Nuclear is competitive in Sweden, says report

07 October 2010

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Nuclear power could be the lowest-cost option for new electricity generating capacity in Sweden, according to a study by PricewaterhouseCoopers conducted for an electricity-intensive industry group.

SKGS, which represents Sweden's forestry, chemical, mining and steel production industries, asked PricewaterhouseCoopers to conduct an indicative estimate of the cost of new investment in nuclear, hydro and wind power as an alternative to fossil fuel power plants. The calculations have been made exclusive of policy instruments in the form of taxes, rebates and grants. For nuclear, however, the cost of waste management and decommissioning has been included in the calculation.

The report shows that when taxes, fees and contributions are excluded, both nuclear and hydro power are far more cost effective than investments in wind power. Wind power, the study suggests, is some 65% more expensive than hydro and about 50% more expensive than nuclear.

The study calculated a minimum price based on the prevailing market rate of return available in the energy sector, excluding taxes, fees and contributions. The study gives an investment that meets the market rate of return, with a minimum price for electricity from hydroelectric power at SKr 390 ($58.5) per megawatt-hour (MWh); for nuclear at SKr 421 ($63.1) and SKr 295 ($44.2) per MWh; and for wind power SKr 645 ($96.7) per MWh. Two models for nuclear were used in the study - one in which government loan guarantees are included and the other where they are not.

The study also shows that the marginal cost of wind energy is higher than for hydro and nuclear power. Excluding taxes, fees and contributions, this is SKr 60 ($9.0) per MWh for hydro power; SKr 100 ($15.0) per MWh for nuclear power; and SKr 1500 ($22.5) per MWh for wind power.

"The new study suggests that investments in nuclear power, as Sweden's new energy policies now allows, is cost effective," said SKGS president Kenneth Eriksson. He added, "In a scenario where investment in new nuclear power is given the same yield, interest rate and capital structure as hydro and wind power, nuclear power will be the cheapest power source."

Eriksson noted, "The study shows that wind power, with current electricity prices, is dependent on very large subsidies to become a competitive alternative, and it is virtually impossible to build new hydropower because of existing environmental laws and local opinion. There is still nuclear power, which is both carbon- and environmentally-competitive."

He commented: "Basic industry's approach to energy issues is pragmatic. To manage jobs and growth in Sweden, industry needs carbon-free and competitively priced electricity, regardless of where it comes from. In the debate on future energy supplies the competitiveness of different forms of energy has sometimes been unclear. For basic industry, it has been important to try to clarify and find out what new generation is affordable."

A piece of legislation in 1980 set 2010 as the shutdown date for all the country's nuclear power plants, but this was put aside by Christian Democrat policy in March 2007. The coalition government, which also includes Conservatives, and Liberals then settled on a line that no new reactors could be planned during their first term. However, in February 2009, the coalition government moved to scrap old anti-nuclear policies and current policy is that new reactors may be built - but only as replacements for retiring ones and only at existing nuclear sites.

The current electricity sector in Sweden is dominated by two forms of generation - hydro power at up to 50% and nuclear power at about 45%. Expansion of both these low carbon forms was limited by legislation that protected undeveloped rivers and prohibited new reactors. Under the new policy, restrictions on nationally protected rivers will stay, but new reactors will be allowed and a third 'significant' sector will be developed from 'cogeneration, wind and other renewable power'.

Researched and written

By World Nuclear News