New report highlights means, costs and impacts of increased promotion and use of nuclear power
A study describing the alternatives and costs of nuclear energy promotion as well as its effects on the electricity market has been published. The report commissioned by the Ministry of Economic Affairs and Employment and produced by AFRY Management Consulting Oy was submitted to Minister of Climate and the Environment Sari Multala on 25 March 2026.
“I welcome AFRY’s comprehensive report on nuclear energy and hope that it will spark high-level discussions in Finland. The report carefully assesses the role of nuclear power in reducing fluctuations in electricity prices and the likelihood of power shortages. I am very pleased that these benefits offered by nuclear power are highlighted in the study,” Minister Multala says.
“Both the Government Programme and the Energy and Climate Strategy, which was submitted to Parliament in December, stress the important role nuclear power plays for Finland. We need nuclear power to guarantee the competitiveness of Finnish industry and to ensure that citizens have access to a supply of reasonably priced energy and heat in all circumstances. This report provides important information for advancing nuclear energy in future,” Multala adds.
“Nuclear power projects are very different in terms of their economy. Their investment costs and profitability vary by type of project. The Ministry is prepared to start legislative work to help the placing of new SMR technologies on the market and to continue the evaluation of large projects,” Multala says.
Report assesses potential of different nuclear power production forms
The report examines three main categories of nuclear power production: traditional large-scale nuclear power, small-scale nuclear power i.e. small modular reactor (SMR) solutions, and extension of service life of existing plants.
According to current assumptions, new large-scale nuclear power projects are not profitable on market terms. Implementing such projects would require substantial state aid. A cost-benefit analysis shows that the direct benefits of subsidising new nuclear power capacity exceed the costs only if the price of electricity is high.
On the other hand, extending the service life of existing nuclear power capacity will generate a significant net benefit in all the scenarios examined, as it will lower electricity prices but will not require state aid. Safeguarding the current capacity for as long as possible is therefore justified from the cost-benefit perspective, the report states.
SMR solutions that produce heat are expected to meet the conditions for market-based implementation better, but even they involve significant project and implementation risks. It is estimated that a 300 MW combined heat and power (CHP) plant based on SMR technology would require an investment of EUR 3 billion and a 100 MW SMR heat plant an investment of EUR 0.4 billion.
Solutions intended solely for heat production could also contribute to the renewal of district heat production. If the promotion of projects were to begin now, new nuclear power could be available for commercial use in the 2030s.
Demand for electricity grows – Nuclear power could lower electricity prices and strengthen security of supply
All scenarios examined in the report indicate a considerable growth in electricity demand in Finland by 2040. According to the report, the construction of more nuclear power would lower electricity prices in the long term. It is estimated that additional capacity of 2,400 MW would reduce the annual average price of electricity by approximately EUR 5–7 per MWh in 2040–2060.
Nuclear power would also improve the security of electricity supply. With weather-dependent renewable production accounting for a larger share of all production, the removal of heat power capacity from the market and the growth in electricity demand, the need for stable basic production is increasing. Based on the modelling, nuclear power lowers the risk of a power deficit and may reduce the need for additional investment in peak production capacity, especially in a high demand scenario. At the same time, nuclear power would even out fluctuations in the price of electricity.
Subsidy models for traditional nuclear power focus on CfDs and financial instruments
The report also explores ways for the state to promote traditional large-scale nuclear investments. Other European countries have typically combined a two-way contract for difference (CfD) with financial instruments, such as government guarantees, interest subsidies or state capitalisation. In practice, this has ensured a profit from the project and minimised the risks of the party implementing the project.
As per the report, using a risk-sharing model to support a large-scale conventional nuclear power project with a combined output of 2,400 MW could result in annual CfD costs of EUR 330–820 million as well as loan guarantees of around EUR 11 billion, depending on the price of electricity.
SMR-based heat plants and CPH plants would require significantly fewer subsidies and their funding gap could be covered by aid instruments that only reduce capital costs if the plants are not profitable on market terms, for example.
Subsidies involve market risks
The report emphasises that supporting traditional large-scale nuclear power projects can have negative effects that are difficult to foresee. In particular, the CfD model could weaken price signals in the electricity market and increase pressure to later extend aid schemes to other technologies too.
As part of the assessment of different aid schemes, it is therefore important to thoroughly consider the benefits of promoting security of supply, price stability and investments in relation to the functioning of the market.
Inquiries:
Riku Huttunen, Director General, Ministry of Economic Affairs and Employment, tel. +358 50 431 6518
Juuso Kilpinen, Special Adviser to the Minister of Climate and the Environment, tel. +358 50 322 9636
Joel Sarasti, Manager, AFRY Management Consulting Oy, tel. +358 50 431 7253
Juho Korteniemi, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 295 047 054 (available from 28 March)