Construction plans for Russia's Baltic NPP stepped up

Russia has stepped up its efforts concerning the construction of the Baltic nuclear power plant (NPP) in the Russian exclave of Kaliningrad. Neighbouring Lithuania claims that Russia is competing with plans for a NPP in Lithuania.

On 24 Feb. the first stone was laid in the presence of Russian Deputy Prime Minister, Sergey Ivanov, and the General Director of Rosatom, Sergey Kiriyenko. A few days earlier, on 20 Feb., Russian Prime Minister Putin had signed a decree ordering the construction of the NPP.

What makes the business model of this particular NPP unusual is the fact that for the first time, private investors can acquire a share in a Russian NPP. 49% of the shares will be offered to private investors, including foreign, while 51% will remain in the hands of the state. Reportedly, some $ 3.6 bln roubles are allocated for the construction this year, plus another 8 bln in 2011. Kiriyenko told press that private investors are not essential for the construction and that the first reactor would be finished by 2016, regardless of private investment.

Neighbouring countries and potential markets, such as Lithuania, have their own view on the Baltic NPP. According to Lithuania's Prime Minister Andries Kubilius, Russia has stepped up its activity around the Baltic NPP because of Lithuania's progress on its own planned NPP, RIA-Novosti reported on 25 Feb. Lithuania, together with the other Baltic states and Poland, plans to build a 3200-3400 MW NPP by 2018 in the Lithuanian town of Visaginas, which will substitute the Ignalina NPP that was recently shut down. 

Last week, the Lithuanian news portal Delfi quoted a representative of Russian power company Inter RAO UES as saying that several options were being considered for exporting power to foreign markets. In addition to providing power to Lithuania, power could also be exported to Poland. In order to do so, however, a power connection with Poland would have to be established first. Another option would be reaching German markets by putting a power cable alongside the Nord Stream pipeline to Germany.

The Baltic NPP will consist of two nuclear reactors with a joint power generating capacity of 2300 MW. The first reactor is planned to come into operation by 2016, the second, whose power production will be used for exports, in 2018. Total investments required are approx. $ 4.5-5 bln. In February Rostekhnadzor issued a license for the construction of the NPP.

EEO Focus: The Baltic countries currently face an energy deficit due to the closure of the Lithuanian Ignalina NPP, therefore the Baltic NPP could serve as a producer for regional markets. In theory, construction could take off soon since all administrative and legal barriers for the construction of the NPP have been removed. There are questions, however, whether the Baltic NPP will be able to attract sufficient funds from private investors. If a competing NPP in Lithuania materialises by 2018, the Baltic NPP could be left with a single 1200 MW reactor.