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How Belarus’ economy could benefit from its first nuclear power station?

Gosatomnadzor of Belarus authorized the start of power startup at BelNPP Unit 2. This will allow it to first start up in test mode and then connect it to the grid. After the commissioning of the second unit, the nuclear power plant should start operating at full capacity.

Belarusian Nuclear Power Plant

This project has had a number of problems from the very beginning. Experts talked about environmental risks, financial recoupment, and delayed commissioning of the power units. There were also disputes about the expediency of building the nuclear power plant to increase the electric power generation for the sake of which the project was conceived.

Expert Anastasia Luzgina analyzed the economic effects of BelNPP.

 

Electricity export perspectives

During the construction of BelNPP it was assumed that part of the electricity it produces will be exported. However, the fact that there would be difficulties with this became clear at the construction stage. Lithuania, which was seen as a potential buyer, refused to cooperate. The Ostrovets site is less than 50 kilometers from Vilnius. The IAEA does not recommend building nuclear power plants near large cities, and the Lithuanian authorities did not agree with such proximity.

Subsequently, Latvia and Estonia announced their refusal of Belarusian electricity. In addition, in 2025, it is planned to separate the Baltic states from the energy ring BRELL, which currently includes Belarus, Russia, Estonia, Latvia and Lithuania. After that the Baltic states will be connected to the European energy system.

Ukraine could become another destination for export of Belarusian power, but after the outbreak of war this opportunity was lost. In 2022 Ukraine accelerated its accession to the European energy system ENTSO-E and disconnected from the energy systems of Russia and Belarus, with which it has been working since the Soviet Union.

The only possible direction for the export of electricity remains Russia, but the prospects of supplies to this country are questionable, as it does not need them. Today Russia exports electricity itself, including to the European Union, but it is possible that in the near future it will have problems with this. For example in 2022 the export of Russian electricity to the EU decreased by 16.4% compared to the previous year and amounted to about 681 million dollars. In the future, one can expect further reduction of Russian electricity supplies to the EU as the Baltic states connect to the European energy system and disconnect from the BRELL. Therefore, the Russian authorities will most likely face a surplus of electricity on the domestic market and will seek to increase its exports to other countries. Thus, the prospects of Belarusian electricity supplies to the Russian market are also limited.

 

Is it possible to replace gas with nuclear power?

The domestic market could become the second area for the use of electricity produced by the nuclear power plant. Officials have repeatedly stated that the construction of a nuclear power plant would reduce the consumption of imported gas and thus reduce energy dependence on Russia. However, this statement is quite controversial.

First of all, reducing gas imports by increasing electricity generation at nuclear power plants is unlikely to reduce energy dependence on Russia. Russian companies will in any case maintain nuclear power plants and supply nuclear fuel. Reducing energy dependence on Russia would be possible if the Belarusian authorities began to stimulate the production of electricity from renewable sources, such as wind or solar. However, no serious steps in this direction have been taken so far.

Secondly, it is hardly possible to significantly reduce the consumption of gas based on the existing infrastructure and the ongoing gasification in the country. Gasification in Belarus began in the Soviet era: A special program was developed in the 1990s, which is being implemented to this day. Only in 2021, it received 11.4 million Belarusian rubles from the national budget, while gas supplies to Belarus amounted to 19 billion cubic meters, which is 7.5% more than in 2020. In 2020, 90% of all electricity in our country was produced by natural gas.

At the same time, in October 2020, measures were defined to stimulate the use of electricity for heating and hot water supply for the population, which, in particular, involves compensation of part of the cost of electricity for housing at the expense of local budgets.

This situation looks rather contradictory: on the one hand, the state allocates additional financial resources to stimulate the population’s demand for electricity, as well as for the construction of new and modernization of existing power grids. On the other hand, Belarus is still one of the most gasified countries in the world. And if gas imports are reduced, at least part of the infrastructure that has been built for years will become unnecessary.

 

Is it necessary to increase domestic consumption of electric energy?

Finally, a solution to the problem of electricity surplus could be an increase in electricity consumption within Belarus. The government has taken certain steps in this direction. For example, in 2018, a government decree was signed to increase electricity consumption until 2025. And the February 2023 Belenergo declaration specifies that the amount of tariffs for energy-intensive industries decreases as electricity consumption increases. In other words, the more electricity a company consumes, the lower the price.

At the same time, the above documents are inconsistent with the Energy Saving Program, according to which by 2026 the energy intensity of GDP should decrease by 7% compared to 2020.

If energy consumption were at a low level, and its increase could stimulate economic growth, then measures to increase energy consumption would be justified. However, the numbers suggest that this figure is not low compared to other states. If you compare the primary energy consumption per capita, which includes consumption from renewable and non-renewable energy sources, in Belarus this figure was 117.2 in 2021, in Poland – 117.2, in Ukraine – 80.4, and in Kazakhstan – 150.1. And the higher indicator in Kazakhstan can be explained by the development of energy-intensive crypto-mining in this period. So, based on these indicators, we cannot say that energy consumption in our country is low.

An increase in electricity consumption would be justified in the case of active economic growth with a simultaneous increase in energy efficiency. However, the country is unlikely to experience an economic boom in the next few years. Therefore, it will be quite difficult to increase energy consumption within the country, even taking into account the action of stimulating measures.

 

Conclusions

Thus, by the time the NPP was commissioned, external conditions had developed in such a way that there was practically nowhere to export Belarusian electric power. At the same time, the possibilities for domestic electricity consumption are limited. Statements about plans to reduce consumption of Russian gas are poorly coordinated with the continuation of gasification of the country, and stimulation of growth of energy consumption contradicts the simultaneous adoption of plans for energy saving. All these actions demonstrate the government’s desire to convince everyone of the expediency of building a nuclear power plant, even if this expediency turns out to be artificially created.

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