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    Turkey's First Nuclear Power Plant On Track To Come Online In 2023

    November 17, 2021 - Fitch Solutions Sector Intelligence


      THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

      Turkey's First Nuclear Power Plant On Track To Come Online In 2023

      • 17 Nov 2021
      • Turkey
      • Power
      • Rosatom

      Key View

      • Turkey's first nuclear power plant will come online during our 10-year forecast period, with construction on the 4,800MW Akkuyu Nuclear Power Plant moving along at a steady pace.
      • We forecast the first 1,200MW unit will come online in 2023, with Units 2, 3, and 4 set to come online in 2024, 2026, and 2027, respectively.
      • By the end of the decade, nuclear power will account for around 10% of Turkey’s total power generation mix - reducing Turkey's reliance on imported thermal power feedstock.
      • Recent announcements by President Erdogan over studies for two additional nuclear power plants pose upside risks to our forecasts over the long-term.

      Turkey’s first nuclear power plant will become operational over the coming decade, diversifying the market’s power generation mix. While Turkey has pursued plans for developing nuclear power over the past few decades, only one project has made it to the construction stage – the 4,800MW Akkuyu Nuclear Power Project. The project has progressed through the development stages over the past decade since a cooperation agreement for the construction of the plant was signed between the Turkish and Russian governments in 2010. The USD20bn is being implemented by Russia’s Rosatom under a build-own-operate (BOO) model, with the company holding a 99.2% stake in the project. Notably, Akkuyu Nuclear Power Project is the first in the world being built under a BOO model. The plant, which will feature four units of VVER-1200 reactors, will have a service life of 60 years plus the possibility for a 20-year extension.

      First Nuclear Power Plant In Turkey To Come Online This Decade
      Turkey - Nuclear Power Capacity, MW (LHS) & Nuclear Power Share of Total Electricity Generation, % (LHS)

      f = Fitch Solutions forecast. Source: EIA, Fitch Solutions

      The first 1,200MW unit of the Akkuyu Nuclear Power Plant will come online in 2023, and we forecast units two, three and four will begin operations in 2024, 2026, and 2027, respectively. In June 2021, we added the Akkuyu nuclear power project into our forecasts given that construction has progressed at a steady rate since groundworks first began in 2018. Among recent developments since late-2020 which continue to support our outlook, we highlight:

      • In late October 2021, Rosatom was granted a construction licence for the fourth unit by Turkey’s Nuclear Regulatory Authority. The beginning of works on the foundation is therefore on track to begin in early 2022. Foundations for the first three units were laid in 2018, 2020 and 2021 respectively.
      • In September 2021, it was reported that the building of the four tier containment shell for the second unit is moving along at a steady pace, with the second tier successfully installed into place.
      • In June 2021, the reactor pressure vessel (RPV) was installed in Unit 1 – marking a key stage in equipment assembly according to Rosatom. The 330 tonne RPV for Unit 1 was delivered in November 2020. The third tier of the internal containment shell for the first unit was also installed in June.
      • In March 2021, Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan remotely attended a ceremony marking the start of construction on the Akkuyu NPP's third unit.
      • In February 2021, Turkey's Energy and Natural Resources Ministry released its 2021 Performance Program, which estimates that the Akkuyu NPP will be 27.5% complete by year-end 2021. The program estimated that 16.3% of the project, including construction, permits, licences and approvals, was completed by year-end 2020; this is much higher than the government's estimate of 8.0% by year-end 2020.
      • In January 2021, Rosatom's subsidiary Akkuyu Nuclear received a loan for up to USD300mn for the construction of the plant from Sovcombank - a key step in ensuring the project stays on track financially.
      • Also in January 2021, four months ahead of schedule, GE Steam Power delivered its first steam turbine module for the project.
      • Several developments were reported in December 2020, including the installation of the inner containment shell for Unit 2, and the installation of a support truss at Unit 1.

      Despite the steady progress, we note that there are considerable risks which could still alter the operational timeline. The ongoing Covid-19 pandemic poses supply chain risks, while economic and political risks remain elevated in Turkey. Furthermore, there is the likelihood of time and cost overruns which are common with developments throughout the global nuclear power sector. As such, we currently forecast that the completion of Units 3 and 4 will each be delayed by one year, coming online in 2026 and 2027, respectively.

      Rise In Nuclear Power To Reduce Turkey's Reliance On Thermal Power
      Turkey - Share Of Total Electricity Generation By Technology Type (2020-2030)

      e/f = estimate/forecast. Source: EIA, TEIAS, Fitch Solutions.

      By the end of the decade, the Akkuyu Nuclear Power Plant will account for 10% of Turkey’s total power generation mix. Once fully operational, the power plant will generate an estimated 35TWh annually, according to Rosatom. We expect the significant growth in nuclear power generation will allow the government to reduce reliance on imported thermal feedstock for natural gas and coal-fired power plants. We therefore forecast natural gas-fired power generation will decline from a peak of 107TWh in 2021 to 80TWh in 2030, while coal-fired power generation will decline from a peak of 93TWh in 2023 to 90TWh in 2030. However, any changes in the schedule for the completion of the Akkuyu Nuclear Power plant unit will result in us altering our thermal power forecasts as well.

      Ambitions by the Turkish government to build two additional nuclear power plants present upside risks to our long-term forecasts, although we expect they will fall outside our current 10-year forecast period should they be developed. In November 2021, Turkish President Recep Tayyip Erdogan stated that Turkey will look to swiftly develop two additional nuclear power projects following the beginning of operations for the Akkuyu Nuclear Power Plant. In September 2021, following a call with Russian President Vladimir Putin, President Erdogan stated that Russia could be a possible partner on those projects as well. If developed, these projects will likely be commissioned in the 2030s, at the earliest.

      This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.


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