Growing up in Soviet Estonia Taught Kalev Social Responsibility
Q: What’s your background? I know you were in parliament at some point, you’re Estonian, but where did your initial interests begin?
A: Kalev Kallemets grew up in Estonia in a family who valued social responsibility. His father was the manager of a Soviet agriculture production unit and Kalev witnessed firsthand how ineffective Soviet thinking was. He developed a sense of social responsibility for people and his nation, believing that those who have the ability to learn new technologies and discover new solutions should deploy them.
Kalev is proud of Estonia’s current start-up culture. He uses Estonia’s electronic personal identification system as an example of the country’s daring, sharing how he registered his son’s name in just 30 minutes and signed him up for kindergarten instantly.
Kalev Shifts from Economics to Politics (4:32)
Q: How did you get involved in politics?
A: Kalev’s interest in politics started in high school after reading Milton Friedman’s Capitalism and Freedom. He started studying economics at the university level, even spending some time at the Mises Institute in Alabama and translating some books by the austro-british economist Friedrich Hayek. Those studies, and his involvement in the Estonial Reform Party’s Youth Council, eventually made him a prime candidate for a seat in Estonian parliament sitting on the economics committee. In that role, he voted to legalize same sex partnerships in Estonia, a close vote that he is proud of. Kalev also discusses the growing trend of fear or rejection of others in democratic countries today.
Kalev Realizes the Economic Potential of Nuclear Energy (8:18)
Q: You became interested in energy at some point. How?
A: Kalev did his academic thesis on government-owned utilities in Estonia. In 2008, this mainly concerned an agreement by the prime ministers of Lithuania, Latvia, and Estonia to explore a nuclear new build project in Lithuania to replace the RBMK reactors in Ignalina, Lithuania that the European Commission had recently deemed unsafe.
Kalev investigated how nuclear energy makes economic sense and found that it made perfect sense. The old reactors operating in Western Europe were fundamentally money making machines. He developed a good relationship with Sandor Liive, who later became the co-founder of Kalev’s start-up Fermi Energia.
Kalev began promoting the idea of a nuclear power renaissance and was fairly well accepted by the public, but some political in-fighting in Lithuania, the Fukushima nuclear disaster, and some expensive nuclear new builds elsewhere in Europe caused Eesti Energia to decide to invest in a new oil shale furnace instead. Kalev says it is now obvious, with rising CO2 prices in Europe, that this solution is uneconomical.
In 2009, Kalev took a nuclear economics course in Munich that inspired him to enroll in PhD studies in energy economics, specifically oil shale economics. Last year, 85% of the power generation in Estonia was from oil shale.
The Changing Landscape of Nuclear Infrastructure in the Baltics and Beyond (11:27)
Q: What is the relationship of the baltic countries from an infrastructure perspective?
A: Lithuania, Latvia and Estonia are currently inseparable and currently connected to Northwestern Russian and Belarussian power grid systems. By December 31, 2025, these three countries will be desynchronized from those systems and connected to the continential European power grid system.
Because these countries share a common infrastructure, they also share a common energy market. Kalev explains that while there are separate pricing areas, the prices across all Baltic markets have been very similar. With more interconnections being built between each of the countries, this trend will continue.
Estonia also has physical cables connecting to Finland, more than 100 megawatts, but the connections are insufficient to cover the full energy consumption of the country. Kalev also shares that, despite the appearance of support for nuclear power, Finland is actually in power deficit until even as far out as 2040 because they will completely phase out coal like many other Western European countries.
There is currently a binding target of 80% reduction of CO2 emissions by 2050 in Europe and a likelihood that the EU will target complete climate neutrality from all sources, meaning absolutely no net emissions from any source even beyond the electricity sector.
