Nuclearectrica shareholders could reassess the whole strategy of modular reactors

The Romanian government's ambitious project to build Small Modular Reactors (SMRs) at Doicești has encountered significant challenges, prompting a potential reassessment of its overall strategy. Initially hailed as one of Europe’s most advanced initiatives in this field, the project now faces uncertainty due to unmet conditions and stalled negotiations with both the government and American partners. According to reports, over four months have passed since the final investment decision was made, yet several critical milestones remain unfulfilled. This delay has raised concerns about the allocation of public funds and the lack of tangible progress toward completing the investment.

Prime Minister Ilie Bolojan, acting on behalf of the interim government, has requested a reevaluation of the investment and informed the U.S. Embassy about the difficulties being faced. He expressed concern that without clear results, the country risks losing public money and ending up with only documentation. The initial investment already amounts to more than $240 million, which has been spent on acquiring land, hiring staff, and conducting feasibility studies. However, these efforts have not translated into substantial progress toward realizing the full scope of the project.

Despite the approval of the final investment decision by shareholders in February, the project remains without firm support either commercially or politically. The conditions set for moving forward were supposed to be reported to the Ministry of Energy by July and September, but progress has been minimal. Negotiations with the government and commercial partners have moved slowly, leaving the shareholders to decide whether to continue with the current structure of the project or reconsider their approach entirely.

One of the main obstacles continues to be the absence of state guarantees. Exim Bank USA, a primary agency for export credit, and DFC, the U.S. government’s investment arm, could provide around $7 billion in financing. However, such funding requires mechanisms of state support, including sovereign guarantees, contracts for difference (CfDs), or other forms of state aid. These measures require governmental approval, and the specific implementation method would need to be negotiated afterward. A key advantage of this financing model is that the funds will not count against Romania’s budget deficit, which is crucial given the country’s current status under an excessive deficit procedure.

Another critical point is the "1 plus 5" mechanism, where the risks associated with the first reactor would be shared with American partners. In this scenario, only the first module would be directly purchased by RoPower, while the remaining five modules would be financed by the partners. This arrangement is still at the principle level and has not yet been formalized.

The company Nuclearelectrica, which owns the project, plans to discuss two key points during an upcoming shareholder meeting scheduled for July 15. One topic involves the possibility of revising the initial strategy for the Doicești project, while the other pertains to signing a 20-year electricity sales agreement. The company argues that the American partner, NuScale, has not met certain conditions, leading to the consideration of alternative strategies. Nuclearelectrica seeks an alternative plan for the SMRs, indicating a shift in focus based on evolving circumstances and perceived shortcomings in the current partnership.

The Doicești project aims to construct six modules with a combined capacity of 462 MW, developed in collaboration with the American firm NuScale. Launched in September 2022, the project is currently at a critical juncture, facing both political and financial controversies. The initiative was intended to serve as a cornerstone of the Romania-U.S. partnership, but it has instead become a focal point of discord within Romanian politics.

SMRs are increasingly viewed as a promising technology for clean energy production, supported by growing interest from governments and international energy policies. According to Nuclearelectrica, these reactors offer flexibility in implementation, lower costs, and can contribute significantly to economic development and the acceleration of decarbonization processes. Designed based on decades of experience with large-scale nuclear reactors, SMRs aim to provide efficient solutions tailored to modern energy needs.

These reactors typically generate up to 300 MW of electricity, compared to traditional nuclear reactors, which range between 1,000 and 1,400 MW. Their modular design allows for factory production, reducing both construction time and costs. Four main types of SMRs include light water reactors, fast neutron reactors, high-temperature graphite-moderated reactors, and molten salt reactors. Their compact size makes them suitable for deployment in remote areas or data centers where grid connection is challenging or costly.

An additional benefit highlighted by Nuclearelectrica is the potential use of former power plant sites, many of which already possess necessary infrastructure. This approach could facilitate reindustrialization and local economic development with reduced investment compared to building new large-scale nuclear plants from scratch.

Technological advancements over the past two years have brought SMRs closer to commercial implementation. Nuclearelectrica believes this technology holds great potential for enhancing energy security, supporting economic growth, and accelerating the transition to a low-carbon economy. The United States leads global efforts in developing SMRs, with 28 planned locations, followed by Canada with nine and the UK with seven. Other countries such as China, France, Poland, Finland, and Sweden also have multiple planned sites for SMR projects.