“Globally there are no alternatives that can replace nuclear power”, but with the growth of renewables, “the demand for very large nuclear reactors will drop”. That is the view of Kirill Komarov, First Deputy CEO of the Russian nuclear giant Rosatom. “Fast-neutron reactors with a closed fuel cycle will secure baseload and low and medium capacity reactors will serve balancing needs”, says Rosatom’s “number two” man in an exclusive wide-ranging interview in which he speaks frankly about sensitive issues such as Iran, radioactive waste, the Hinkley Point C project in the UK, “dependence” on Russia and competition from renewables. The interview was first published by World Energy Focus, a publication of the World Energy Council produced by Energy Post.



While parts of the global nuclear industry, in particular in Japan, Germany, France and the US, have experienced strong headwinds in recent years, Russian nuclear giant Rosatom has recorded impressive growth. During the post-Fukushima period, since 2011, Rosatom has doubled the size of its foreign orders portfolio. In 2014, its value reached $101.4 billion over the next 10 years. This portfolio includes not only orders for the construction of 34 power units abroad, but also contracts dealing with the nuclear fuel cycle, maintenance and upgrade of power plants and other business areas.

“Our target for the next 5 years”, says Kirill Komarov, who is in charge of the company’s Corporate Development and International Business, and is also CEO of subsidiary Atomenergoprom, a conglomerate of Russian civil nuclear industry activities, “is to sign contracts for construction of about 30-40 new power units, so the total orders portfolio may reach up to $200 billion.” He adds that this is “ambitious, but attainable”.

Rosatom’s success partly depends on its unique corporate structure, says Komarov. “We are the world’s only nuclear company that operates in all the segments of the value chain, from uranium mining to construction and operation , decommissioning and spent fuel processing. This gives us a unique set of competencies and the ability to offer turnkey solutions, which are especially appreciated by nuclear energy newcomers.”

Komarov notes that thanks to Rosatom’s integrated structure, the cost (LCOE, Levelized Cost of Energy) of new VVER reactors (the Russian pressurized water reactors) is no more than $50-$60 per MWh in most countries. “This value proposition allows us to compete with other nuclear vendors and also with conventional energy sectors.”

Some people say there is a nuclear renaissance going on, others say the nuclear sector is in decline worldwide. Where do you see nuclear power going?

“It is no exaggeration to say that nuclear power engineering serves as one of the most important drivers of global economic development. Due to the growth of energy consumption in combination with the shortage of energy sources and restrictions on CO2 emissions, there are globally no alternatives that can replace nuclear power.

Nuclear power plays a dual role. First, new projects support economic growth. They create new jobs and stimulate production and consumption. For instance, a $6 billion project with local purchases on the level of 50-60%, adds $3 billion to GDP directly and another $3 billion indirectly.

Secondly, nuclear power engineering ensures the predictability of energy tariffs and therefore bolsters investments in energy-consuming industries. This advantage of atomic generation looks especially important if we take into account the volatility of energy prices that we have been observing in the market for the past 20-30 years. Nobody knows how much, say, natural gas will cost in some 10 years. The expenses of gas account for about 85% of operating costs at gas power plants. It means that the rise of gas prices by two times leads to an increase in the cost per kWh of at least 70%. With nuclear power, the fuel factor in operating expenses is very low – not more than 25-30%, and thus 3-5% of the final price per kWh. In case uranium prices double, the final energy price for consumers rises by just 3-5%. So the cost of nuclear power is much more predictable.”

Who is Kirill Komarov? Kirill Komarov was born on December 29, 1973 in Saint Petersburg. He graduated from the Urals State Law Academy and then, after completion of a postgraduate course, received an advanced law degree. In 2006, he was appointed Vice President of TVEL Fuel Company prior to becoming CEO of Atomenergomash, a TVEL subsidiary. In December 2007, he joined Atomenergoprom where he served first as Deputy CEO and then as Managing Director. In 2010, he was appointed Chief Executive Officer of Atomenergoprom, and concurrently worked as Director of Rosatom’s Nuclear Power Directorate. In April 2011 he became Rosatom’s Deputy CEO for Corporate Development and International Business. In February he became First Deputy CEO for Corporate Development and International Business while remaining CEO of Atomenergoprom.

Would you say nuclear power is at a crucial stage where it could go up or down – or do you believe it will develop more in terms of “business as usual”?

