A Baltic Startup Throws Lifeline to Nuclear’s Next Big Thing

Bookmark

(Bloomberg) -- A startup in the smallest Baltic state could play an outsized role picking the winner in what the nuclear industry hopes will be its next big thing.

Fermi Energia OU is looking at proposals to build a small modular reactor, or SMR, in Estonia by the middle of next decade. The units are supposed to provide cheaper and more flexible generation than traditional atomic plants. The project could wean the market of 1.3 million people off their dependence on oil, while also securing energy independence from Russia.

“We are the first one trying a nuclear deployment,” said Fermi founder and Chief Executive Officer Kalev Kallemets.”Our time line in Estonia is very similar to the one for development and licensing of small modular reactors.”

That timing is key for a struggling nuclear industry looking to breathe life into a concept it’s peddled for the better part of two decades. The International Atomic Energy Agency estimates there are some 50 SMR designs being developed around the world, but the technology has failed to generate returns in the absence of orders.

“Back in 2005 the technology was ready but there wasn’t a customer that was ready,” said Rita Baranwal, the U.S. Department of Energy’s top nuclear power official. “That’s part of the reason these concepts had been shelved.”

Advocates say small reactors, that are standardized and built in modular units, can help the nuclear industry regain competitiveness. The cost of traditional reactors has skyrocketed in recent decades as construction times lengthened and regulators worried about safety. At the same time, floods of cheap natural gas, solar and wind energy have driven down the cost of generation in much of the world.

Fermi has raised funds from local investors who see potential for the startup to run the reactor without state backing or financial aid from utilities. The country will need the extra source of power to meet more unreliable flows of electricity when Estonia and the rest of Baltic region synchronizes its grids with Europe instead of Russia from 2025.

A Baltic Startup Throws Lifeline to Nuclear’s Next Big Thing

But with northern and western neighbors in Germany, Denmark and Sweden replacing thermal plants with wind and solar generation, Baltic electricity flows could become more dependent on the weather. Small modular reactors are being designed to ensure power supply at those times when the sun doesn’t shine or the air is still.

“What SMRs provide to smaller markets is energy independence,” Baranwal said, adding that with the cost to license a reactor costing hundreds of millions of dollars it ”behooves a developer to have a customer in mind.”

Fermi Energia has shortlisted four different modular reactor technologies for its study. The company believes the first commercial units will be in operation by 2026-2028 at the earliest and that Estonia’s first nuclear unit then could be built by the end of next decade.

“We are keeping track of the development of new technologies,” Estonia’s Deputy Secretary General for Energy Timo Tatar wrote in an emailed reply to questions. “We are also communicating with potential private investors to understand their plans. The technologies considered by Fermi Energia only exist on paper at this point.”

New demand from countries like Estonia is accelerating the American licensing process for the technology, the DOE’s Baranwal said in an interview. Testing of the first licensed units won’t begin until early next decade in the U.S., with commercialization only years later.

Meanwhile Estonia will have to depend on its oil plants, making up 85% of the nations power supply and making Estonians the European Union’s largest per-capita emitter after Luxembourg. With the price of carbon having more than tripled last year the country’s state-owned utility Esti Energia AS has had to put employees on forced leave due to rising costs.

Kallemets insists that modular reactors are worth the wait as building natural gas plants would make the nation dependent on Russian fuel and that wind turbines will never be able to fully cover demand on windless winter days when imports from rest of Europe are limited.

”The biggest challenge is for people to recognize that climate change is real and that there are no easy solutions for it like wind power,” Kalev Kallemets said. ”When imports from Russia and Belarus discontinue it will mean a significant risk of the system not able to provide power in all weather conditions.”

Four SMR Designs Considered In Estonia

  • Moltex Energy: A U.K. company building a test reactor in Canada. It uses molten salt coolant to stabilize the nuclear reactions, a technology feature advocates say is safer
  • Terrestrial Energy: A Canadian company that also plans on testing a molten salt design, which it forecasts could be licensed to operate before 2030.
  • GE Hitachi: A U.S.-Japanese joint venture developing a more traditional water-cooled reactor that may be able to generate electricity at prices similar to natural gas
  • NuScale: A Fluor Corp. company funded by the Department of Energy that is designing a reactor that can be built in a factory and shipped anywhere in the world

©2019 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.