About the Project

At the end of 2009 Lithuania closed its last nuclear reactor, Ignalina Nuclear Power Plant (INPP), which had been generating around 70% of the country’s electricity. Since the closure of INPP electricity imports have increased to more than 60 percent, and imports of all energy resources have increased to 80 percent. The most of imports goes from one country (Russia).

The situation is made worse by the fact that Lithuania and other Baltic countries (Latvia and Estonia) are cut off from the rest of the EU by a lack of interconnections (the only current Baltic grid connection is Estonia’s interconnection with Finland, the 350 MW EstLink-1).

In order for the Baltic States to become full members of the EU, their energy sectors have to be integrated into the EU’s energy system.

Currently, the works of converging the energy market of the Baltic States with the EU's energy system are in progress. They began on 17 June 2009 when the Baltic States, the Scandinavian countries, Poland, and Germany signed a memorandum of understanding regarding the Baltic Energy Market Interconnection Plan (BEMIP). During the implementation of this plan the following interconnectors will be built:

  • A Lithuania-Sweden interconnector (NordBalt) coming online in 2016 with a capacity of 700 MW ;
  • A Lithuania-Poland interconnector (LitPol Link) with 500 MW coming online in 2015 and a further 500 MW online in 2020 ;
  • A second Estonia-Finland interconnector (Estlink-2) coming online in 2014 with 650 MW of capacity (lower end of the currently predicted range);

Since the demand for electricity is increasing and the obsolete, polluting fossil fuel power plants will have to be decommissioned by 2016, the demand for electricity will greatly exceed the supply. It is forecasted that in 2020 the Baltic States will have a deficit of electricity amounting to 10.5 TWh. To compensate for such a huge shortage an additional 1.3 GW electricity generation capacity will be needed. New electricity generation capacities are also needed as the countries, when trying to integrate into another energy system have to be independent, i.e., possess sufficient and competitive electricity generation sources.

Taking into consideration all the factors, the needs of the Baltic States and their strategic goals, the new Visaginas NPP was acknowledged as the best alternative for electricity generation. The new NPP will ensure basic generation of electricity and together with renewable energy sources and Lithuania's new energy block will form a sufficiently distributed portfolio of energy generation.

2011 was a key year for the project. All the basic technical preparatory work, and all preparatory work in various other areas were completed in 2011, the Strategic Investor Hitachi was selected. After 6 months of intensive work and negotiations with the Strategic Investor, an agreement was signed regarding the key conditions of the Visaginas NPP Concession Agreement in December 2011. The signed agreement defines the main principles according to which the preparation of the Concession Agreement will be completed with the regional partners and submitted to the Seimas for approval during the spring session.

Exelon Nuclear Partners, the subsidiary of Exelon, the company that operates 17 nuclear reactors and is one of the largest electricity infrastructures in the United States, started acting as the Owner’s Engineer of the Visaginas NPP project. The cooperation with the experienced Owner’s Engineer will ensure optimal engineering and economic decisions during the construction of the Visaginas NPP.

The principles of the Visaginas NPP project structure

The Visaginas NPP project participants are: Lithuania, regional partners Latvia and Estonia, and the Strategic Investor – the Japanese company Hitachi together with Hitachi-GE Nuclear Energy. According to laws of the Republic of Lithuania, Lithuania will have no less than 34% of the new NPP's shares. The remaining shares will be distributed among other participants of the project. The Visaginas NPP project is being developed based on the Mancala model. According to the model, the investors in the Visaginas NPP will get electricity at cost price in proportion to the amount of shares they have. Having chosen Hitachi as the Strategic Investor, the Visaginas NPP will have a 1358 MWe advanced boiling water reactor (AWBR).

The Visaginas NPP project historic timeline

The Period 2006 – 2009

Project initiation. Beginning of regional cooperation. Establishment of a special purpose company. Beginning of required pre-development work. The selection process for a new NPP Strategic Investor began.

Chronology of the project development:

  • February 2006 - The Prime Ministers of Lithuania, Latvia and Estonia signed the Declaration on security of supply in the Baltic States and the Common European energy policy, and the Communiqué inter alia concerning the energy strategy of the Baltic States and the initiation of the plan to build a new nuclear power plant in Lithuania;
  • December 2006 – the Prime Ministers of the Baltic States and Poland signed a joint communiqué which acknowledged the importance of the interconnection between Lithuania and Poland and encouraged to start consulting with experts regarding the new NPP construction project;
  • December 2006 - Lietuvos Energija AB established a Nuclear Energy Department, which began the implementation of the technical preparatory works required for new NPP construction project;
  •  July 2007 – the Lithuanian Parliament adopted the Nuclear Power Plant law;
  • August 2008 - A new company called Visagino Atominė Elektrinė (VAE) was established. It continued the preparatory works initiated by Lietuvos Energija AB.
  • August 2008 – the environmental impact assessment (EIA) report was prepared; the process of harmonization was started in Lithuania and internationally. During public meetings the report was presented to the people of Lithuania and neighbouring countries. The report was also presented to 7 foreign states; cross-border consultations with institutions in Poland, Belarus, Latvia and Austria were undertaken.
  • April 2009 - The Ministry of the Environment of the Republic of Lithuania took the decision that the construction of the new Visaginas NPP is acceptable in terms of its environmental impact. The Environmental Impact Assessment report was positively evaluated by the experts’ mission from the IAEA.
  • April 2009 – the Lithuanian government passed Resolution No. 300 which validated the new NPP project development and implementation direction plan.
  • September 2009 - LR Government resolution No. 1143 establishing a supervision commission for the implementation of the new NPP project in Lithuania was passed.
  • September 2009 – the business model and the financing plan for the new Visaginas NPP was prepared and presented. Considering the economic situation and the particularities of the development of NPP projects, a decision was made to attract a Strategic Investor with experience in nuclear energy and the development of NPP construction projects as well as funds to invest in the Visaginas NPP;
  • December 2009 – Strategic Investor selection procedure was officially started. The international invitation to investors was announced (in the Official Journal of the European Union).

