A government study published Monday in Stockholm He highlighted several features of his preferred model to provide certainty to investors. Financing instruments include government loans to support construction and 40 years of guaranteed income through a contract for difference or CfD..
The Nordic nation is in urgent need of new power capacity as demand is projected to double with the greater electrification of the economy. The country currently has six reactorswhich provide about a third of its energy, and hydroelectric and wind turbines account for most of the remainder.
Financing is one of the biggest hurdles for nuclear power, as reactors cost billions of dollars and take years to build, often driving up the price. The model presented on Monday focuses on financing a program of up to 6,000 megawatts, or four large-scale reactors, and has taken inspiration from the plans of the Czech Republic to finance new units at the Dukovany complex.
“We have looked a lot at the Czech model,” Mats Dillen, who led a government-appointed inquiry, told a news conference in Stockholm. “It was recently approved by the European Commission, which is interesting for us as it allows us to take a support model that we know has the blessing of the commission.”The proposals will be sent for consultation to various institutions, companies and government agencies before they can be adopted by the government.
A feature is the CfD model, used by both Electricite de France SA at Hinkley Point C in the UK and Dukovany. Under this mechanism, developers and the government agree on a fixed price for electricity for a set period, providing certainty of future revenue. If market prices fall too far, the generator receives a top-up from the state. In return, the plant operator must pay the difference if the market rate is higher.
In contrast to the financing scheme for Hinkley Point, which has an estimated total cost of about £47.9 billion (US$61.2 billion) at current prices, the model suggested for Sweden also involves public borrowing to fund construction. Under the proposal, the government would borrow up to 75% of investment costs, which Dillen expects could increase public debt by about 300 billion Swedish krona ($28.5 billion).
Swedish state-owned Vattenfall AB and Finland’s Fortum are among the companies studying new reactors. “When the owner, the state and the customers collectively share the profits and risks, financing costs will decrease significantly.”“This will benefit households, industry and also strengthen Sweden’s competitiveness,” said Jesper Marklund, manager for new nuclear energy development at Fortum Oyj.
In a comment on his website, Vattenfall said it agreed with many of the points raised by Dillen, but it was unclear how the state would ensure that the first wave of new reactors would actually be built.
