by Jonathan Leff
Additional reporting by Martins Gravitis in Riga and Alistair Holloway in TallinnDateline: VISAGINAS, Lithuania, Feb 1 ( Reuters )
In the northeast corner of Lithuania, next to the towering ventilation pipes of the country's two nuclear reactors, lies a 20-metre concrete shell guarded by a trio of giant, rusted construction cranes.
The structure, several stories of concrete slab floors riddled with exposed metal rebar, represents two years' work on a third RBMK-type reactor, the same kind that exploded in Chernobyl, spewing radioactive dust over much of Europe.
It is a part of this ex-Soviet state's past, but may be the direction for the future - the construction of a new reactor to replace the Ignalina Nuclear Power Plant's two Chernobyl-style units scheduled for decommissioning early this century.
"We can only dream of a third block and I hope for this dream to come true. But the chances of bringing it to life are very slim," Ignalina's general director Viktor Shevaldin told Reuters. He said a new 1,000 megawatt (MW) unit would cost $2 billion, much more than the cash-strapped country can afford.
Work on the third reactor stopped in 1989, when Lithuania was part of the Soviet Union, but Shevaldin is not alone in wanting to see the job finished.
This time, politicians and industry officials say they would build a new, Western-standard facility big enough to meet domestic demand and perhaps export to the West.
It would be one solution - albeit a highly controversial one -- to the Baltic region's power puzzle, which politicians and experts hope to begin piecing together at a region-wide conference in Vilnius on February 3 and 4.
POST-COMMUNIST QUANDARY
The energy infrastructures of the Baltic States were built by communist planners concerned with lighting up the entire northwest region of the Soviet Union rather than ensuring sufficient internal supply for the three small republics.
When the three countries escaped Moscow's grip and declared independence in 1991, they found themselves with distinctive power problems.
Lithuania inherited massive over capacity, with the ability to produce more than twice the energy it needs. Ironically, it had no big customers - Russia has too much supply, Belarus is unable to pay its debts and Latvia is too small.
A project to build transmission lines for exports to the West remains a dream, but with Lithuania set to start detailed talks on European Union accession this year, Ignalina is out - one reactor is to close by 2005 and the other by 2010.
Estonia, the northern-most Baltic state, has sufficient capacity of its own, but it comes mainly from oil shale-fired plants, fuel for which is expensive and difficult to process.
Of the three Baltic countries, Latvia was left with the best long-term solution -- hydro-electric plants powered by its many rivers -- but a serious under capacity leaves it reliant on imports for up to 60 percent of its electricity.
For the Baltics, the question they see for the future is whether they can attract enough investment to modernize and build facilities to avoid increased foreign dependence.
Analysts say this should be done with a view to forming an open power market in the region, although generation structure remains a key problem.
"Of course there is a problem in having basically two dominant players on the Baltic market, Estonian's Narva power station and Ignalina. Neither of them is a long-term solution," said Gunnar Lundberg, vice president for electricity networks at Sweden's Vattenfall, a key power sector investor in the region.
Supporters of a regional market have expressed their idea in the Baltic Ring, a project meant to unify the power systems in the Baltic states with Russia, Belarus, Germany and Scandinavia.
It remains years away from implementation.
THIRD REACTOR A DREAM
Despite the cost, many Lithuanian politicians -- such as President Valdas Adamkus, a former American citizen who was a top official in the U.S. Environmental Protection Agency, and Parliamentary chairman Vytautas Landsbergis -- say they would consider the option of building a new nuclear power station.
Ignalina's two 1,300 MW reactors produce 80 percent of total power but actually account for less than half of Lithuania's total installed capacity of 6,000 MW. However, the energy it provides is much cheaper than using fossil fuels.
The other major facility, a combined heat and power (CHP) facility, has a capacity of 1,800 MW and could fill domestic consumption of about seven terrawatt hours (TWh) annually, but it is more expensive and needs some $500 million in investment.
Meanwhile, exports last year fell to 3.3 TWh from 6.3 TWh in 1998 because Belarus, which has not paid its debts, was cut off.
The construction of transmission lines through Poland to West European markets would turn excess capacity into a valuable commodity, but the project is still just an idea.
ESTONIAN SHALE NOT LONG-TERM SOLUTION
Estonia is more than self-sufficient with domestic consumption around six TWh a year fuelled by its two oil shale-fired power plants in Narva, which account for 94 percent of the country's total installed capacity of 3,190 MW.
Exports have been only about 0.5 TWh annually, although with excess capacity that could rise to a maximum 2.5 TWh.
Estonia has also been in protracted talks for almost three years with U.S. NRG, a unit of Northern States Power, over selling it a minority stake in the plants, which supply more than 90 percent of the country's electrical power.
But experts say oil shale it is not a long-term solution.
"It's like firing stone...It is not likely that you can ever have such generation as Narva in a commercial way," said Lundberg of Vattenfall.
LATVIAN FACES MAJOR POWER GAP
Latvia has installed capacity of 1,900 MW, about 80 percent hydro-power, but far below its annual consumption of five TWh.
It imports about half of its power annually, including two to 2.4 TWh from Russia, although it has spent the last 10 years reducing its dependence on Moscow.
"Our strategic plans include a need for new generation capacity construction by 2010," Arturs Kruskops, head of strategic planing department at Latvenergo, told Reuters.
However, as no construction plans for major generation facilities have even made it onto paper, the small country of 2.4 million faces a massive power gap.
OPTIONS ARE LIMITED
Latvia, like the other Baltic States, is connected only to the former Soviet power grid, meaning supply comes either from its Baltic neighbors or Russia.
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