Finnish study: large nuclear power plants are not profitable without the state; SMR is a solution for heating.

The Finnish Ministry of Climate and Environment has received a comprehensive study by consulting firm AFRY warning: the construction of new large blocks will require billions of euros in state guarantees, while small modular reactors (SMRs) have a significantly greater market potential – especially in the district heating sector

Finland already gets a third of its electricity from five operating reactors, and the new study focuses on the period up to 2060. The conclusion is clear: an additional 2.4 gigawatts of nuclear power will reduce the price of electricity by 5 to 7 euros per megawatt-hour, but the path to that goal is paved with enormous financial risks.

Therefore, AFRY notes that large nuclear projects are currently not profitable under market conditions. For a 2.4-gigawatt project, the state would have to provide around 11 billion euros in loan guarantees and annual subsidies through contracts for difference (CfD) totaling between 330 and 820 million euros.

Small modular reactors for heating: an excellent solution for urban environments?

What sets Finland apart is its focus on heat energy, which is logical. The study, which we reported in detail last year, estimates that facilities with small modular reactors (SMRs) for combined heat and power (CHP) production of 300 megawatts would cost around 3 billion euros, while purely thermal SMR facilities of 100 megawatts would cost around 400 million euros.

Thus, thanks to the smaller initial investment, these solutions would more easily find their way to the market. The Finns are already preparing a new Nuclear Energy Act (which comes into force in 2027) to enable locating these small reactors closer to cities and industrial zones for heating. But we reiterate: the number of operating small modular reactors is very limited and there is not a single operating one in the West: the only two operating ones are located in Russia and China. And we add that small modular reactors do not represent fundamentally new technology, and they also have some inherent drawbacks.

The largest net societal benefit, according to the study, comes from extending the operation of the existing reactors: that would be two reactors with boiling water at Olkiluoto 1 and 2, as well as the older VVER reactors at the Loviisa site, although we add that there is a big question as to how their refabrication would be carried out without possible technical assistance from Russia. Nevertheless, extending the operation of these reactors is the cheapest option that does not require large state assistance, and it significantly lowers electricity prices.