New nuclear power is about growth, competitiveness and jobs

On 25 March, the Ministry of Economic Affairs and Employment published a study it commissioned from AFRY Management Consulting Oy on options for promoting nuclear energy production, including costs and impacts on electricity markets in Finland. AFRY’s report report - External link is, in broad terms, good and welcome, as the debate on the necessity of new nuclear power in Finland is now timely. It is important to consider what kind of electricity system will enable emissions reductions not only in power generation but also elsewhere in society, while simultaneously promoting Finnish prosperity.

New nuclear power will not emerge on market terms alone

More than a year ago, Fortum completed its own extensive study on the commercial, technological and societal prerequisites for new nuclear power in Finland and Sweden. At the time, we concluded that there are no conditions for building new nuclear power on a purely market-based basis in the Nordic countries. It is not being built on market terms elsewhere in Europe either — not in Sweden, France or the Czech Republic. This fact is also acknowledged by AFRY in its report.

AFRY’s study also confirms our view on the competitiveness of large and small plants. Large plants should be more competitive in baseload production due to the economies of scale they offer. They are proven, already deployed technologies. Small modular reactors (SMRs), on the other hand, rely on modularity and simplified designs. This should make it possible to build nuclear power in locations where large plants could not be sited, closer to cities or industrial areas. In addition to electricity production, heat production is an interesting complement for nuclear energy and can improve its business case.

However, there is no concrete evidence yet on the cost level and competitiveness of SMRs in Western countries. Construction of the first Western SMR started in 2025 in Canada, and we will know more about the costs and timelines during the coming years.

At its core, this is about growth and prosperity

For new nuclear power — as for all new electricity generation — demand growth is decisive. Electrification is a key means of reducing carbon dioxide emissions in industry and in societies at large, and it is expected to nearly double electricity demand in the Nordic countries by 2050.

If significant demand growth is met solely with weather-dependent renewable energy, it may lead to a highly volatile electricity system. The costs of such a system would likely be high, and the predictability of electricity availability and prices limited. From the perspective of our customers and society, this would not be desirable. AFRY addresses demand growth and its impact on the need for nuclear power well in the different scenarios of its report. In these scenarios, nuclear power has a stabilising effect on electricity prices.

Security of supply and stable prices are precisely the factors that argue in favour of building new nuclear power. They create a predictable operating environment for industry, enabling investments. Ultimately, new nuclear power is fundamentally about industrial competitiveness, new investments, jobs and the prosperity that all of these generate.

Risk sharing accelerates the implementation of investments

Although the issue is larger than supporting new nuclear power, it is still worth discussing risk-sharing mechanisms. What are they, and why are they needed for new nuclear projects?

First, financing a highly capital-intensive and long-duration nuclear project from the market without state guarantees or public financing would raise financing costs to very high levels — as AFRY also states in its report. If such a project borrows from the market, the cost of financing could rise to 10 per cent or even higher, based on AFRY’s estimates. If the risk is shared with a reliable party capable of providing guarantees, financing costs could fall to 3 per cent or less, as AFRY notes.

The cost of financing is a significant factor that must be reduced in projects of this nature, and states are uniquely positioned to help achieve this.

Naturally, much depends on how much revenue the project can generate to cover, among other things, the financing costs mentioned above as well as the operational costs related to the day-to-day running of the plant. One option to improve revenue visibility is the two-way Contract for Difference (CfD) mentioned by AFRY. In this model, a guaranteed price is set for the electricity sold by the new plant, covering all costs. The mechanism is two-way because the operator pays back excess revenues if the market price exceeds the agreed strike price. Such a mechanism significantly improves visibility and balance in the cash flow of a long-term project.

No support mechanism is perfect, but in my view CfDs are a fairer solution than, for example, the feed-in tariff used in Finland to significantly promote wind power construction. Moreover, CfDs are a mechanism with extensive experience in Europe, particularly in wind power projects, but increasingly also in new nuclear projects. Naturally, it would be even better if we could directly link new generation to increased demand in Finland.

The final key element is new investors. For example, in Sweden, the state is attracting investors to new nuclear projects by guaranteeing returns on invested capital, while limiting excess profits. This is a significant incentive in Sweden.

Continuing to seek partners and build readiness

Fortum is not embarking on a new nuclear project alone. We, too, need strong partners as investors and shareholders in new nuclear power projects. We continuously map such potential partners. We are also continuing to develop our capabilities so that new nuclear power can be part of a long-term solution to customers’ growing electricity demand in the Nordic countries. This development work is also a step in preparing for the potential replacement of existing nuclear capacity.

We ourselves firmly believe that new nuclear power can play a role in the future electricity system and that it can be advanced in a sensible way. Vouloir, c’est pouvoir. Where there is a will, there are also means.