As the Western nuclear industry flounders, Russia’s Rosatom is building nuclear power plants (NPPs) on time and under budget around the world, while selling uranium to the US.
For forty years, nuclear power in the West has been in the doghouse. Ever since Three Mile Island and Fukushima – not to mention Chernobyl in between – nuclear power has been shunned as unsafe and uneconomic. But today, faced with stubbornly rising greenhouse gas (GHG) emissions, the West is taking a second look at nuclear power. There is a problem, though: after decades of neglect, the Western nuclear industry has lost much of its capability to build new NPPs or even (in the case of France) to maintain them, as skilled workers and experienced managers have left or retired. In the US, no new NPPs have been commissioned in the past three decades (although one is due to start up soon, but fifteen years late). At this time of writing, none of the traditional leaders still active in civilian nuclear power is able to execute a nuclear project on time or even close to budget.
Except for the Russians. The Russian nuclear industry stands out as a rare – indeed unique – case of a high-technology sector that has not only recovered from the end of the Soviet era and the chaos that followed, but has developed an effective export strategy that has allowed it to prosper today as never before.
Russia’s nuclear industry is thriving, thanks mainly to its international business. According to Aleksey Likhachev, CEO of Rosatom, Russia’s nuclear monopoly, Russia is currently at work on 23 nuclear power units in a dozen different countries, including China, India, Belarus, Turkey, Hungary and Egypt. It sold $10bn worth of products abroad in 2022, a 15% increase on the year before, and its current foreign order book stands at over $200bn. Rosatom is actively courting new customers, mostly in the developing world; it offers a “full service” package that covers construction and operation, as well as the supply and reprocessing of nuclear fuel. The Russian government actively supports Rosatom with low-interest financing. In short, Russian nuclear power is on a roll.
But that is not all. In addition to building and operating new NPPs, Rosatom exports enriched uranium to numerous countries around the world, including the US and Europe. (In addition, Rosatom provides services to five EU counties that operate Russian-built NPPs.) Even though the revenues are not comparable (only about $1bn per year), the fuel exports are key politically. Because of this dependence, Russia’s nuclear industry is not under Western sanctions (as discussed further below), and it is not likely to be so any time soon. At this moment, Rosatom is able to operate without impediment, both at home and abroad; one of the few sectors in the Russian economy to be able to do so.
For both the US and Europe the implications are serious. First, they will continue to depend on Russian enriched uranium for several years more, potentially weakening their common front on sanctions. (Indeed, there have already been substantial disagreements among EU members over their policy toward Russian nuclear power.)
Secondly, and more fundamentally, neither the US nuclear industry nor its European counterparts, in their present decrepit state, is in any position to compete commercially with the Russians in the construction of new NPPs, whether at home or in the developing world. Russia should continue to hold a commanding position in nuclear power for some time to come. The only threats to its nuclear business, as we shall see in a moment, are likely to be China – and the Kremlin’s geopolitics.
How did this situation come about?
Russia’s surprising nuclear renaissance
Rosatom’s present commercial success is a remarkable story of near-death and rebirth. The Russian civilian nuclear power programme was born out of the Soviet nuclear weapons programme. But the end of the Soviet Union in 1991 was a disaster for the nuclear industry. Over the next fifteen years, it largely disintegrated. Key assets were plundered by oligarchs, and what remained mostly stopped work. The industry’s three major foreign projects, in China, India and Iran, all legacy projects left over from the Soviet era, fell far behind schedule. There was a massive loss of skills as experienced workers left for other jobs. By 2005, the Russian civilian nuclear programme had virtually stopped.
But that year Putin named a politician, Sergei Kiriyenko, to head the nuclear programme. Kiriyenko had had a mixed career up to that time – including a disastrous five-month stint as prime minister that coincided with Russia’s 1998 financial meltdown – but he turned out to be a talented manager. He regathered Rosatom’s wandering assets under one roof and after seeing off the oligarchs, he brought the industry’s unruly suppliers and contractors to heel. During the next eleven years he built Rosatom into a powerhouse. In 2016, Putin rewarded him with a secret medal and a top job, as Number 2 in the Kremlin’s Presidential Administration, where he is today.
The secrecy was no accident. When Rosatom was created in 2007, it inherited both the civilian NPPs and the military weapons assets. Kiriyenko made vigorous efforts to disentangle the military wing from the civilian, but the separation proved easier to achieve on paper than in reality. Today, the civilian and the military parts of Rosatom remain connected at the hip, as many parts of the nuclear supply chain, beginning with the mining of uranium, serve both military and civilian customers inside Russia.
But the military part was (and is) funded directly by the government, while the civilian part was supposed to be self-supporting. For Kiriyenko, this was a crucial difference. He had begun with ambitious plans for expanding nuclear power inside Russia, but he soon realised that there was little domestic demand for new NPPs in an electricity sector dominated by gas, and so Kiriyenko turned his sights on the foreign market. For this he needed to persuade the international community that Rosatom had become essentially a civilian business, in other words to fashion a new “commercial” image for the company. By and large he was successful, and Rosatom owes its present prosperity largely to the international business he built.
The impact of Western sanctions
Because of its important role as a supplier of uranium and nuclear fuels to NPPs around the world, including the US, Rosatom is not under Western sanctions. The US, in particular, relies on Russia for low-enrichment uranium for its own NPPs. Although efforts are under way to develop substitutes, for the present Rosatom is simply too valuable to sanction.
