The state remains interested in bringing major energy projects to Estonia, such as offshore wind farms or nuclear power plants, but it will not offer direct subsidies. Banks, however, see such large-scale ventures as too risky. Now, the Ministry of Climate is preparing a measure under which the state would guarantee loans for these projects.

“A guarantee measure could help secure longer loan periods and reduce interest costs, but it still doesn’t solve the main question: what will the electricity price be over the next 30 years? To use a home loan analogy — a guarantee always helps, but without proving a stable income, it’s still very hard to get a bank loan. A guarantee alone definitely isn’t enough. We need a buyer for the electricity or a state-backed guarantee that the electricity will have value — long-term contracts either directly with consumers or with the state,” said Enefit Green’s head of offshore wind energy, Johann-Gustav Lend.

Kalev Kallemets, CEO of Fermi Energia that is looking to build a nuclear power plant in Estonia, said that in nearly all European countries, nuclear power plants have been built with some form of state guarantee — such as loan guarantees or state loans.

“Practically the entire loan amount has to be guaranteed one way or another. If we estimate that a two-reactor plant would cost €3.4 billion and about two-thirds of that would be financed by loans, then all of that borrowing — whether through export credit or commercial loans — must be guaranteed. Without a guarantee, we most likely couldn’t build it at all,” Kallemets said.

Read more: ERR.EE