With its accession to the European Union, Lithuania committed to shut down the existing Ignalina nuclear power plant (NPP) by the end of 2009. But in February of 2006, the Prime Ministers of Lithuania, Latvia and Estonia issued a communiqué expressing their approval for the construction of a new NPP in the region and invited their national energy companies to invest in the project. A memorandum of understanding to conduct a feasibility study for the plant was later signed between these governments and following this, the Polish government also expressed its interest in joining the project. With Poland’s entry, the project would grant Lithuania 36 percent of project shares, while Latvia, Estonia and Poland would each own a 22  percent stake.

The feasibility study for the 1600 megawatt (MW) NPP was finalized in October 2006. Though the study’s summary stresses that nuclear energy is the cheapest option, the full study has not been disclosed to the public. With Poland’s entry to the project, the plant’s expected capacity has doubled to between 3200-3400 MW to accommodate increased demand. However a new feasibility study was not conducted, and the costs of upgrading infrastructure like grids and reserve power plants have not been assessed.

The project’s environmental impact assessment (EIA) procedure started in 2007. Though Lithuania notified neighbouring countries about its intention to build the new plant, there were no proper consultations organized in neighbouring countries to allow meaningful public participation and contributions to the draft EIA programme, and no comments from these countries were included in the EIA programme. A draft EIA report is expected to be published in September 2008 to be followed by public consultation on it.

Project concerns

Bankwatch and environmental NGOs from the Baltic countries and Poland oppose the project because of the risky nature  nuclear power and the related high electricity costs that often are not reflected in the price because these are buried by indirect subsidies from public finance. The economic and financial viability of the project is questionable as well, as total costs are estimated on the level of six to seven billion EUR and energy companies will have difficulties to raise this financing.

The project also would not reduce energy dependency on Russia as is often argued politically. Quite the opposite, Baltic countries would become more dependent on Russia in the handling of peak loads, and the vulnerability of electricity markets would increase with the building of large scale nuclear facilities. The project cannot overcome a deficit in regional electricity markets either in the coming years; energy companies CEOs admit that the plant will begin operation no earlier than 2025.

According to several studies and assessments commissioned by NGOs, energy experts and scientists demonstrate that the electricity demand in Baltic countries can be met with renewable energy sources such as biomass, wind energy and solar energy. There is also a need to increase energy efficiency by improving heat insulation in buildings and allowing easier grid access for small- and medium-size electricity producers. Further the building of electrical power bridges from Baltic countries to western European and Nordic markets are required to diversify energy supply options and integrate with European energy markets.

Bankwatch member groups in Lithuania, Latvia and Estonia and other environmental organizations continue to dispute the sensibility of the project and organize various activities to raise public awareness about the risks of nuclear energy.


For more information contact Saulius Piksrys, the Bankwatcher in "Atgaja" Community, Lithuania, monitoring the project's development.