TALLINN - The Estonian company Derivaat NH3 is starting the construction of a gas-fired power plant in the Paldiski South Harbor to launch a green ammonia factory on an adjacent property.
The investment is supported by a grant of approximately 11 million euros from the Estonian Business and Innovation Agency (EIS).
Erik Laidvee, CEO of Derivaat NH3, said the idea for building the gas-fired power plant, named Voyager 1E and slated for completion in 2028, was prompted by the fact that the price of electricity and related taxes in Estonia are consistently too high, even up to a third higher than in Finland.
"It is specifically the high price of electricity that has hampered the establishment of our green ammonia factory in Paldiski, which is why we decided to find a solution ourselves. This is the purpose of the 94 megawatt net capacity gas-fired power plant, which will initially use biomethane as fuel but can also run on green hydrogen if necessary," Laidvee said. "By producing the electricity needed for the factory ourselves, we can reduce the electricity consumption in the green ammonia factory by three megawatts. While the heat from a standard gas-fired power plant usually goes into the central heating network or simply into the air, we will direct it to our ammonia factory. Utilizing that thermal energy helps to bring down the cost price of ammonia."
The estimated investment volume for the plant, including connections, is approximately 120 million euros. An application for support was submitted to the EIS, which on Tuesday announced its decision to support the project with 11 million euros under a support measure for large-scale investments created on the initiative of the Ministry of Economic Affairs and Communications in 2024.
To develop the gas-fired power plant, OÜ Derivaat NH3 established a subsidiary, OÜ Derivaat NH3 Power, at the end of July. With the same gas power plant project, the company is also participating in Elering's ongoing frequency reserve procurement.
"This is not only about meeting the energy needs of our own factory; we also see it as playing an important role in ensuring Estonia's electricity security of supply, since a gas power plant can provide stable, controllable energy production regardless of sun and wind. It is also urgently needed by both businesses and households to prevent electricity price hikes," said Laidvee.
The West Harju municipality has confirmed that the environmental impact assessment reports for both the factory and the power plant meet requirements, and building permit applications for both have been submitted to the Register of Construction Works.
"We are ready to begin building the power plant already this year once the permits are granted, and to start construction of the green ammonia plant at the beginning of 2026," the CEO added.
The Voyager 1 plant, which received approval from the municipality administration back in 2023, will produce both green ammonia and hydrogen. These are increasingly important future raw materials globally, helping to replace fossil fuels in shipping and reduce pollution in fertilizer production.
"One major source of carbon dioxide emissions is shipping, which currently relies on polluting fossil fuels. However, under international maritime regulations, it must fully transition to green fuels. Demand for the future commodity produced at the plant is expected to surge in the coming years, as the EU requires shipping companies to significantly reduce their carbon footprint -- meaning fossil fuels must be replaced," he explained.
At the green ammonia plant, green hydrogen is first produced by electrolyzing water using renewable electricity. This hydrogen then reacts with atmospheric nitrogen under high pressure and temperature, with the aid of a catalyst, to form green ammonia.
Derivaat NH3 continues to see Paldiski as a future industrial hub.
"Our goal is to make the region widely known as Estonia's capital of green fuels," Laidvee added.
The project is being developed by Derivaat NH3 Power, which is 100 percent owned by Nordic Stream Group.
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