Financial Model of a NPP Construction: A Case Study of the Mankala Project in Finland

Abstract

Distributed power generation means that consumers generate electricity for their own needs and then sell the surplus. So far, this has not become very widespread in Russia, despite there being a demand for it. In other countries, this model of energy development has a long and successful history.

The aim of this article is to analyze the advantages and risks of distributed power generation. The mankala model case, which exists in Finland, was used for the purpose of this study. Rather than focusing on receiving profit, the goal of mankala enterprises is to generate energy at cost for their shareholders. The shareholders are entitled and must buy this energy.

The advantages of this model are as follows: the energy price for consumers declines, the risks are diversified (the case is provided for the third nuclear power plant, Olkiluoto, where the main shareholder operates on the mankala principle), and enterprises receive the guarantee of energy distribution on a fixed-price basis.

The article shows that the Finnish model of distributed power generation is an effective and commercially sustainable one, even despite certain difficulties, such as delayed construction in special cases and the claims of the European Commission regarding the core of the model. A sketch of similar models in other countries (the EU, the US, etc.) is also given.

This study was conducted on the basis of contextualization and case study methods. The contextualization method makes it possible to analyze the evolution of the mankala model in the context of the energy policy of Finland and Nord Pool. Description methods, system analysis, and other methods were used within the frame of this case study.

The results and conclusions of this study may be interesting to those who conduct energy planning. They can also be use in the development and implementation of a framework for distributed power generation in Russia.