The Period 2010-2011

Active cooperation of Regional Partners and European Commission. IAEA mission in Lithuania. The construction sites for the new NPP were prepared; the main technical preparatory works were completed. A Strategic Investor was chosen – the Japanese company Hitachi.

  • April 2010 – The initial indications of interest responses were received;
  • May 2010 – the detailed plan of the Visaginas NPP sites, which includes the sites for the construction and operation of the new NPP as well as the decommissioning of the Ignalina NPP, was approved;
  • May 2010 - The Joint communiqué regarding the integration of the Baltic electricity market with the EU energy market and the development of a new nuclear power plant in Lithuania was signed by four Baltic Ministers of Economy/Energy in the presence of the European Commissioner for Energy Günther Oettinger;
  • September 2010 – The Lithuanian Concession Tender Commission, which had been delegated to organise a tender for the selection of a Strategic Investor into Visaginas nuclear power plant, sent requests for Binding Proposal submissions to the potential Strategic Investors;
  • September 2010 – the EC-led High Level Task Force for dealing with the matters regarding the new NPP project was established. The first meeting of the Task Force was held in Warsaw;
  • November 2010 - The International Atomic Energy Agency (IAEA) mission, which evaluated whether the assessment of the new NPP's sites was conducted in accordance with its recommendations, arrived in Lithuania;
  • November 2010 - Two responses were received by the Concession Tender Commission from potential Strategic Investors; one of them did not meet the official tender requirements.
  • The other, which met the requirements, was submitted by Korea Electric Power Corporation (KEPCO). But two weeks after the submission of a response KEPCO unexpectedly informed the Concession Tender Commission about its withdrawal;
  • December 2010 – the IAEA experts submitted the conclusion that the new Visaginas NPP sites were suitable for the construction of a nuclear facility;
  • December 2010 - The representatives of Estonia, Latvia, Lithuania and Poland met with the European Commission in Brussels. The representatives discussed the progress towards the integration of the Baltic electricity market into the EU energy market as well as the development of the new NPP, which is needed to ensure the safety of the region's electricity supply. The participants reaffirmed their support of the construction of the Visaginas NPP in Lithuania and the intention to contribute to a stable and secure electricity supply in the Baltic region and to the implementation of the long-term goal – full integration of the Baltic States;
  • December 2010 – a decision was made to continue the selection of a Strategic Investor during direct negotiations;
  • By the beginning of 2011, the main works of the preparatory stage were completed, including the evaluation of the construction sites according to the IAEA safety requirements, i.e., the assessment of seismic factors, geotechnical and geological conditions, and the transportation routes of heavy and bulky goods; the radioactive waste management strategy was prepared; the possibilities to use the Ignalina NPP’s infrastructure and the possibilities for the local businesses to participate in the Visaginas NPP project were analysed, etc;
  • June 2011 – the proposals from potential Strategic Investors – the Japanese company Hitachi GE Nuclear Energy and the American one, Westinghouse Electric Company – were received;
  • June 2011 – the Seimas of the Republic of Lithuania adopted the separate body of laws amending the laws regulating nuclear energy, which consists of 12 laws, thus creating a more efficient and transparent model for the licensing and granting authorization for activities in the nuclear energy sector;
  • July 2011 – Hitachi, Ltd with Hitachi-GE Nuclear Energy, Ltd was selected as the Strategic Investor for Visaginas NPP. Hitachi committed to starting immediately the works required for the preparation of the Concession Agreement. Hitachi’s proposal also included a nuclear technology – a 1350 MWe AWBR. Currently, it’s the only generation III advanced safety reactor technology that has been tested in practice, i.e., there are operational NPPs with this technology. The ABWR technology complies with the EU’s reactor safety requirements;
  • July–December 2011 – Hitachi and Visagino Atominė Elektrinė UAB specialists conducted the preparatory works necessary for the preparation of the Concession Agreement;
  • October 2011 – The European Commission has been formally notified of the Visaginas NPP project to under Article 41 of EURATOM with a positive response expected by February 2012;
  • December 2011 – the Polish energy company PGE withdrew from the Visaginas NPP project;
  • December 2011 – Exelon, the utility company with the largest number of nuclear (BWR type) plants in the United States, joined the Project. Its subsidiary Exelon Nuclear Partners will act as the Owner’s Engineer;
  • December 2011 – Lithuania and Hitachi signed an agreement regarding the main terms and conditions of the Concession Agreement. The Concession Agreement should be prepared in February 2012 and submitted to the Seimas of the Republic of Lithuania during its spring session for consideration.