RE-ENERGIZING THE BALTIC Lithuania and its neighbors explore energy independence through nuclear power By Dr. Gregory Gleason, Marshall center P ER C ONCORDI A M ILLUS T R ati ON he official opening in July 2012 of pursue energy interconnections with poland naTo’s energy security Centre and sweden. Two new liquefied natural gas of excellence in the Lithuanian plants, one in estonia and one in Lithuania capital of Vilnius marks an (klaipeda) are being developed. polish important milestone for the north authorities have announced plans to scrap atlantic community and the their coal-fired generation export capacity in Tbaltic countries in particular. The baltic compliance with environmental regulations, countries’ high dependence on imported opening opportunities for greater regional energy has long made them vulnerable to cooperation with the baltic states. supply disruption and price volatility. The The naTo energy security Centre of naTo summit in riga in 2006 recognized excellence will be primarily concerned with the growing importance of energy security, advancing security capacity with respect advancing energy issues to a high priority to vulnerabilities, particularly concerning in the naTo agenda. energy interruption from either intentional The Lithuanian government in 2010 or accidental causes. The naTo center is established the Lithuanian energy security devoted to developing advanced knowledge Center as an aspect of the country’s national and best practices with respect to naTo energy strategy. The transformation of security interests. assessment of energy the Lithuanian energy center to a naTo fuel vulnerabilities will very likely include energy security Centre of excellence, as analysis of aggregate data on energy supply, Lithuanian president Dalia Grybauskaitė demand and transit. a secondary but never- explained at the naTo summit in Chicago theless important concern of the naTo in May 2012, “is a practical contribution to center concerns nuclear power throughout naTo’s efforts in the field of energy secu- the baltic region. rity and smart defense.” 1 as a naTo Centre This is a complex issue, involving not of excellence, it is designed to provide only technical questions of capacity and the analysis, assessments, recommendations political commitment to nuclear energy and proposals for efficient energy solutions but also the very complex and politically designed to support military, scientific, tech- charged issue of competition over markets, nical and academic analysis. energy vulnerabilities and national strategic Lithuania stands out as an exception- priorities. some Lithuanians oppose nuclear ally industrious and innovative country in power as a source of energy – a national addressing the many aspects of contem- referendum has been scheduled for october porary energy challenges. The Lithuanian 14, 2012, to put the reconstruction of the government has strived to achieve greater Lithuanian nuclear power plant at Visaginas energy economy, stressing conservation, to a public vote. but even if Lithuanian efficiency and prospects for carbon seques- voters endorse the plan to construct a new tration. The Lithuanian energy security nuclear power plant to replace the electric- Center has devoted special attention to find ity previously supplied by a soviet-era plant ways to engage the public sector, industry that was closed in 2009, competition has and the academic community in a search emerged over baltic and east european for solutions to reduce the dependence of power markets. it is a commercial competi- Lithuania’s military on fossil fuels and to tion but has clear geopolitical implications. find energy substitutes during military oper- ations and exercises. Lithuania has joined BACKGROUND: BALTIC NUCLEAR POWER the other baltic countries in developing For many years the baltic region relied plans for a baltic energy security commu- on power supplied by the ignalina power nity, closely linking the three baltic states to plant. The soviet-era nuclear plant went per Concordiam 27 Technicians stand near a nuclear reactor head at the Ignalina nuclear power plant, which Lithuania took off line at the end of 2009. AFP/GETTY IMAGES on line in 1983, powered by two rbMk-1500 Mwe decommission the plant as well as for investor rights and water-cooled graphite-moderated, channel-type power obligations. however, the commercial viability of this new reactors. These reactors were similar in design to those plant was based on the assumption of an electric power of the Chernobyl power plant. after the disintegration market throughout the baltic states as well as electricity of the soviet union in 1991, these plants raised qualms sales to poland. among west europeans who were otherwise anxious to Meanwhile, outside