80s. It was meant to be the country’s second nuclear power plant, but the project was halted in 1990. In the 2000s, plans to build the Belene NPP were revived. In 2006, Atomstroyexport won the contract to construct the plant, with the deal estimated at around 4 billion euros. But later, the Russian side pushed to increase the project cost to 6.4 billion euros and demanded guaranteed profits. Due to these disputes, the construction of Belene NPP was put on hold in 2009.

In 2018, Bulgaria’s National Assembly decided to complete the plant but then changed course and chose to focus on expanding the only operating nuclear power plant in the country, Kozloduy, without Russian involvement. The Bulgarian press, by the way, nicknamed the equipment for Belene that was imported from Russia as “nuclear samovars.”

In 2023, Bulgaria decided to sell the unused equipment from the unfinished Belene project to Ukraine.

“After the start of the war in Ukraine and sanctions against Russia, the Belene project is finally doomed. I have just submitted a proposal to the National Assembly, together with my colleagues, to authorize the Minister of Energy to negotiate with Ukraine on selling the equipment from Belene. The price is negotiable, but it can’t be lower than what Bulgaria paid for it – almost 1.2 billion leva,” said then Delyan Dobrev, head of the National Assembly’s Finance and Budget Commission.

According to him, Ukraine has nearly completed two units, but they still need the equipment Bulgaria has.

“In this context, Ukraine is the only buyer for our equipment worldwide, and we are the only sellers for them. It’s a win-win situation for both sides,” Dobrev added.

This makes the statement by Ukraine’s Minister of Energy, Herman Halushchenko, that Ukraine had to decide on buying these power units from Bulgaria by March 11 “or else the opportunity would be gone,” seem rather strange.

What’s the risk of buying equipment Rosatom sent to Bulgaria?

"When we say 'reactor', we mean all the equipment needed to build and launch a power unit. But Bulgaria doesn't have enough steam generators, large-diameter primary circuit pipelines, and so on," says Oleh Dudar. "Russia insisted that they would not only build the Belene NPP but also handle the commissioning work, so they’ll send the necessary equipment over time. The Bulgarians understood that everything Russia does, not just in the energy sector, is aimed at gaining leverage over the policies they cooperate with. That’s why the project was canceled, and the equipment there is incomplete. Where to get the missing pieces is unclear."

According to the expert, the equipment available in Bulgaria is slightly better than the VVER-1000 units used in Ukraine but still not modern.

"We have reactors that started being designed in the mid-60s. The ones the Bulgarians have began development in the 80s to the early 90s," says Oleh Dudar. "When they say these can’t be called Russian, because the entire Soviet Union worked on them, that’s not true. This is a purely Russian reactor, even if some parts were worked on in Ukraine. If we plan to build a plant with this reactor, we become dependent on the designer and the factories that made the equipment. It’s ridiculous to install equipment for which the manufacturer won't take responsibility. Which Ukrainian manufacturer, who even once helped make certain components, is going to take responsibility now and say: 'yes, this is mine?'"

According to Oleh Dudar, the issue is that emergency situations at nuclear power plants require an investigation and holding the manufacturer of a specific part — or even the metallurgical enterprise responsible — if the problem lies with the quality of the metal.

"How this will work when buying Russian equipment from Bulgaria is unclear," he says.

Where’s the money coming from to finish Khmelnytskyi NPP?

It’s not certain how much it will cost Ukraine to finish power units No. 3 and No. 4 at the Khmelnytskyi NPP, since there's no updated feasibility study yet. $600 million is the cost of just the equipment that Energoatom was allowed to buy in Bulgaria. At the same time, Herman Halushchenko says it’s $600 million, while a document published by Delyan Dobrev shows the amount as 601 million euros. That’s a difference of almost $29 million.

In addition to construction at the power units, there will also be a need to build distribution platforms and extra high-voltage lines for electricity transmission.

EU Ambassador to Ukraine Katarína Mathernová stated that the EU will not take part in completing the NPP, so Ukraine won’t be able to attract funds from European donors.

Energy Minister Herman Halushchenko said the Khmelnytskyi NPP completion project is commercially appealing, and foreign companies are already offering to join. However, the minister confirmed that they’re not considering external investors for now. So for the moment, only Energoatom will work on the project. The minister also mentioned that they do not plan to raise electricity tariffs to fund the completion of the Khmelnytskyi NPP.