“From a global perspective, there seems to be widespread understanding that countries cannot do without nuclear generation, if they want to have stable, cheap, safe and environmentally friendly power supplies. European experience is the best illustration: nuclear power plants are being built today in the UK, Hungary and Finland. That said, BRICS states and the countries of Asian-Pacific region are leading in terms of growth. According to the IAEA (International Atomic Energy Agency), globally 67 nuclear power units are being built today.

“The total installed capacity of renewable energies exceeded that of all nuclear power units in the world by 1.5 times in 2012”

According to the IEA (International Energy Agency) and WNA (World Nuclear Assocation), the world needs 1000GW of new nuclear capacity by 2050 if it is to limit global warming to just 2% during that period. It means that we have to put into operation 35 new power units annually, while today we are speaking about 10-15 new reactors a year.”

Many people argue that with the cost of renewable energies coming down, new nuclear power has fundamentally become uncompetitive and should not be pursued anymore by countries. What is your view?

“Many countries are actively investing in solar and wind generation today, but the renewable energy sources (RES) still represent the most expensive source of electric power and can develop only with state subsidies. Though we observe the reduction of costs in the RES sector, VVERs have an LCOE that is almost 1.5 times lower than the average cost of RES. Besides, one should keep in mind that neither solar nor wind facilities are constant energy sources, while we need power all the time. There is no economically feasible alternative to nuclear power as a source of carbon-free baseload.”

Does the advent of distributed generation and new business models for utilities represent a threat to the nuclear sector?

“Distributed generation and “smart grids” represent the future of the power industry, so we should speak in terms of opportunities instead of threats. The decentralization of generation opens a vast market for small reactors with higher flexibility. These can work both as sources of baseload and as support to small capacity renewable energies.

Naturally, we live in a different world compared with the one we lived in some 15 years ago. The total installed capacity of renewable energies exceeded that of all nuclear power units in the world by 1.5 times in 2012. By 2030 renewable energy sources will account for almost 30% of total power consumption in Europe and about 10-30% in other countries. Since intermittent sources will account for the major part of this growth, it means we will have different configurations of power grids and higher demand for load following sources. Naturally, such a trend is a gamechanger for nuclear power engineering to a certain extent. The demand for high-energy reactors (like EPR’s with capacity of 1,650MW) will drop, while the demand for low and medium capacity reactors featuring better flexibility in terms of capacity will grow. More intensive use of commercially applicable fast-neutron reactors (FNR) featuring a closed fuel cycle and, therefore, absence of radioactive waste, which a priori are less flexible, will make this trend even more pronounced. Thus, the function of securing baseload in the energy system will belong to FNR, while low and medium capacity reactors are to be used for balancing systems with a high share of intermittent renewables.”

What kind of technological innovation do you see taking place in the nuclear sector and how is your own company involved in this?

“Rosatom reinvests 5% of its revenues in R&D to reinforce our technological leadership. We will probably be the first in the world to commercialize fast-neutron reactors, floating nuclear power plants and low-capacity reactors. The FNR-based closed fuel cycle technology supports the global objective of creating a waste-free nuclear industry. At present, the fast-neutron reactor BN-800 operating at Beloyarskaya in Russia is the only one in the world. Russia is world leader in this area of nuclear power engineering.

“There have been ups and downs in the political relations between Russia and the United States, but there has been no supply disruption, not even a single delay of our services. Even today each tenth light bulb in the USA is lit based on Russian uranium”

In addition, in August the Mining and Chemical Combine, a subsidiary of Rosatom, put into operation a new facility for the production of MOX (mixed oxide) fuel, the first enterprise in the world to implement this at industrial scale. Such technology means transforming uranium-238 into an energy resource will pave the way for the development of waste-free technologies capable of providing energy security for the planet in the long term. Since nuclear generation is not associated with greenhouse gas emissions, one can produce any amount of energy using uranium-238 without any harm to the climate.”

Nuclear power is expanding into new regions in the Middle East, Asia and Africa. What is the attraction for those regions and won’t this increase the risk of accidents or proliferation of nuclear materials?

“It is evident today that the vector of nuclear industry development is shifting from the developed countries of Europe and North America towards South-Eastern Asia and Latin America. The countries of Africa and the Middle East are also increasingly choosing in favor of nuclear. Naturally, we support our partners. We believe that the growth of nuclear industry will enable them to move to a new technological level due to having a new type of industry. It will give local business new opportunities. When a nuclear power plant is built, the country sees growth in demand for engineering professions and the ones associated with the use of nuclear energy – nuclear medicine, chemical industry, etc.

