On 10 June the Swedish parliament moved to abolish its tax on nuclear power in recognition of nuclear's role in helping it to eventually achieve a goal of 100% 'renewable' generation.
The framework agreement announced by Sweden's Social Democrats, the Moderate Party, the Green Party, the Centre Party and the Christian Democrats will see the tax phased out over two years. It also allows for the construction of up to ten new nuclear reactors at existing sites, to replace plants as they retire.
Setting 2040 as the date at which Sweden should have a 100% renewable electricity system, the government plan stresses that 2040 is a 'goal' and not a cut-off date for nuclear generation.
Sweden has had an on-off love affair with nuclear power for fifty years. It was introduced originally as the new hope of a country that had few natural resources but after a national referendum voted to abolish it altogether the dismantling of the system was set of the late 1990s. However successive delays in implementing that proposal followed.
In 1984 a variable production tax was introduced, then replaced by a tax on installed capacity in 2000. Since its introduction this tax has gradually increased and today corresponds to about 7 öre (0.8 US cents) per kWh. In February this year, major utility Vattenfall said that the capacity tax had brought its nuclear operating costs to around 32 öre per kWh, while its revenue from nuclear power was only about 22 öre.
Swedish utilities had sought redress against the tax through the courts, but the European Court of Justice ruled last October that Sweden could continue to tax nuclear power, deciding the tax is a national, rather than European Commission, matter.
Vattenfall CEO Magnus Hall welcomed the agreement, which he said gave the utility the predictability it needed. "The abolishment of the nuclear capacity tax is an important precondition for us to be able to consider the investments needed to secure the long-term operation of our nuclear reactors from the 1980s," he said. Vattenfall's reactors at Forsmark and Ringhals have undergone a comprehensive modernisation programme to allow them to operate until the mid-2040s.
However, to continue operating beyond 2020 they must meet stricter safety requirements through the installation of independent core cooling. Investing in those upgrades was economically impossible with the tax in place.
"Even with the abolishment of the capacity tax, profitability will be a challenge," Hall concluded. "Low electricity prices put all energy producers under pressure and we will continue to focus on reducing production costs. Naturally, investment decisions must be taken on commercial grounds, taking all cost factors and expected long-term market developments that the agreement implies into account.".
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