Russia is to build the world's first floating nuclear plant, designed to provide power for remote areas.
Russia has long used nuclear technology to power submarines
Under a contract signed on Wednesday, the plant will be built at an Arctic site where atomic submarines are made.
Work is expected to start next year on two nuclear reactors and the 144m (475ft) platform for them, despite environmentalists' concerns.
Nuclear industry leaders said fears about the safety of the $336m (£183m) facility were unfounded.
Under the agreement between the state-controlled Rosenergoatom consortium and the Sevmash shipyard in the far northern port of Severodvinsk, the power station is due to begin generating in 2010.
It will provide heating and electricity for the Sevmash naval facility.
Rosenergoatom chief Sergei Obozov said the plant was the ideal solution for providing power to remote Arctic sites.
He said Russian authorities were looking at 11 other possible sites for such reactors, and that customers from abroad were already interested in the technology.
Environmentalists have been highly critical of the proposals.
Charles Digges, editor of the Norwegian-based Bellona website, told the Associated Press that floating nuclear plants were "absolutely unsafe - inherently so".
"There are risks of the unit itself sinking, there are risks in towing the units to where they need to be," he said.
But Sergei Kiriyenko, head of Russia's Federal Atomic Power Agency, dismissed such concerns, saying the country had more experience of building nuclear submarines than any other in the world.
"There will be no floating Chernobyl," he said, according to the Russian Itar-Tass news agency, referring to the the world's worst ever nuclear accident, which took place in 1986 in Ukraine.
Russia currently generates up to 17% of its electricity from 31 reactors at 10 sites, and President Vladimir Putin has said he would like to increase the figure to a quarter.