The Hanhikivi 1 project will influence the Oulu region and the whole of Finland in a myriad of ways during its lifecycle, according to a study commissioned by the Council of Oulu Region and Raahe District Business Services.
It has been clear from the very beginning that the Fennovoima nuclear power plant project will have national and regional effects in the scale of billions of euros.
A recently published study breaks down the billions of the Hanhikivi 1 project (FH1) into millions and puts some labels on the effects. Now we know what will be consumed and what kind of effects the project will have during construction of the infrastructure and the nuclear power plant, as well as during operation of the plant, in terms of euros, man-years, and material volumes. It has also been calculated that during the construction phase, the nuclear power plant project will account for 3.0–4.9 per cent of the GDP of North Ostrobothnia.
The study on the effects of FH1 project is part of a broader survey of the region’s resources, which is funded by the European Regional Development Fund (ERDF). The study on regional resource flows has been realized by the design and consulting firm Ramboll.
According to project manager Tuomas Kallio from the Council of Oulu Region, the key benefit of the study is the fact that now there is an overall assessment of the material flows in the region.
The study offers a good starting point for development of the circular economy and material efficiency. In addition, important information has been obtained on the effects of energy projects in the region. Kallio says that the energy industry is currently experiencing a period of strong growth and renewal in North Ostrobothnia. Low-carbon solutions are the current trend.
“A valuable paper,” says Joonas Hokkanen, the senior specialist who was in charge of the study at Ramboll.
The significance of the study is further boosted by the knowledge that the FH1 project will create some EUR 2.5–3.9 billion of new turnover in the entire country during the construction phase. The annual change in turnover during operation of the nuclear power plant will be approximately EUR 460–560 million.
Both Joonas Hokkanen and director Pasi Pitkänen from Raahe District Business Services are of the opinion that the study can be utilized in a variety of ways by the region, by the municipalities in the region, and by local companies. The study is a good source of information on land use planning, the development of services, business subsidies and the planning of training courses.
“The study will not be left on the shelf to gather dust,” both men say.
Senior specialist Joonas Hokkanen from Raahe District Business Services are of the opinion that the study can be utilized in a variety of ways by the region, by the municipalities in the region, and by local companies.
Up to 4,000 workers at the construction site
The Hanhikivi 1 will have a major impact on employment: Fennovoima has estimated that more than 20,000 professionals will work at the FH1 construction site in Pyhäjoki during the construction phase. During the busiest construction period, more than 4,000 people will be simultaneously working at the site. Once in operation, the nuclear power plant will directly employ 450–500 experts in different fields.
The impact on employment is even larger when studied from the viewpoint of the entire lifecycle of the nuclear power plant project. If the cascade effect from the direct jobs (i.e. jobs generated in the service sector, etc.) is also taken into account, the employment impact will be, according to the survey, 17,400–26,000 man-years, depending on the degree of domestic origin.
When taking into account the cascade effect, the power plant will generate 2,500–2,600 jobs during its operation, approximately 1,700 in North Ostrobothnia and 800–900 in the rest of Finland. According to the study, the 450–500 jobs at the nuclear power plant will create 260 jobs in the field of commerce and 280 jobs in the accommodation and restaurant industry, for example. Jobs will also be generated in other fields, such as energy supply and waste management, real estate services, training and culture.
The cascade effect is partially due to the increased use of a variety of services, which will, in turn, increase the number of jobs in the service sector. The value of the services used during the construction of the infrastructure will be EUR 55 million. During the construction of the nuclear power plant, the services used will be worth EUR 200–395 million.
Hundreds of millions of euros in tax revenue
FH1 will also benefit the national economy in the form of tax revenue, which will increase to more than half a billion euros during the lifecycle of the project. Some EUR 70 million in taxes of different types will be paid during the construction of the infrastructure, EUR 342–564 million during the construction phase of the nuclear power plant, and some EUR 49 million per year during operation of the nuclear power plant.
