Yesterday’s quarterly report from energy giant Vattenfall presented a rise in operating profits and profits after tax of SKr 6 billion, thereby granting CEO Magnus Hall some breathing space.
However write-downs for German brown coal, if the government approves Vattenfall’s sale, are expected in the next report and the company must make a decision to make new investments into nuclear power or decommission.
“Without investment… we will not be allowed to run the reactors after 2020. We are not going to make investments if the government does not remove the tax on nuclear power completely. That is a definite decision from us,” says Magnus Hall.
Meanwhile DN reports Vattenfall has no plans to scrap emission rights, as MEP Jytte Guteland has demanded. Magnus Hall says the rights are part of the deal with the buyer of the lignite operations in Germany.
The government recently announced it wants Sweden to move towards a completely renewable energy system, a decision that has caused concern because of potential supply shortages for business if nuclear power is phased out. However, on Wednesday Energy Minister Ibrahim Baylan clarified that the new model does not necessarily mean the end for Swedish nuclear power.
If there is a strictly business line basis for building new nuclear power plants then this should be made politically possible, he stated. “There may be a situation where we produce 120% of our need and export the rest,” he says. However, he does not believe this will happen. “Nuclear power is experiencing difficulties with or without taxes and will sooner or later be phased out,” he says.
Instead Ibrahim Baylan considers hydropower to have huge potential to supply the basic industries. “We need to reduce the political risk so that the market is able to invest,” he says.
During election campaigns the Green Party set the goal of closing at least two nuclear power reactors during the mandate period. So far the closure of four of Sweden’s ten reactors has been announced. At the weekend the government announced the remaining six reactors will be phased out within 20 years. Lise Nordin, Green Party spokesperson on energy, considers the decision a major success.
However the alliance parties are critical. “They say they want to use the alliance’s energy agreement, but that is not true. It says nothing about phasing out nuclear power within 20 years as the government now wants, which is bad for both the environment and industry’s competitiveness,” says Maria Weimer, the Liberals energy spokesperson.
A report on the economic situation in the energy sector was brought before the energy commission yesterday. Declining profitability risks closing Swedish nuclear power, which represents 40% of the country’s energy, early, according to the industry. And industry organisation Swedenergy (Svensk energi) claims output tax makes up a quarter of all production costs.
Minister for Energy, Ibrahim Baylan (S), commented that all electricity production is struggling with low prices, and that taxes must be examined. Nuclear providers are facing major investment decisions, which must be taken before the middle of the year to meet tighter safety requirements after the Fukushima accident in Japan. Baylan has now promised the decision about output tax will be made by the middle of May.
In a letter to the government, the Swedish Radiation Safety Authority (Strålsäkerhetsmyndigheten) has requested an increase in the charges that nuclear power plants pay for handling radioactive waste. The authority has analysed the decision to decommission four of the country’s ten reactors early and concludes the charges must be raised to finance the decommissioning of the reactors and the management of the used nuclear fuel.
The rise in cost would increase the pressure on the nuclear power plant owners who are already raising the alarm that all reactors may be forced to close due to poor profitability.
State-owned Vattenfall has reported a record loss for 2015, the worst in the company’s history. With a loss of SKr 19.8 billion, it is almost double as much as the loss the previous year.
Vattenfall’s CEO, Magnus Hall, pointed out the company is still making reasonable profits in operations. It is mainly the writing down of assets and falling electricity prices that triggered the huge reported loss. The single largest write down was due to the closure of two of the four reactors at the Ringhals nuclear plant.
Magnus Hall warns that all the reactors, which supply a significant portion of Sweden’s electricity, could close if nuclear output tax is not removed, “and a decision is needed before the summer,” he says. He states that political action is needed to avoid Swedish nuclear power closing down early, and Vattenfall is unable to make necessary investments if the tax is not abolished.
DI reported yesterday that research is under threat from nuclear power plant closures, as scientists leave Sweden.
Liberal party leader Jan Björklund has reacted angrily, “In practice the government is reintroducing the “thought-ban” laws (Act from 1986 prohibiting construction of nuclear power stations – ed.) by strangling funding.”
Björklund wants to construct a new research reactor to study the fourth generation of nuclear power energy. Both the Moderates and Vattenfall’s CEO Magnus Hall are in agreement.
However the government dismisses the criticism. “We aim to be an eminent research nation, but it is not the government that controls in detail which research should be financed,” says Research Minister Helene Hellmark Knutsson (S). (DI: 11)
In September the decision was taken to close early two of the four reactors in the nuclear power plant, Ringhals. Shortly after the same fate was decided for two of the three reactors in Oskarshamn. The remaining reactors were to remain operational until 2040.
However now Torbjörn Wahlborg, head of Vattenfall Generation, warns that the crisis that has shaken Swedish nuclear power production has worsened. If the tax on nuclear power capacity is not scrapped the power company may be forced to close all its reactors in Sweden early. “The current situation is unsustainable. Electricity prices on the futures market for several years ahead have continued to fall, and with a tax on nuclear power capacity of 7 öre per kilowatt hour none of our reactors are profitable.”
Germany’s E.On, which owns 54.5% of nuclear power plant operator OKG, announced yesterday that low electricity prices and high maintenance costs associated with the Oskarshamn reactors 1 and 2 meant that it was seeking to close both units. Minority owner Fortum opposes the decision.
The news, which comes just two months after Swedish state-owned utility Vattenfall said it was seeking the early closure of the Ringhals 1 and 2 reactors, could leave Sweden with just six reactors.
Sweden’s centre-left government has increased taxes on nuclear power capacity since it came to power, from 6 to 7 öre per kilowatt-hour. It has been estimated that OKG will pay SKr 1 billion annually in capacity tax, revenue that the Treasury can no longer count on.
Commenting the news, Ibrahim Baylan, the energy minister, says it is vital that cross-party agreement is reached on a long-term solution.
Meanwhile, the Moderates have requested that Baylan be summoned to appear before the parliamentary commission on the constitution.
“In recent months we have received news that four reactors will close. Obviously this will have a major impact on businesses and jobs,” says Lars Hjälmared, the Moderate spokesman on energy policy.
After buying rival Rautaruukki last year, Swedish steelmaker SSAB has become a stakeholder in Fennovoima, which has plans to build a nuclear plant in the Finnish village of Pyhäjoki.
The Swedish arm of environmental organisation Greenpeace is highly critical of SSAB’s involvement in the much-disputed project, saying: “It is deeply alarming that SSAB is funding the construction of a Russian nuclear power plant just 150 kilometres from the Swedish border, given the huge environmental and financial risks associated with the project”.
In a move designed to persuade SSAB to quit the project, Greenpeace representatives will today meet with the steelmaker’s executives. However, while SSAB says it welcomes a discussion, it has no plans to withdraw from the venture.