Sweden’s Greens Plan to Close Reactors Ducking Parliament

Sweden’s Green Party has joined the government for the first time in its 33-year history and now wants to use that power to shutter the country’s aging nuclear reactors in the face of opposition from a majority of lawmakers.

By imposing stricter safety rules, higher taxes and by terminating state-owned utility Vattenfall AB’s plans to replace reactors, the party plans to force a phase-out, without parliament support. That’s key, because the former ruling coalition parties and the anti-immigration Sweden Democrats support atomic energy, which provides about 43 percent of the country’s electricity, and would win a vote on the issue.

“We have made no political decision on which reactors should be closed,” Lise Nordin, the Greens’ energy spokeswoman, said in a phone interview on Oct. 1. “It is up to the market to decide and then it will be those reactors with the worst profitability and those that won’t live up to the safety demands we now intend to sharpen” that will be closed.

The Greens, sprung from the 1970’s anti-nuclear movement, may have auspiciously timed the ascent to cabinet. Front-year Nordic power prices have slumped 48 percent since 2010 and analysts, including those at Markedskraft AS, expect flat prices for years as investment in renewable energy leads to an unprecedented power glut of as much as 10 percent of annual demand by 2020.

Margins Slim

Sweden’s 10 reactors at three sites are 29 to 42 years old. Vattenfall majority-owns Forsmark and Ringhals, and German utility EON SE controls Oskarshamn. Cheaper electricity make margins for upgrade investments for reactors nearing the end of 50- to 60-year lifespans very slim, according to Mats Ladeborn, head of nuclear development at Vattenfall.

Nordic power for 2015 last traded at 31.80 euros ($40) per megawatt-hour on the Nasdaq Commodities exchange in Oslo. The contract fell to a five-year low of 28.85 euros per megawatt-hour on April 4.

A nuclear love-hate relationship started with Sweden’s first commercial reactor in 1972. Mounting grass-root political opposition in the following years culminated in a 1980 referendum that charged lawmakers to dismantle reactors. The Greens were founded a year later as a reaction to the plebiscite, with many voters disappointed with the established parties’ policies.

Without being specific, the party has said Sweden’s oldest four reactors are at the greatest risk of being shut. The Greens will ensure that all meet standards for independent safety systems and core cooling set out by the nation’s nuclear-safety authority, according to Nordin.

Stricter Safety

Ladeborn said Vattenfall won’t revise plans to run the two oldest nukes at Ringhals until 2025 and 2026, as the company has factored in effects of stricter safety. The industry may also get a helping hand from the Radiation Safety Authority, which told Bloomberg it will exempt some older reactors from demands regarding isolated core cooling.

“The Social Democrats and the Greens have agreed that the safety demands will be tightened and now we’re going to discuss how that will happen,” Nordin said. “The authority is developing new standards after Vattenfall’s application to build new reactors. That raises the question of how old reactors’ safety should be weighed against new demands.”

While EON’s 40-year-old Oskarshamn-2 is undergoing modernization to extend its lifespan to as long as 60 years, eight of 10 analysts polled by Bloomberg in June said power prices are too low to warrant further investment in Oskarshamn-1.

The new coalition formed by the Social Democrats and the Green Party last week won’t be able to repeal a 2010 law allowing producers to replace aging reactors and plan instead to order Vattenfall to abort ongoing studies on new plants, according to Nordin.

EON’s Reactors

Unlike Vattenfall, EON said it’s not interested in pursuing new Swedish reactors.

“We’re fully focused on running our existing reactors in a safe manner and with as high availability as possible,” Roger Strandahl, a spokesman for EON, said in an e-mail.

The government has proposed a 16 percent increase in the nuclear tax in its first budget. The current cost is about 4 billion kronor ($555 million) annually for the Swedish nuclear owners, or around 5.5 oere per produced kilowatt-hour, according to Svensk Energi.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE