In march 2011 a tsunami engulfed the Fukushima power plant in Japan, ultimately causing a meltdown. The worst nuclear disaster since Chernobyl, it was a devastating blow to an industry that has been in the doldrums since the 1980s. Nuclear plants closed around the world. The amount of electricity generated by nuclear power plunged 11% in two years and has not recovered since. Within this declining industry, one country now dominates the market for design and export of nuclear plants: Russia.
Flat domestic demand for electricity has curtailed construction of new plants at home, so Rosatom, Russia’s state-owned nuclear-power company, has been flogging its wares abroad. It is focused on what Stephan Solzhenitsyn, a nuclear-energy analyst with McKinsey, calls the “great grand middle”: countries that are close allies of neither the United States nor Russia.
In April Russia started building Turkey’s first nuclear plant, worth $20bn. Its first reactor is due for completion in 2023. Rosatom says it has 33 new plants on its order book, worth some $130bn. A dozen are under construction, including in Bangladesh, India and Hungary, according to The Economist.
Energy exports have long been a pillar of Russian foreign policy, typically in the form of its abundant oil and gas supplies. Exporting nuclear plants is trickier, but in some ways a better bet, says Mr Solzhenitsyn. Reactor sales bring in more money than fossil fuels, as they are generally accompanied by a suite of services, including provision of nuclear fuel, training for engineers and regulatory consulting. Each plant is a multi-billion-dollar project, unaffected by swings in commodity prices, and locks customers into decades-long relationships with Russia.
Once completed, the plants offer an obvious diplomatic lever in the form of sway over a large portion of a country’s electricity-generation capacity. In theory Russia might threaten to raise the price of uranium, or simply to close a reactor operated by Rosatom. The relationship between exporter and customer is particularly close in a nuclear plant’s early years, when local employees are still being trained and the exporting country is directly involved in the plant’s operation. The threat is especially potent in countries where a new nuclear plant represents a significant share of the electricity supply. Rooppur, the Russian-built nuclear-power station in Bangladesh, for instance, will provide 2,400 megawatts, accounting for 15% of total generation capacity.
Vulnerable countries have long grown accustomed to Russia’s habit of wielding energy as a geopolitical weapon. Ultimatums over gas supplies were once a regular feature of eastern European winters, but lately the threat has grown more sophisticated. In 2015 Russia launched a cyber-assault on Ukraine’s electrical transmission system. Last week America’s department of homeland security said that Russia’s military intelligence agency had hacked into the control rooms of American power plants.
Agneta Rising, director general of the World Nuclear Association, says that geopolitics tends not to complicate Rosatom’s export plans. Any influence the Kremlin can exert through its plants is limited by the supervision of the International Atomic Energy Agency. Rosatom’s influence weakens over time, because customers typically insist that it trains local engineers to run their plants. Customers can source their nuclear fuel elsewhere. And Russian potential mischief-making would spook buyers in other countries.
Yet concerns persist. In 2017 a South African court blocked a $76bn deal with Rosatom that had been secretly brokered between Presidents Jacob Zuma and Vladimir Putin. Closer to home, this year Rosatom started building a reactor in Hungary months after Mr Putin was warmly received in Budapest by Viktor Orban, Hungary’s prime minister. The deal is financed by a €10bn ($11.6bn) loan from Russia, and Rosatom will operate the plant and supply its fuel. That prompts fears that Russia could use the plant as diplomatic leverage.