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Report: Nuclear plant in Estonia would start to pay for itself from year six

Render of a GE-Hitachi BWRX-300 nuclear reactor.
Render of a GE-Hitachi BWRX-300 nuclear reactor. Source: Fermi Energia

According to the report prepared by the national nuclear energy working group, once any program for the construction of a nuclear power plant gets underway in Estonia, revenues to the state budget would exceed costs associated with its construction starting from the project's sixth year.

This would be ahead of the plant going online, which would take 11 years, from the decision to build being made, the report's authors say, and would derive from social tax payable on employees as the payroll continues to grow, and the boost to the local economy the construction brings.

The 164-page report (link in Estonian) states that: "Revenues into the state budget would start to exceed costs during the nuclear power plant's construction phase from the sixth year of the implementation of the nuclear program."

 "This is primarily as labor taxes paid from the growing numbers of staff with the project developer, plus the revival of regional economic activity caused by construction activities. In the operational phase, from the 11th year, the state revenues would permanently exceed the costs by at least €19 million," the report, published Saturday, goes on.

In a negative scenario case, in which the state budget costs would be twice as high as currently forecast and and revenues half that, revenues would still exceed costs by at least €5.5 million, immediately after the power plant went online.

State budget costs relating to the implementation of the nuclear program include those imposed by the regulator, those relating to the legal framework and policy-making, technical and rescue capability creation, and competence development, the report says.

In the years following any decision to introduce nuclear energy generation into Estonia, through to the start of electricity production at the proposed nuclear power plant (a nine-11-year lead time), the total state budget costs for the regulatory framework and educational programs , in today's prices, would total up to €73 million.

The lion's share (62 percent) of these expenses constitutes the regulator's personnel costs, followed by the costs of education and research programs (17 percent of the total).

Report: The construction of the SMR would reduce regional inequality

Analysis of the nuclear plant's socio-economic impact and that of its construction finds that it would be most positive on regions which have a shrinking, below-average earning population, located further afield from Tallinn. Locations such as Varbla, Loksa, Kunda and Toila regions are mentioned (all are within a 170-kilometer radius of central Tallinn, while the nearest, Loksa, is less than 70 kilometers from the capital – ed.), which also happen to be the potential locations recently recommended in a spatial analysis conducted.

Any nuclear power plant must be located near a large water source like the Baltic Sea.

The regional inequality between different regions of Estonia would conversely rise even more were a nuclear power plant to built close to Tallinn.

According to the analysis, the construction phase would bring new residents to the region in which it is situated, and with it tax revenue and turnover for other private sector firms, including local ones, which in turns would encourage additional investments in social infrastructure such as schools, leisure facilities and Kindergartens.

With reference to the data of nuclear plants of a comparable size elsewhere in the world, the report states that the number of employees a small modular reactor (SMR, see cover image) such as that proposed could anything between 75 and 400 personnel.

Plant would also provide thermal energy and hydrogen

The authors of the report note that nuclear power plants have an ever-increasing potential to generate hydrogen and to provide district heating, hot water piped to apartment blocks during winter, as by-products.

A conventional co-generation power plant in Narva already does this.

Unlike solar and wind energy, which depend on natural conditions, nuclear plants allow for constant and reliable hydrogen production, making the process more stable and predictable regardless of the season, the report went on.

The high-temperatures generated as output: Up to 950 degrees Celsius at SMRs, compared with around 300 degrees in conventional power stations, increases the efficiency of electrolysis, reducing the cost of hydrogen production and potentially making the process more cost-effective, the report says.

Another key area of ​​use of nuclear power plants is the provision of district heating as noted, by redirecting the heat produced to district heating systems and thus supplying nearby settlements with thermal energy during heating season (October to March inclusive).

This application will help maximize the use of heat generated in the power generation process, the report states, and would not only thus reduce heating costs in the region, but also cut CO2 emissions, contributing to the de-carbonization of the district heating sector.

Connecting nuclear plants to district heating networks is more energy efficient than traditional methods also in that it reduces the need to use additional fuel to produce heat (district heating plants often use natural gas; wood chippings and even refuse are alternative possible sources).

The report also outlines how the SMR being built would provide opportunities for Estonian construction and industrial firms.

Risks and challenges

At the same time, the report notes that the introduction of nuclear energy comes with a number of associated challenges and risks, which must be taken into account and dealt with.

The report stated that the most important of these relates to safety at the nuclear power plant, a primary national concern.

"Although accidents with serious consequences are extremely unlikely, nuclear power plants must be constructed and operated to the highest safety standards, and it must be ensured that all risks are minimized," the report states.

The second aspect concerns waste management, given the radioactive waste which nuclear power produces and which needs long-term safe storage.

The report's summary said: "Even if the volume of generated waste is small, Estonia should develop a radioactive waste management strategy and consider building a final storage site for spent nuclear fuell."

While Estonia has never had a functioning nuclear power plant on its territory, the occupying Soviet authorities put in place nuclear reactors at a nuclear submarine base in Paldiski; these reactors are currently being dealt with.

The report further stressed that securing project financing and meeting the construction schedule may prove challenging also, as the construction of a nuclear power plant requires large initial investment outlay, and has a very long lead time (of over a decade, as noted).

The report also pays plenty of attention to public sentiment and political risks, and their mitigation. "Establishing nuclear power plants can lead to public outcry and opposition, especially during the site selection process. Political views may change. It is important to involve the public in the decision-making process, and ensure adequate information is provided," the analysis says.

The authors of the report also refer to the long service life an SMR would have. "Once the nuclear power plant has started working, the long-term obligations associated with it must be taken into account, which is why it is not possible to give up on this type of energy quickly."

Finally, the report also highlights the need to develop human resources. The use of nuclear energy requires specialists with higher education and skilled labor with the appropriate qualifications; whose training is time-consuming and who are in short supply on the labor market.

Both the SMR and its operator would be heavily dependent on imported labor coming from other countries in the early years of the nuclear program, the report says.

Task force recommends an SMR

An SMR is viable in Estonia, since the introduction of nuclear energy would support the achievement of climate goals, security of supply. and stability of the energy system in Estonia – all major issues which Estonia has had to address in recent months and years.

The final report concludes that an SMR than 400 MVA (megavolt amperes, equivalent to 400 MW – ed.) would be viable in Estonia. However, since the first reactors considered suitable for Estonia's conditions will only start operating anywhere in the world at the end of the current decade, Estonia will have to wait for to make its final technology selection once the first such plants have started operating.

Compared with large nuclear power plants, SMRs take up a relatively small area of ​​land. Due to these dimensions, they take up approximately one tenth to one quarter of the land area required by a traditional nuclear power plant, meaning their area requirement can be measured in the dozens of hectares, not in the hundreds of hectares.

Compared with existing reactors, the designs used in SMRs are simpler. Security often relies on passive systems here. This means that in such cases, no human intervention or external power sources are required to turn off the systems, as passive systems rely on physical phenomena such as convection and gravity. These measures, in turn, help to eliminate or significantly reduce the possibility of radioactive substances entering the environment.

At the same time, the report finds, it is important to base the choice of technology on the experience and reliability of fuel supply.


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Editor: Andrew Whyte, Mait Ots

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