ESTONIA UPBEAT ON VISAGINAS NPP; PROSPECTS FOR A DOMESTIC

C O N F I D E N T I A L TALLINN 000361

SENSITIVE
SIPDIS
ENERGY FOR PI/APICELLI
COMMERCE FOR ITA/DERSTINE

E.O. 12958: DECL: 2019/11/30
TAGS: ENRG ECON PREL EINV LH EN
SUBJECT: ESTONIA UPBEAT ON VISAGINAS NPP; PROSPECTS FOR A DOMESTIC
REACTOR DIMINISHING

REF: A. TALLINN 384; B. TALLINN 110

CLASSIFIED BY: Marc Nordberg, Pol/Econ Chief; REASON: 1.4(B),(D)

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SUMMARY

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1. (C) In separate meetings with Econoff, GOE and Eesti Energia
officials expressed their pleasure with the progress Lithuania has
made recently on the Visaginas nuclear power plant (NPP) project
and emphasized that Estonia was only at the earliest stages of
developing its own, alternative, NPP. (Note: The GOE has been
investigating building its own NPP as progress on Visaginas was
slower than expected.) Einari Kisel, Deputy Secretary General of
Energy at the Ministry of Economic Affairs and Communications,
stated he expected the GOE would announce that Estonia will not
build its own NPP once an official tender was issued for a reactor
at Visaginas. Despite the generally optimistic outlook, Eesti
Energia stressed the next year will be decisive for the Visaginas
project, achieving either real agreements or an indefinite
postponement/cancellation of the project. END SUMMARY.




2. (SBU) EconOff met separately with Andres Tropp, Head of Nuclear
Energy for Eesti Energia, and Einari Kisel, Deputy Secretary
General of Energy at the Ministry of Economic Affairs and
Communications, to discuss Estonia's participation in the Visaginas
NPP project and Estonia's plans to develop its own NPP.



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Eesti energia pleased with recent progress; next 12 months WILL BE
decisive

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3. (C) Tropp began by emphasizing that Eesti Energia's top priority
was the Visaginas NPP project. Development of the project has been
disappointingly slow due to Lithuanian internal politics, Tropp
said, however the Lithuanian government has been "active and
efficient" the last six to eight months and has created an
ambitious plan. Still, Tropp said the next twelve months would be
decisive. If firm agreements are not completed in that time, then
Tropp believes the Baltic states will have to indefinitely postpone
or cancel the Visaginas project.




4. (C) Tropp expressed his frustration with the attention the
Estonian NPP project is receiving. He said Estonia was only in the
earliest preparatory phase and that he felt lucky Estonia has a
"few years" before it has to make any decisions on its own NPP.
Tropp added that the GOE did not understand what it took to build
an NPP. He felt the GOE gave the public a false belief in
Estonia's ability and intention to build an NPP in the medium-term
and that the GOE's talk of nuclear power supplying one-third of
Estonia's energy by 2020 was overly simplistic.



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Estonian NPP Project to be put on hold if Visaginas CONTINUES
movING forward

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5. (C) Kisel said Estonia's nuclear program will not be developed
further if the Visaginas project continues at its current pace. He
expects that once there is an official tender for the Visaginas
reactor, the GOE would announce that it will not/not issue a tender
for a reactor in Estonia. Despite this, Kisel continued to draft
nuclear regulatory legislation in case Estonia needs to go forward
with its own NPP project. Additionally, the GOE has proceeded with
the high-profile sale of potential NPP sites to Eesti Energia.




6. (C) Tropp and Kisel stated that cooperation with their
Lithuanian and Latvian counterparts was good. They conceded there
was earlier tension since Lithuania wanted to handle NPP issues on
a political level and Estonia wanted to keep negotiations on a
corporate level. Both stated this disagreement is more or less
resolved with the Lithuanian energy company representing all three
regional investors in preliminary talks with potential strategic
partners. Tropp and Kisel agreed Visaginas would start as a
single-reactor NPP, with a second and possibly third reactor added
later if the market demanded. They also dismissed as pointless any
discussion of the share of output each country would receive, or
how much each would have to invest, until after a strategic partner
was chosen. Tropp added that Eesti Energia wanted to receive
electricity at production costs, not dividends from the company.



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COMMENT

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7. (C) Less than a year ago, Estonia was looking seriously at the
possibility of a national nuclear plant to meet its own energy
needs and to export to larger neighbors. Now, with sharply falling
GDPs and electricity demand slumping, Estonia is much more focused
on regional solutions. While we are surprised to hear Estonian
officials talk of writing off the domestic option so quickly,
Estonia has not yet negotiated how much energy it will receive fom
Visaginas, and until its energy supply is assured, GOE officials
will continue to speak publicly about an Estonian NPP. END
COMMENT.
DECKER