But even if sanctions were to be imposed, Rosatom’s operations would be largely unaffected by them. Internally, its supply chain, which as mentioned runs from uranium mining to power plant construction and operation, depends very little on the outside. As a direct descendant of the Soviet nuclear programme, it was designed from the beginning to be self-contained, with a minimum of reliance on imported designs and components. That remains the case today. Indeed, as Russia’s leading high-tech company, Rosatom is increasingly being given the mission of filling sanctions-related gaps in other Russian industries.
Rosatom’s international business might be somewhat more vulnerable to sanctions, but so far there is little sign of it. Only one country, Finland, has pulled out of an ongoing project with Rosatom. (The Czech Republic has terminated Russia’s part-ownership of Skoda’s nuclear division, a situation inherited from Soviet times, but which involved a different Russian company.) Most of Rosatom’s international client base consists of “friendly countries” that have observed a careful neutrality on the Ukrainian war and would not necessarily support Western sanctions on Rosatom. (Hungary, though a member of the European Union, has a long-standing partnership with Rosatom, which is even now building a new NPP there.) Rosatom’s foreign projects do make extensive use of non-Russian manpower and materials, chiefly to satisfy its clients’ requirements for local sourcing. But these consist mainly of low-tech inputs, which are not sourced from third countries and therefore are not affected by sanctions.
Multiple challenges ahead
Yet quite apart from sanctions, Rosatom and Russian nuclear power may face multiple challenges ahead. One of them is technological progress. To deal with the high costs and long approval times of large traditional power plants, several Western countries, notably the US and France, are encouraging the development of small modular reactors, so-called “SMRs.” These have several potential advantages. They could be transported easily and assembled quickly on site. Individual units, mounted on shipboard as “floating nukes,” could provide power to offshore drilling rigs or remote coastal locations. SMR’s could be one of the keys to tomorrow’s nuclear renaissance, especially in developing countries, Russia’s main market.
If that happened, Russia would be well positioned. Russia is the only country in the world to operate nuclear-powered icebreakers and floating NPPs, both of which are powered by small reactors. The Russian experience in designing and building small reactors goes back decades to the Soviet era, and there have been multiple generations of successively improved designs. Rosatom is working on deploying them not only on nuclear icebreakers and floating platforms, but also on land. A small NPP is already planned in Yakutia, in Russia’s Far East, and Rosatom has also signed an agreement with Kyrgyzstan to explore the deployment of small reactors there.
In contrast, Western countries lag far behind in SMR development and deployment. The first SMRs will continue to be based on conventional light-water technology, but they are still far from deployment. For example, US-based NuScale just submitted to the NRC the Standard Design Approval application for its VOYGR SMR on January 1 of this year. But the first units will be ready only by around 2030, according to company estimates, even assuming the absence of delays in regulatory approval and construction.
The key to the future of SMRs, in the longer term, will likely be so-called “Generation IV” reactors, based on revolutionary designs that break entirely from the traditional light-water-reactor technology. But Generation IV is still an immature technology, and the race for leadership in G-IV is only now getting under way.
The more proximate threat to Rosatom’s leading position is Beijing. China has a vigorous nuclear programme, which is entirely independent of Russia. China ranks first in the world in the number of units under construction, and it is moving quickly toward next-generation designs. China’s first Gen IV reactor just reached full power last month. It uses a modular design, with each module having 100 MWe of output. The commercial unit will have six modules arranged in circular fashion for 600 MWe of total output. At this moment neither Russia nor any Western country has anything similar at a comparably advanced stage of deployment.
So far the Chinese nuclear programme is focused on its domestic market, and its only international project is in Pakistan. But the Chinese have ambitious plans to expand overseas, and if past experience is any guide, they will soon give Rosatom a run for its money.
Finally, the ultimate challenges for Rosatom may be safety and reputational risk. Ever since the Chernobyl disaster in 1986, the Russian nuclear industry has had an excellent safety record. But the Russian invasion of Ukraine raises a serious new threat. There are four NPPs operating in Ukraine – ironically, all of them of Soviet manufacture. Russian missiles have already landed close to one of them, the Zaporizhzhia plant, which is located close to the current battle line between Russian and Ukrainian forces. Just who is responsible for the safety of the plant is in dispute. Russia has so far resisted the efforts of the International Atomic Energy Agency (IAEA) to take over the plant’s management, and has put Rosatom forward for the role instead. But for Rosatom this plan is full of risks. If the plant were damaged and there were radioactive contamination, quite apart from the further suffering this would inflict on the Ukrainian people, for Rosatom the reputational damage would be extreme.
Despite these risks, Rosatom and the Russian civilian nuclear industry look likely to retain their leading role for at least another decade. The challenges ahead are real, but they will come more from technological changes and rising competition from China, than from sanctions, from which Rosatom in any case remains so far exempt.
This article originally appeared on “The Devil’s Dance” substack blog here.
Thane Gustafson is the author and co-author of eight books on Russian affairs, including most recently Wheel of Fortune: The Battle for Oil and Power in Russia (2012), The Bridge: Natural Gas in a Redivided Europe (2020) and Klimat: Russia in the Age of Climate Change (2021), all with Harvard University Press. As always, I am grateful to many friends for their kind and helpful comments on earlier drafts. I am especially indebted to Yanliang Pan, a talented alumnus of Georgetown’s Center for Russian and Eurasian Studies (CERES), who is currently studying nuclear non-proliferation at the Middlebury Institute of International Studies. Yanliang Pan is the author of the RUS/CHN Nuclear Energy Newsletter, available at https://rcnuclear.substack.com.