Developer expects contract for difference support scheme for Estonia's nuclear plant

Estonia's parliament, the Riigikogu, passed the Nuclear Energy and Safety Act on Wednesday, enabling the country to move forward with plans to build a nuclear power plant. According to Kalev Kallemets, a board member of Fermi Energia, the most immediate tasks are completing the first stage of the national spatial plan and starting the second stage. The first stage will determine the plant's location, expected by November next year, as stated by board member Diana Revjako.

The new law introduces a preliminary assessment phase, which will be conducted by the Consumer Protection and Technical Regulatory Authority (TTJA). Fermi Energia aims to submit its application for this assessment by mid-2029, possibly in May, Kallemets said. However, an investment decision must be made beforehand, and given the project's multi-billion-euro cost, the company is seeking state guarantees. Citing a study by Erkki Raasuke and Anne Sulling, Kallemets emphasized the need for a state-backed contract-for-difference (CfD) mechanism, similar to those used in renewable energy auctions.

The operating costs of the nuclear plant are estimated at €26 per megawatt-hour, with a strike price of €84 per megawatt-hour under the CfD, which is about €10 lower than Estonia's average electricity price this year. Although the location is not yet final, Fermi Energia purchased a property in Viru-Nigula Municipality, Lääne-Viru County, in May, with the deal conditional on the site's approval in the spatial plan.

The current political stance is that the state will not provide direct funding for the plant, but Deputy Secretary General of the Ministry of Climate, Antti Tooming, noted that the state is creating a legal framework to make construction possible. The law does not mandate building a plant but sets the conditions for obtaining the necessary permits.

The total cost of the plant is estimated at €4.5 billion, with 38% equity financing. Fermi Energia plans to use BWRX-300 boiling water reactors from Canada, manufactured by GE Hitachi Nuclear Energy, with factory completion expected in 2030. The company also plans to invest €15 million in Viru-Nigula Municipality, including direct investments, housing, and a visitor center, contingent on the location being approved.

Under the new law, Fermi Energia will pay an annual community compensation of €750,000 per reactor, split between the municipality and local residents. The plant is expected to employ around 200 people, with salaries twice the national average. Six potential sites are currently under consideration. Construction is scheduled to begin in 2032, with the first 300-megawatt reactor expected to start generating electricity in early 2036 and the second in 2038.