A NUCLEAR RENAISSANCE IN RUSSIA?

Russia's nuclear power sector is waking up from almost two decades of dormancy. On July 15, 2006, Russian Prime Minister Mikhail Fradkov approved a nuclear energy program that calls for the completion of ten new 1,000 megawatt (MW) reactors by 2015, with an additional ten reactors to be in various stages of construction by that time. The call to revitalize the nuclear power industry comes at a time of booming electricity demand and concern over the domestic gas balance in Russia. However, the Russian nuclear sector faces several formidable institutional, technical, and financial challenges in completing the program:

*Russia is moving forward with major structural changes in the industry and is also reconsolidating parts of the former Soviet nuclear energy complex to be able to compete internationally.

*However, the current nuclear program appears too optimistic about the costs and financing of new reactors in Russia, raising questions on whether it can withstand future budgetary pressures, particularly as new investment activity in thermal generation decreases the urgency for an expansion of nuclear capacity in Russia after 2010.

*Ultimately, the true costs and benefits of the program must be considered in the broader context of Russia's geopolitical and economic goals. Russia's nuclear energy policy is predicated on broader goals with indirect or ""spillover"" benefits, such as reducing gas consumption and stimulating industry and economic development.

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