Eventually, the state gains many benefits from such projects – a stable energy system, energy independence, predictable electricity prices, an impetus to the development of infrastructure and concomitant industries, as well as a better education system due to growth in demand for engineering and “technical” professions. Any government that is far-sighted and able to look ahead for about 20-40 years is interested in such initiatives.

As to safety and security, the global practice, which is supported by the IAEA, is that countries choosing to develop nuclear power engineering assume the responsibility for their power plant being safe. International organizations work out the standards, while all the companies involved in the process adhere to them.”

Critics say your integrated business strategy perpetuates dependency of countries on Russian nuclear know-how and fuel supplies. Can you respond to that?

“This is far-fetched. Fuel reloading takes place just once in five years and even a relatively small stock of nuclear fuel is enough for a plant to ensure years of trouble-free operation of its power units. Moreover, any company that disrupts fuel supplies ruins its reputation as a reliable vendor and loses its global markets along with a slightest chance to win any tender henceforth. In this situation, the consumer is king, not the supplier.

“Russian enrichment facilities will be used to produce fuel for Iranian nuclear facilities, thus the country will not need to increase the number of centrifuges for uranium enrichment”

There is no monopoly in the VVER fuel market and no dependence either. Apart from our fuel company – TVEL – there are several companies in the world that can make fuel assemblies for the Russian design reactors, including in Europe, and they have all the necessary technological information for that. Over the past 10 years, there have been more than 10 tenders for the supply of fuel in Europe and we have won all of them. We have offered better terms in price and quality than our competitors. By 2030/2035, almost every fifth light-water reactor in the world will be based on the VVER technology, so the market size will be large enough.

We can build on a long history as a reliable supplier, even throughout the most critical periods of the Cold War in 1960-80’s. We have been implementing the HEU-to-LEU (highly enriched to low enriched uranium) contract together with our American partners for twenty years since 1994, which has ensured half of the needs of US nuclear power plants with Russian uranium products. During that time, there have been ups and downs in the political relations between Russia and the United States, but there has been no supply disruption, not even a single delay of our services. Even today each tenth light bulb in the USA is lit based on Russian uranium.”

How can the nuclear deal with Iran influence the development of nuclear power engineering globally?

“Our company’s participation in Iran’s nuclear industry development is in fact an alternative solution compared to the most controversial aspects of Iran’s nuclear program that have caused the strongest concerns of the global community. Russian enrichment facilities will be used to produce fuel for Iranian nuclear facilities, thus the country will not need to increase the number of centrifuges for uranium enrichment. Iran will have no centers for spent nuclear fuel utilization of its own, as the spent nuclear fuel will come back to Russia. Therefore, Tehran’s access to nuclear materials that can be used for making nuclear weapons or a “dirty bomb” will be kept under control, which suits both Iran and six world powers.

“In future it will become possible to virtually forget about burying waste as Fast-Neutron reactors allow ‘burning up’ highly toxic waste, thus considerably reducing the half-life period”

We believe that any country has the right to develop nuclear power. As for the Bushehr Nuclear Power Plant, it is a civil facility, which poses no threat to the non-proliferation regime. We built the Bushehr nuclear power plant, and no sanctions have ever been imposed on this facility. Last year Russia and Iran signed a new intergovernmental agreement on building 8 new power units. Rosatom has already signed a contract for the first two units, which means that the company follows the ordinary course of operations. Evidently, after the sanctions are lifted, we are looking forward to more opportunities and prospects for cooperation with Iran. By the way, Bushehr was named project of the year in 2014 by “Power Engineering Magazine”, the oldest energy magazine in the USA.”

What can you tell people who oppose nuclear power generation, because they are afraid of the long-term consequences of radioactive waste?

“With regard to spent nuclear fuel (SNF), each country chooses one of the two approaches. In the first case SNF is considered an important resource, in the other one it is perceived as waste. Russia, as well as a number of European countries like France and England, makes use of spent nuclear fuel as a valuable material.

In our opinion, processing with the extraction of valuable components is an environmentally friendly method of handling spent nuclear fuel. These principles are the very basis of the SNF Handling legislation in our country.

“The UK made a very wise and strategically right decision to develop the nuclear power industry by building new power plants”

According to the obligations in our international contracts, Rosatom provides services in SNF removal from plants of Russian design. We also offer processing and storage to our clients. Today a contract on SNF handling is part of the standard package on power plant maintenance through its entire life cycle along with the contracts on construction and fuel supplies. Our growing contract portfolio is evidence of the fact that this approach is in demand in the market today.

