German law change threatens Thorp plant

British Nuclear Fuels' controversial new Thermal Oxide Reprocessing Plant (Thorp) has lost its first customer, even before it has started full operations.

Informed observers fear that BNFL could now lose up to half of the overseas customers who have signed advance contracts for the "post-baseload" period of the plant's operation. The fears have been sparked by the announcement that a German nuclear utility, Kernkraftwerk Kruemmel (KKK), has cancelled its long-term reprocessing contract with BNFL.

Changes in German nuclear safety laws in July this year allowed reactor operators for the first time to opt for long-term storage followed by direct disposal instead of reprocessing of spent fuel. KKK cited this change in the law as the reason for pulling out of the contracts it signed in 1990.

The fear is that other, larger utilities might now follow suit, especially as the penalty for withdrawing from a post-baseload contract escalates heavily after the end of this year. German utilities account for all the overseas business for Thorp in the "post-baseload" period.

Thorp has a full order book for the first 10 years of its 25-year design life. These "baseload" contracts were drawn up in the mid to late 1970s before the plant was built, when fears of energy shortages made reprocessing - and the consequent recycling of uranium and plutonium as fuel - an attractive option. BNFL maintains that even if the plant were to operate only for this period of 10 years, the baseload contracts would still make a profit of more than £500m.

The Government allowed Thorp to start operating earlier this year, after taking nearly two years to reach the decision. The plant cost more than £2.3bn and took more than 14 years to build. A plant of such complexity takes a long time to commission and so it has not yet fully reprocessed any nuclear fuel.

KKK has not withdrawn from its baseload contracts. The penalty clauses which have been written into these contracts are so severe that it is unlikely to be in any company's interest to cancel these.

A spokesman for BNFL said, "We are obviously very disappointed that they have cancelled."

However, the company pointed out that the contract represented less than 1 per cent of Thorp's £9bn total order book. "BNFL can confirm that this development will have absolutely no impact upon Thorp's £500m minimum profit from its first 10 years of operation. The economic justification for Thorp's go-ahead was based upon the plant only operating for its baseload period and then being decommissioned."