On Wednesday, the Riigikogu passed the Nuclear Energy and Safety Act. This means Estonia can now move ahead more concretely with plans to build a nuclear power plant, with the most important tasks currently being to continue the first stage of the national designated spatial plan and begin the second stage, said Fermi Energia management board member Kalev Kallemets.

The first stage of the designated spatial plan determines the location of the nuclear power plant, which should become clear by November next year, said Fermi Energia board member Diana Revjako.

The new law also establishes a step known as the preliminary assessment for the construction of a nuclear power plant. This process will be handled by the national nuclear regulator, which in Estonia is the Consumer Protection and Technical Regulatory Authority (TTJA).

"Our goal is to submit the application to initiate the preliminary assessment by the middle of 2029, perhaps in May. Taking into account the review period set out in the law — 150 days, plus the time needed for the Riigikogu to take a position — we are approaching a deadline when the operational life of Narva's oil shale power plants will begin to run out in earnest," Kallemets said.

Before that, however, an investment decision must be made and because the project is worth several billion euros, Fermi Energia is seeking certain guarantees from the state. Referring to a study prepared by Erkki Raasuke and Anne Sulling, Kallemets said that, as a major infrastructure investment, a nuclear power plant would require a state-backed contract-for-difference (CfD) mechanism, similar to those offered in renewable energy auctions.

"This needs to be thoroughly analyzed and incorporated into the Electricity Market Act so that potential final investors can form their own view on whether they are prepared to participate in the final investment in building the nuclear power plant," Kallemets said.

"And this, in turn, is a prerequisite for us to be able to submit the preliminary assessment application at all. Everything is interconnected and these activities need to be carried out this year, next year and in 2028 so that by the middle of 2029 we reach the point where we have a complete and valid preliminary assessment application," he added.

The nuclear power plant's operating costs amount to €26 per megawatt-hour of electricity generated, Kallemets said. Modeling put the strike price for the contract-for-difference mechanism at €84 per megawatt-hour, around €10 lower than Estonia's average electricity price so far this year, he added.

Although the location of the nuclear power plant has not yet been decided, Fermi Energia purchased a property from Viru-Nigula Municipality in Lääne-Viru County in May this year. The deal was structured so that Fermi will complete the purchase only if that specific location is approved in the designated spatial plan.

"We have carried out various analyses and currently do not see any disqualifying factors," Kallemets said.

Political position currently sees no state funding for the plant

The Nuclear Energy and Safety Act regulates the entire life cycle of a nuclear power plant, from planning, construction and operation to eventual decommissioning and the handling of nuclear waste, for which the owner must already have a plan when the plant is built. What will ultimately be done with the nuclear waste — in other words, how it will be disposed of permanently — will be decided by the state over the next 10 years, said Antti Tooming, deputy secretary general at the Ministry of Climate.

"Since waste management technologies are still developing, we are not prescribing a final solution at the legislative level today. Instead, the state must adopt a strategy and then determine how it should be implemented. If we look at neighboring countries such as Finland and Sweden, they use deep geological disposal for final storage. That option is also possible for Estonia and we have studied it as well," Tooming said.

The law does not grant automatic permission to build a nuclear power plant or stipulate that one must definitely be built in Estonia. Rather, it creates the conditions for applying for the relevant designated spatial plan, preliminary assessment and operating licenses. The Nuclear Energy and Safety Act is also not centered on any single plant, meaning it does not determine where a plant will be built, what technology it will use or what its generating capacity will be.

The current political position is that the state will not participate in financing a nuclear power plant, Tooming said.

"But that is the position today and the state has the option of reconsidering it in the future. If we look at examples from other countries, the state is generally involved in one way or another. At the moment, however, no such decision has been made in Estonia. The decision that has been made is that the state will provide the framework to make it possible to build a nuclear power plant in Estonia for electricity generation or heat production," Tooming said.

"If there is political will for the state to take a stake or support the process in some other way, that is something for the future," he added.

Although the Nuclear Energy and Safety Act has been passed by the Riigikogu, implementing regulations must still be adopted. The Ministry of Climate is currently preparing dozens of such regulations, Tooming said. These regulations are needed, for example, to prepare applications for construction permits.

Kallemets noted that the construction permit application for a nuclear power plant is an extremely extensive and expensive undertaking that requires a great deal of preparatory work.

Cost estimated at €4.5 billion

Fermi Energia has also drawn up preliminary estimates for the cost of building the nuclear power plant, putting the total at €4.5 billion, including a 15 percent contingency margin. Equity would account for 38 percent of the financing, Kallemets said. The company is assuming a 10 percent return on equity and borrowing costs of 5 percent.

As previously announced, Fermi Energia plans to acquire BWRX-300 boiling water reactors from Canada. The reactors are expected to be completed at a Canadian factory in 2030 and will be manufactured by GE Hitachi Nuclear Energy.

In addition to investing in the plant itself, Fermi Energia plans to invest €15 million in Viru-Nigula Municipality: €5 million in direct investments, €5 million in housing development and €5 million in a visitor center at the plant. The agreement is conditional and will take effect only if the designated spatial plan confirms the location in Viru-Nigula Municipality.

Under the new law, Fermi Energia will pay an annual community compensation fee of around €750,000 per reactor. Half of the money will go to the municipality and half to local residents.

The nuclear power plant is expected to employ around 200 people who would be paid salaries equivalent to twice Estonia's average wage.

The government initiated the designated spatial plan in May last year at Fermi Energia's request and the process is expected to be completed in 2029. Fermi Energia also plans to make its initial investment decision that year.

After the first stage, which focuses on selecting the location, the second stage will involve developing a detailed solution. TTJA will participate in the site selection process and the final choice must be approved by the government. The government will also issue the operating license, which must first receive TTJA's approval.

At present, six potential locations are being considered in the designated spatial plan, with the best site to be selected during the first stage. The evaluation will take into account a range of factors, including national defense, environmental protection, socioeconomic impacts, technology and geology. During the second stage, a detailed plan will be prepared for the selected site, along with a comprehensive environmental impact assessment.

The preliminary assessment is expected to begin in 2030 when the construction permit process will also get underway. Construction is scheduled to start in 2032, while the application process for the operating license will proceed in parallel. Construction is expected to continue through the end of 2035 and will include commissioning and testing of the plant. Fermi Energia hopes to obtain the operating license in early 2036 when the first 300-megawatt reactor is scheduled to begin generating electricity. A second 300-megawatt reactor is expected to start operating in 2038.

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