At the same time Russia is one of the few countries, or, rather, the only country in the world which works on the project of locking the nuclear fuel cycle based on “fast neutron” (FN) technology. This means in future it will become possible to virtually forget about burying waste as FN reactors allow “burning up” highly toxic waste, thus considerably reducing the half-life period.”

Rosatom is successfully building a new nuclear power station in Finland. The EPR reactor in Finland and the one in France are obviously struggling. Does the EPR still have a future?

“The main reason for the problems of the EPRs is that they are FOAK – first-of-a-kind – projects. It is quite common for any first project to experience delays, to exceed estimates and to encounter other obstacles. As to the prospects of the EPR, while having advantages it also possesses one important restriction – its great capacity (1650 MW). For operators and networks located in small countries that is often too much. An plant with two power units of this type will provide 3.2 GW of power.

“I believe that our technology could have been delivered at a lower price than the current price for Hinkley Point C”

For countries like Bulgaria, Hungary or Slovakia, for example, that is over one third of the entire generating supply. What happens when a reactor is taken offline for routine maintenance or fuel charging? Therefore, such a project is in higher demand in big markets – China, India, Japan, Canada – but many of those countries have their own suppliers of nuclear technologies with competitive offers.

The second aspect which cannot be dismissed is the growing share of intermittent renewable energy, which is likely to lead to less demand for large reactors and more demand for reactors of small and medium capacity with more flexibility.”

What do you think about the cost guarantees given by the UK government on the Hinkley Point C project?

“In principle, the CfD (contract for difference) scheme introduced by the British Government is in my opinion a promising way to stimulate private investments in the power industry of deregulated markets. It is a transparent and fair form of state support that should help raise private capital in the nuclear power industry.

The UK made a very wise and strategically right decision to develop the nuclear power industry by building new power plants. The first project is always the most difficult one. Therefore the investors often need additional stimuli, which apparently leads to a higher strike price. It is hard for me to judge whether the strike price is justified. EPR being a FOAK project it does cost more than projects that we build. The British market is, undoubtedly, attractive for us. Our VVER technology today is the only mature – in the full meaning of the word – technology of the III and III+ generation with completed construction projects and experience of safe commercial operation. These projects already exist, they are real. Therefore I think we would have been able to make a competitive offer. It is difficult to give any certain figures now, but I believe that our technology could have been delivered at a lower price than the current price for Hinkley Point C.

“Rosatom gets no subsidies or grants for its export energy projects”

At present we are studying the possibility of implementing a project based on the Finnish model in Britain, one in which Rosatom would act as a minority shareholder (the majority of shares would be held by the future operator and European investors). But it is still too early to talk about any certain dates or sites.”

Can nuclear energy really compete in a competitive market? Or does it need a governmental support?

“It is wrong to believe that we mainly rely on the Russian state budget or state funds in financing our export projects. Rosatom gets no subsidies or grants for its export energy projects. In China, Iran and partially in India we get 100% payment and financing from our clients. In Finland we provide funds proportionally to our minority share in the project, the rest is private capital – shared or borrowed – provided by our Finnish partners. In those cases when we use state funds or the funds of the state bank of the Russian Federation they will be returned with an interest while contributing to the process of job creation and stimulating business development in Russia. There is no difference with how other export agencies work, for example COFACE in France or the ExIm Bank in the US.

Today, all of Rosatom’s foreign projects are well on schedule and none of them has been stopped. Unit 2 at Kudankulam in India is to be launched soon; units 3 and 4 at Tianwan in China are under construction; the first nuclear power plant in Belarus is in the active construction phase; operations are underway in Iran, Vietnam, Bangladesh, Turkey, Finland, Hungary and other countries. This year, we have signed a deal to upgrade the Armenian nuclear plant and joint teams have already begun operations.

We are very flexible in project funding. We deal with governmental, intergovernmental institutions and private institutional investors. Importantly, as for our portfolio of confirmed and guaranteed orders, including the current 34 units abroad, funding schemes for these projects have been discussed with the partners and approved. As for future projects currently under consideration, all of them are bankable with an internal rate of return of 8%-12%.”

Editor’s Note

This interview was first published in the World Energy Focus Annual Edition, produced by Energy Post for the World Energy Council. This magazine was launched at the World Energy Leaders Summit of the World Energy Council in Addis Ababa (26-30 October 2015). Next year, the World Energy Council will be holding its tri-annual World Energy Congress in Istanbul, 10-13 October, 2016. The World Energy Focus Monthly editions are all freely accessible on the World Energy Focus website.