The state will benefit from the project even more than the local municipalities in the form of value added tax and product tax revenue.
When the tax revenue during the construction of the infrastructure and the construction of the power plant are combined, the state will receive EUR 108–163 million in product, production, and value added tax revenue from North Ostrobothnia. In addition, the state will receive up to EUR 92–137 million in value added tax revenue.
The municipalities in North Ostrobothnia will benefit from the project in the form of increased municipal tax revenue, their share of the corporation tax revenue from companies, and real estate tax revenue by some EUR 60–90 million.
One-time investments of more than EUR 300 million
Fennovoima’s nuclear power plant project is an investment of some EUR 6.5–7 billion. Of this, Finnish investments account for EUR 1.8–2.7 billion.
Furthermore, new investments totaling approximately EUR 210–400 million will be generated during the construction phase due to the cascade effect. During the operation of the nuclear power plant, the value of investments will be EUR 25–30 million per year. These investments may be for components purchased by a company that serves the nuclear power plant or construction projects due to new services, for example.
Fennovoima’s development manager Juha Miikkulainen admits that understanding a large international project and grasping its concrete effects, in particular, may be difficult for a layperson. The effects increase gradually, and people get used to positive development in the long term.
“The local residents will benefit from the area becoming more lively, but I doubt, that anybody will remember how many restaurants there were in Pyhäjoki when the project started or how many open jobs there were in Oulainen in the last decade, for example,” Miikkulainen says.
Based on facts
Joonas Hokkanen, who was in charge of the study at Ramboll, emphasizes the fact that the study of resource flows is based on facts, and the modelling approach has been tested in connection with other large-scale projects. Natural Resources Institute Finland has been involved as well.
Facts were obtained from a variety of public statistics and registers, as well as from Fennovoima and the plant supplier, RAOS Project. The degree of domestic origin used in the assessment varied between 25 and 40 per cent.
Hokkanen believes that the study is unique. As an example of a project improving the economy, employment and the general activity level, he mentions TVO’s Olkiluoto nuclear power plant, which did its part in keeping the books of Satakunta in the black while the economy in the rest of the country experienced a downswing. This effect was felt in Satakunta, but no detailed modeling of the nuclear power plant’s direct impact and cascade effect, tax revenue, or environmental effects was performed.
New activity also in surprising fields
Hanhikivi 1 construction in the winter 2018.
According to Fennovoima’s development manager Juha Miikkulainen, the key questions are where and how the results of the study can be utilized.
He believes that industrial and service businesses in the region are in the best position to utilize the research data. Companies can use the data when planning their future activities or directing their development investments, and above all, when timing their investments.
“In my opinion, the report nicely emphasizes the fact that new activity in several somewhat surprising sectors will occur due to the cascade effect.”
Miikkulainen believes that the new approach used in the study and the information provided will assist in reducing the uncertainty about the general economic development of the region and reinforce the faith that the demand for products and services in the north will pick up in the long term.
“Hectic years of construction, with the thousands of companies and tens of thousands of employees, followed by decades of stable operation will also offer opportunities for companies in whole new sectors.”
As a small example, he mentions periodic inspections of the thousands of hoists used at the plant, which can easily fill the order book of a small, specialized firm for decades to come.
“As the project proceeds, more of such service companies need to be attracted close to the Hanhikivi 1 beehive. Some may even have to be established.”
- The study of resource flows in energy sector case studies (a nuclear power plant and a wind farm of ten wind turbines)
- The study was part of a study of regional resource flows.
- The study was commissioned by the Council of Oulu Region and Raahe District Business Services, and it was funded by the European Regional Development Fund and the local municipalities. The project manager was Tuomas Kallio from the Council of Oulu Region.
- The study was prepared by a team consisting of Ramboll’s specialists Heikki Savikko and Joonas Hokkanen, as well as researcher Frans Silvenius and senior researchers Yrjö Virtanen and Vesa Joutsjoki from Natural Resources Institute Finland.