Fitch: TVO's Olkiluoto 3 on Course but Challenges Remain
Fitch believes that the restructuring of Areva, who is also the leading member of Areva-Siemens consortium responsible for the construction of OL3, creates both long - and short-term challenges for TVO. Areva's technological know-how is critical during the final stages of the OL3 project as the European Pressurised Reactor (EPR) technology used in OL3 is first-of-a-kind. There are currently three other EPR reactors under construction (Taishan 1 and 2; Flamanville 3) and two under planning phase (Hinkley Point C) but the technology is yet unproven, which creates uncertainty over the availability of technological know-how in the long term.
TVO has launched new legal action against Areva to seek assurance that the project would have adequate financial and technological resources to be ready for electricity production by late 2018 as currently planned and that Areva has the capacity to provide maintenance services once the plant is online. In Fitch's view the new legal action by TVO highlights the importance of Areva's technological know-how for the Finnish company.
TVO and the Areva-Siemens consortium have unsettled OL3-related litigation at the International Chambers of Commerce's arbitration court, where TVO's claim of EUR2.6bn is met with a counterclaim of EUR3.5bn from Areva-Siemens. Fitch's current rating case assumption is for the outcome from the litigation to be neutral for TVO but this is subject to the impact from penalties paid or compensations received on TVO's all-in production costs that will ultimately be charged from TVO's electricity off-takers.
The European Commission is reviewing France's state-backed rescue package outlined for Areva. The outcome is unlikely to be announced in the near future and it is uncertain whether the Commission will approve the rescue plan. Areva and Siemens are jointly and severally responsible for OL3 project obligations, mitigating TVO's financial counterparty risk with Areva, especially if TVO is the net receiver in the litigation process.