Sweden May Keep Winter Power Reserve Beyond 2020, Baylan Says

Sweden may keep its reserve power program beyond 2020 because of increasing reliance on intermittent output from wind parks, Energy Minister Ibrahim Baylan said.

The reserve, which this year amounts to as much as 874 megawatts, or about the same as a nuclear reactor, may need to be kept available beyond the program’s planned close in six years, Baylan told reporters yesterday in Stockholm. Sweden will probably face a shortage of peak power as early as 2019 as utilities may start to close old atomic plants, grid operator Svenska Kraftnaet AB said last month.

“The capacity in the system is vital,” said Baylan, a Social Democrat appointed last month after his party formed a government after the September general election. “I need to think about how it should work properly.”

After Sweden in 2005 for the first time closed a reactor before the end of its lifespan, the grid began to pay producers to keep plants in reserve and industrial users to be ready to cut use during peak demand. The parliament in 2010 decided to phase out the reserve by the end of this decade as the Moderates-led government sought a market-based solution to secure output.

Sweden’s wind power output will rise to 16 terawatt-hours by 2020, or 9 percent of the total, from 10 terawatt-hours last year, according to the Swedish Energy Agency.

Electricity meets as much as 44 percent of heating needs for single-family homes in Sweden. Consumption in an individual hour peaked at 24,760 megawatts on Jan. 13. That compares with an average of 15,300 megawatts in 2013. The record is 27,000 megawatts on Feb. 5, 2001, almost three times the nation’s total nuclear capacity. Atomic energy met 43 percent of power demand last year.

Operator Meeting

Baylan yesterday met with executives from Vattenfall AB, EON SE and Fortum Oyj, the operators of Sweden’s nuclear reactors, to ensure the nation has enough nuclear capacity available this winter.

Wholesale prices don’t always cover how much it costs to generate the electricity at reactors, Torbjoern Wahlborg, head of Vattenfall’s Nordic region, said yesterday at the briefing with Baylan.

Vattenfall’s average production cost at the Ringhals plant is about 28 euros ($35) per megawatt-hour, according to the plant’s website. That compares with a price for next-year power of 32.90 euros today on Nasdaq OMX Group Inc.’s commodity market.

The government’s proposal to increase the nuclear tax by 17 percent will increase costs for the operators to about 4.6 billion kronor ($620 million) a year, according to calculations by lobby group Svensk Energi.

Availability Concern

“Production cost are higher than the power prices in the market for some of our reactors,” Wahlborg said. “The increase of the nuclear tax is not reasonable and will have a long term effect on the power balance.”

Svenska Kraftnaet is concerned about the availability of nuclear reactors ahead of the winter, Olof Klingvall, a spokesman in Stockholm, said Nov. 4 by phone. The grid added 154 megawatts at EON’s Karlskrona oil-fired plant to the reserve until March 15 next year.

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