March 8, 2022

How can Europe wean itself off Russian power? This startup is betting on nuclear

Russia's war on Ukraine has accelerated Europe's need to wean itself off Russian gas. For Estonia, the startup Fermi Energia believes nuclear is the answer.

Mimi Billing

6 min read

GE Itachi's BWRZ-300 small modular nuclear reactor.

Putin's invasion of Ukraine has accelerated Europe's need to end its dependency on Russian oil and gas. Alternative energy sources like solar, hydrogen, next-generation nuclear and deep geothermal will all be part of the future of keeping grids powered, so Sifted is taking a deep dive into the European startups with the most innovative energy solutions.

As European countries contemplate how to wean themselves off Russian oil in the wake of the country's invasion of Ukraine, one Estonian startup is already working on a solution: small nuclear reactors that you can assemble on a production line like cars.

“In Estonia, there are lots of development projects for wind and solar, but none for nuclear. So we thought we try to do that,” Kalev Kallemets, CEO of Fermi Energia, says.


Kallemets didn’t intend to be a startup founder. He was a politician serving in the Estonian parliament with a position in the economics ministry. In 2006, Estonia was already considering building its first nuclear reactor, but due to time constraints and the huge costs, an oil shale plant was built instead.

Kallemets was becoming increasingly worried about rising CO2 emissions and spent a lot of time trying to find options other than oil and gas. He started to read up on nuclear technology and during a sauna at a wedding in 2018 he met with his cofounders and decided to try to bring small modular nuclear reactors (SMR) to Estonia.

Fermi Energia was founded later that year and although the company has cofounders that have been trained in nuclear energy, the startup is not developing the technology behind the SMR. Instead, it is set to do all the planning and deployment of an SMR, with about a third the capacity of an average nuclear power plant. So far, it has applied to the Estonian government to begin the planning process — whether or not it is approved will be decided this month.

If everything goes according to plan, the first nuclear reactor in Estonia could be up and running by the early 2030s, enough to power 300,000 homes.

Ending reliance on Russia

The Fermi project couldn’t come at a more crucial time. The Baltics have long been worried about their reliance on Russia for gas and electricity, and have been gradually moving towards the European grid for years. Since Russia’s invasion of Ukraine, however, this has become urgent, as natural gas supplies from Russia through Belarus have been cut.

“We have a real emergency in Estonia and so does Latvia and Lithuania. We have to come up with a solution as quickly as possible,” Kallemets says.

This is an issue not just for the Baltics but for the rest of Europe too, which until recently sourced almost 35% of its natural gas from Russia. Most came through pipelines that crossed Belarus, Poland or Ukraine or Nord Stream 1, which goes directly to Germany via the Baltic Sea. Nord Stream 2, a second pipeline connecting Russia and Germany, has been built but the project was scrapped by chancellor Olaf Sholz after Putin's invasion.

Poland is one of the countries with most advanced plans for new nuclear power. Desperate to reduce the 64% of its natural gas that it gets from Russia, Poland has plans to build up to six large pressurised water reactors.

In addition, private companies in Poland are planning a number of SMRs; In December last year, KGHM signed a commercial agreement with American NuScale for one SMR and Synthos Green Energy and PKN Orlen have created a joint venture to bring SMRs, probably GE Itachi’s, to Poland.

France, which is already heavily dependent on nuclear power, announced plans in 2021 to invest €1bn in new SMRs to help France reduce its CO2 emissions.


The UK, which is to retire half of its nuclear power plants by 2025, has announced £210m of investment in Rolls-Royce's new SMR development. In Estonia, Fermi is pretty much alone.

Where is the money coming from?

Getting a nuclear reactor up and running — even a small one — in 10 years is ambitious. But Fermi's 40 staff aren't developing the technology itself themselves. The company will most likely partner with the Japanese-Canadian company GE Itachi.

GE Itachi is one of the nuclear energy companies closest to having an SMR on the market, planning to deploy its BWRX 300 unit in Canada by 2028 at an estimated cost of $4.8bn for four reactors.

According to Kallemets, it is possible to have the same model of SMR in Estonia, deployed and generating power only three years later — in 2031.

Although setting up an SMR is not cheap, Fermi Energy believes it can get away with €50m pre-construction, including the purchase of the land.

“So far we have spent €1.5m on the development project. That's three years in and we have still cash available for the next two years," Kallemets says.

Angels in the Estonian tech community have put their money behind the startup. Early investors include Martin Villig, cofounder of Bolt, and Martin Henk, founder of software company Pipedrive. Fermi has also raised €1.7m in crowdfunding on Funderbeam.

Another investor backing Kallemets and Fermi is the Swedish state-owned energy company Vattenfall, which runs the five operational nuclear power plants in Sweden and owns another five that are being decommissioned — three of them in Germany.

Although there are no plans for Sweden to deploy SMRs, Vattenfall invested €1m in Fermi Energy in late 2020. Why is a large energy company looking at SMR development?

Vattenfall delivers 30% of Sweden’s energy supply with nuclear power and is interested about learning more about SMR technology, says Desirée Comstedt, VP of fleet development at Vattenfall.

“Our investment in Fermi was to build our employee competency of this technology and the conditions for it but also to be able to contribute to a joint licensing for SMR. The key to making it profitable is to bring the production to large scale, like assembly-line production,” Comstedt says.

Building SMRs is completely different to building an old-style nuclear power plant. It is much more like assembling a car — it's possible to produce all the different parts in a factory and then ship them out to be assembled on site. This would make it considerably faster to build than ordinary nuclear plants and also make spare parts easily available.

Why choose a water-based SMR instead of new technology?

A lot of the next generation nuclear startups are looking at using lead or salt as a cooling agent, but Fermi has decided to move forward with SMRs that use water, like existing nuclear power plants.

Kallemets says this will allow the project to proceed more quickly.

“Even if molten salt or any other gen-four technology would be successfully and commercially deployed in America or Canada — it would still be hard to deploy the same technology in Europe," Kallemets says.

“There is no regulation in place, no standard operating procedures in place and you also need companies willing to invest money and have a trained workforce. This is a big thing.”

Will they get permission to build it?

Getting a licence to build a nuclear power plant is still a complicated process. For Fermi, once the Estonian government has to approve the planning for an SMR, then the technology needs to be licensed in Estonia.

The licensing procedures for large nuclear power plants are different in each country in Europe and Comstedt hopes that with SMRs, the EU will provide a framework and license for all countries to follow.

Vattenfall is currently helping Fermi investigate what technologies will be most suitable, and the one that is finally chosen is the one that Fermi will try to get licensed.

“There are hundreds of different concepts that are being developed for SMR but to create large-scale production, it is pretty obvious that 99% of those will never reach production,” Comstedt says.

Whether Kallemets and his cofounders will be successful in bringing an SMR to Estonia depends on local licensing and regional agreements. But if they do, Estonia will have come one step closer to managing its energy supply.

Mimi Billing

Mimi Billing is Sifted's Europe editor. She covers the Nordics and healthtech, and can be found on X and LinkedIn