The Real Estate Developer of Nuclear Energy (16:21)
Q: Okay, so you’ve got academic experience, political experience, industry experience and now, start up experience. How did Fermi Energia come together? (16:21)
A new nuclear new build project was discussed last summer. Sandor Liive, Kalev’s co-founder at Fermi Energia, sent 4 people to study nuclear energy in Stockholm and work in utilities in Scandinavia. Together, they discussed NGOs and promoting nuclear power, but realized that the real need was for megawatts, not policy.
They asked themselves if it would be possible to develop a business for the deployment of SMRs (Small Modular Reactors) like they are licensed in the United States and Canada. There is a false assumption that nuclear power has to mean billions of euros in investment. Kalev likens his work at Fermi Energia to real estate investment, highly intellectually challenging and risky but inexpensive in its early stages.
He discusses his team of 6 founders, 4 PhDs, a former CEO of an Estonian utility company, and a groundbreaking physicist. The team realized the need for a clear and formal feasibility study, not for economicals purposes but for governmental policy ones. The feasibility study will be presented on January 28, 2020 in Tallinn, Estonia.
Converging Factors Convince Future Stakeholders (24:09)
Q: It’s almost as if you’ve discovered that there is a pent-up demand for this and you are about to unlock Pandora’s box of new opportunity.
A few cooperating factors that have supported nuclear power as a solution to Estonia’s future power problems. A) CO2 prices have gone from 15 to 27, meaning power generation from oil shale has decreased by 50% in the past year, B) 900 people will be unemployed in the oil shale industry out of 6000, raising awareness for a new source of power and C) increased awareness around climate change.
Kalev explains that these factors have even influenced environmentalists in Estonia, once vehemently opposed to nuclear power, to rethink their position. He rejects the use of social media and public forums to have rational discussions about nuclear power, instead preferring to share data one-on-one.
Bret and Kalev discuss the importance of speaking to societal values at large, in particular those necessary for successful industry. For example, nuclear power in Finland was supported by Finnish companies and municipalities in order to mitigate the risk of a loss of power. Kalev explains that this public ownership structure for nuclear new builds in Finland may have also reduced the likelihood of backlash and mistrust. Kalev views it as his job to bring together a similar coalition of stakeholders for a nuclear new build in Estonia.
Energy Blackouts in the European Union (33:12)
Q: Do you think there will be a reckoning in Europe over how nuclear power is being perceived?
Yes. There are coal phase outs happening in the Netherlands, Germany, Finland, United Kingdom, Belgium and France at the same time many nuclear power is shutting down.
The EU is currently gathering national climate and energy plans. Many of the plans promise to develop interconnections to secure energy supplies, but it’s necessary to have capacity behind those interconnections. It’s mathematically impossible for Norway and Sweden to supply all of Europe. Kalev sees it as “highly likely, extremely likely, 100% likely” that there will be blackouts in the European Union.
Europe’s Need for Molten Salt Reactors (35:37)
Q: What have you learned that has made you think differently about your approach?
Fermi Energy started with a keen interest in molten salt reactors but molten salt reactors are more complicated with their physics and thermo-economical management than current light water reactor systems. Kalev still believes that the development of molten salt reactors is imperative for the future and encourages governments like Canada and the United States to continue their support of molten salt reactor R&D, licensing and testing programs. Kalev highlights the 40-billion euro market for hydrogen, citing that it has to be all replaced by 2050 with non-fossil energy and arguing that light water reactors aren’t as fit for that need.
The Future of Capital-Driven SMR Deployment (39:32)
Q: Could you spell out for us your vision for the future and why this is important to you?
Kalev claims that Europe will need hundreds of SMRs being deployed, but that he’ll start moderately with just the two units planned in Estonia.
His innovative business model provides a service to government-owned utility companies, reducing both the site and political risks of nuclear SMR deployment. Kalev discusses his vision for the future, pioneering a business model innovation for hundreds of other companies. He wants Europe, his home, to be successful and believes SMR technology has the potential to embrace private capital driven energy deployment, rather than murky fossil fuel deals that have to be done by politicians or utilities that have to be controlled by government owned companies. Kalev believes that capitalism is the way forward.