However, Prime Minister Kristen Michal (Reform) had stated at the beginning of the year, while he was still climate minister, that there is no plan to implement a separate support mechanism for nuclear energy, as there is with wind energy.

Earlier this year, Michal, who became prime minister last month, had proposed a plan to offer a price floor and ceiling mechanism for offshore and onshore wind farms entering the market.

A floor ensures that if electricity prices fall below a certain level, the government compensates the producer for the difference. Conversely, should prices rise above the set ceiling, the producer would be required to pay the excess back to the state.

Electricity prices in Estonia nowadays tend to be lower in summer, ostensibly when there is an abundance of renewable solar and wind power on the market – winter is noted for usually bringing calm conditions much of the time.

Prices can be high during these calmer winter days, however, when the short days and low temperatures mean consumption is high.

In an interview given to Vikerraadio's "Uudis+" in February, Michal stated that the state does not foresee any similar support mechanism being applied to nuclear energy, should Estonia get a nuclear power station at a future date.

He said. "There is no plan to provide any support mechanism for nuclear energy. Nuclear energy is an answerable to market and productive to market unit."

Kalev Kallemets, CEO of Fermi Energia, which hopes to construct a Small Nuclear Reactor (SMR) in Estonia, told ERR that since the electricity market does not entirely involve free market conditions, the company is also investigating a similar pricing mechanism.

Kallemets said: "Unfortunately, the electricity market is not completely free due to state interventions and support measures. For this reason, the European Commission and the European Council agreed on an electricity market reform last December."

"All renewable energy and nuclear energy investments, starting from 2026, should come to the market with this price floor and ceiling mechanism. This is being applied universally in western and central Europe, both with wind and nuclear energy projects. Last week, Sweden published an extensive report on how it plans to implement this price ceiling mechanism," Kallemets went on.

According to Kallemets, it is too early to forecast the scale of the measure Fermi deems necessary, as these calculations can only be made at the end of this decade when the market situation becomes clearer.

State alters offshore wind support plan unexpectedly

At the start of this year, questions arose about the cost of the wind energy pricing mechanism.

Kristen Michal planned to announce two auctions earlier in the year, through which the state would offer a price floor for 4 terawatt-hours (Twh) of offshore wind energy plus 4 Twh of onshore wind energy.

Michal's plan proposed that the support scheme for the offshore wind farms would last for 20 years.

SDE chair and Interior Minister Lauri Läänemets said at the time that approximately €100 million per year would need to be paid in support.

The climate ministry's forecast also indicated that the more offshore wind farms Estonia gets built, the costlier it will be for taxpayers.

However, in the draft climate law sent for coordination at the beginning of August, the ministry stated it plans to auction only 2 TWh in respect of offshore wind farms.

The bill's explanatory memorandum states that the cost of the auctions to electricity consumers would come to €130 million annually over 20 years, so a total of €2.6 billion, though the exact cost would depend on market prices. Additionally, a private investment of around €3 billion would be needed.

ERR was on Tuesday unable to obtain further comment on the offshore wind support plan from Michal's successor as climate minister, Yoko Alender (Reform).

Kallemets: Nuclear energy support mechanism might be cost-neutral

Fermi CEO Kallemets said he believes it is entirely realistic that a state support mechanism for nuclear energy could be cost-neutral for consumers.

According to Kallemets, this would largely depend on the extent to which the state plans to financially support the construction of offshore wind farms. If the state plans to subsidize offshore wind energy to the extent and over a 20 year period as had been discussed in the winter, there would be more days each year when electricity became completely free to consumers.

While consumers themselves might be pleased with cheaper electricity, the state would have to compensate the producer, under the price floor mechanism.

Kallemets said: "This does not mean that offshore wind and nuclear energy are mutually exclusive. They are not in Sweden, nor are they in the Baltics. However, if renewable energy, especially offshore wind, is heavily subsidized via long-term support mechanisms, it will also affect what kind of a support mechanism would be needed for nuclear energy, and for how long."

Kallemets added that no state measures to promote nuclear energy will be required in the coming years. The next labor-intensive phase is the proposed nuclear power plant's planning stage. Fermi Energia plans to cover all these costs independently, Kallemets said

Estonia has no nuclear power station; nuclear reactors at Paldiski used for military purposes and with nuclear submarines, have been decommissioned.

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