Lithuania, decisions affect- welcome the baltic countries to the european community. ing power markets in the region having to do with in accordance with the provisions of the european union environmental risks have been taken independent of accession agreement, Lithuania agreed to decommis- Lithuanian priorities. russia’s electric nuclear power sion the ignalina’s reactors. as the nuclear power plant company, rosenergoatom, announced plans to build a went offline in 2009, Lithuania shifted to relying on the nuclear power plant in russia’s kaliningrad province. elektrėnai power plant (epp), a thermal power facility, for The 2300-Mw baltic nuclear power plant was sched- 70 percent of the country’s electricity. a european bank uled to be constructed in the town of nemen on the for reconstruction and Development–financed upgrade province’s eastern border with Lithuania. at the same improved the epp. but the natural gas to fuel the plant time, rosenergoatom announced plans to build a similar has been purchased primarily from Gazprom, russia’s nuclear power station in belarus. it identified a construc- national gas producer. tion site in astravets in the hrodno region, a town located in June 2007, the Lithuanian parliament passed legis- only 50 kilometers from Lithuania’s capital of Vilnius. lation to build a new nuclear power complex near the The belarusian nuclear power plant (npp) is old ignalina plant at Visaginas. This facility would assure regarded by many, in the words of Lithuanian Foreign electricity not only for Lithuania but for other countries Minister audronius azubalis, as a “provocation.”2 The in the region. Lietuvos energija concluded agreements Lithuanian Ministry of Foreign affairs sent a diplomatic with Latvia’s as Latvenergo, estonian eesti energia and note of objection to the belarusian Ministry of Foreign poland’s polskie sieci elektroenergetyczne sa in which affairs. The diplomatic note included a Lithuanian all the partners indicated an interest in taking part in environmental impact assessment of the proposed the project. Lithuania signed a concession agreement belarusian npp. The belarusian Ministry of Foreign on March 30, 2012, with Ge-hitachi to construct a affairs did not respond. 1,350-Mw advanced boiling water reactor. The agree- ment provided the general framework for the Visaginas ENERGY SECURITY AND THE NUCLEAR FUTURE nuclear power plant, including provisions for the rights The nuclear power plants being discussed in the baltic of the project company to design, construct, operate and region are still at a stage where decisions are not yet final. 28 per Concordiam Russian leaders stand near a model of the nuclear power plant they plan to build in the Kaliningrad region. The plant represents a commercial challenge to Lithuania’s nuclear industry, which is trying to provide greater energy independence for the Baltic region. AGENCE FRANCE-PRESSE but nuclear power decisions are long-term decisions. The first generation of nuclear power reactors had when the decisions are taken they can be expected to an expected operational life of 25 to 30 years. newer have consequences that will endure for decades. The generation reactors are expected to last 40 to 60 years. startup of a power generation project is preceded by a Decommissioning involves administrative and technical planning period devoted to determining commercial actions, including all cleanup of radioactivity, dismantle- viability. The assessment includes investment analysis ment of the site and securing hazardous materials. once designed to determine capital budgeting projections. a facility is decommissioned, there should no longer be a The appraisal must include a market analysis, an assess- danger of a radioactive hazard and the facility is released ment of the expected rate of return and a calculation of from regulatory oversight. Decommissioning is likely to the payback period based on an amortization plan. The become big business in europe, and Lithuanian nuclear future is always uncertain, hence assessments are not technicians and engineers may have a distinct advantage based on facts; they are based on reasonable assumptions in this competitive arena. regarding profitability given the overall state of the econ- The security issues related to national energy policies, omy, market demand, generation revenue, expenditures, political implications of commercial energy competition, accident risk and insurance, borrowing interest rates, as well as the issues relating to nuclear decommissioning currency risk, management costs and other prognostica- and nuclear nonproliferation, are of considerable signifi- tions. Technical market analysis is based on forecasting cance for european energy security. it is fitting that the given assumptions