Turnkey contracts

The contractor is paid per foot drilled. Whilst this will provide an incentive to make hole quickly, the same risks are involved as in the turnkey contract. Footage contracts are often used for the section above the prospective reservoir where hole conditions are less crucial from an evaluation or production point of view. 

The Finnish Okiluoto III project developed by an existing cooperative of consumers has three main characteristics it is developed in a political environment of consensus it is the benchmark of a consumers consortium project in which consumers share equally project costs and risks and the reactor vendor assumes the construction risk via a turnkey contract. It relies typically on two contractual structures for electricity price risk and construction cost risk - a set of PPAs with the consortium members and a turnkey contract with the vendor. This type of arrangement makes possible a corporate financing approach, in which the cooperation between the borrower (with the backing of the shareholding companies) and the set of PPAs allows for an unusual high gearing ratio of 75/25. 

Reallocation of construction and performance risks to the vendor a turnkey contract The turnkey contract with AREVA allocates the construction risk to the reactor vendor above a cost level which includes unforeseen learning costs ( 3.2 billion, that is, 2,000/kW). As a consequence of the ongoing... 

With the combination of a low debt cost, a high leverage, and a low return on equity, the project has a low WACC of about 5 percent. According to some studies this leads to a cost price as low as 24/MWh for the owner-operator (Tarjanne and Luostarinen, 2003). This low level of cost assumes a load factor of 91 percent, a performance which is guaranteed by the turnkey contract with AREVA. 

TURNKEY CONTRACT, where a single principal contractor has the overall responsibility for the design and construction of the nuclear power plant. This responsibility often extends to the commissioning and startup of the station, and to the provision of the initial fuel supply. The Turnkey Contractor is most often the nuclear steam supply system vendor, but an... 

The selection of the type of contract (turnkey vs non-turnkey) is one of the key decisions to be taken by the buyer when embarking on a nuclear power project. The decision should, therefore, be carefully considered, based on the analysis of all relevant factors, paramount among which are the experience and competence level of the utility organization in the area of large project management. Since a nuclear project is likely to be the most complex and capital intensive project in the history of most utilities, they will not have sufficient project experience at the necessary level. In this case, a turnkey contract is the advisable form for the implementation of the project, especially the first one. 

A turnkey contract has both advantages and disadvantages. Among the advantages are ... 

The major disadvantage with turnkey contracts has often been stated to be the limited possibilities which the buyer has to influence the project and to have domestic participation. These disadvantages can. 

Option of a turnkey contract for a NPP Water cooled SMRs SMART (Atmex I) CAREM (Annex III) Gas cooled SMRs GT-MHR (Annex XV) 3... 

A wide range of contractual arrangements is possible between the operating organization and suppliers, from individual procurement to a turnkey contract. For... 

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