October 29, 2014 / 1:10 PM / 5 years ago

Sweden's nuclear operators say new tax means earlier shutdowns

* Maintenance costs, low power prices pressure operators

* New government proposes increased nuclear tax

* E.ON considers retiring Oskarshamn-1 reactor earlier

By Nerijus Adomaitis

OSLO, Oct 29 (Reuters) - The operators of Sweden’s nuclear power plants say their older reactors may have to shut earlier than planned due to higher taxes proposed by a new coalition government.

The new left-wing government, which includes the anti-nuclear Green party, has proposed increasing taxes on nuclear power capacity by 17 percent from 2015, prompting warnings from state-run utility Vattenfall and Germany’s E.ON.

Sweden had planned to shut down older reactors over a decade span and replace them with more modern plants, but the Greens want to shut several during the current government term of office, ending in 2018. That has divided the Social Democratics, the lead party in coalition.

Nuclear reactors generate about 40 percent of electricity in Sweden and shutting down one or several could also lead to higher power prices in the Nordic region, especially during a dry year, when output from hydropower plants falls.

The operators of Sweden’s 10 nuclear reactors say the proposed tax hike would put further pressure on profitability, already stretched by the need to improve safety in the wake of Japan’s Fukushima disaster, and could speed up decommissioning.

“An increased nuclear capacity tax means an additional 530 million Swedish crowns for the two nuclear power plants,” Eva Hallden, in charge of Vattenfall’s Ringhals and Forsmark plants, told Reuters.

“This distorts the competitiveness of Swedish nuclear energy in the Nordic power market.”

“DIRE SITUATION”

E.ON is already considering retiring Sweden’s oldest reactor, the 437 MW Oskarshamn-1, several years earlier than previously expected, officials at Sweden’s nuclear regulator SSM said.

“They are discussing closing it earlier than planned, maybe around 2020,” said SSM economist Annika Astrom.

Roger Strandahl, E.ON’s spokesman for Swedish nuclear power, said the preparations for shutting down Oskarshamn-1 would have started in any case, but that plans to raise nuclear tax were adding more pressure.

“We believe that this is an unfair increase,” Strandahl said. “The nuclear tax is further adding to the dire situation of nuclear in Sweden.”

The original plan to retire the reactor was “sometime after 2020,” he said.

Finland’s state-controlled utility Fortum has 45.5 percent at the Oskarshamn plant.

Vattenfall said it was still planning to operate its two oldest reactors - 865 MW Ringhals 1 and 878 MW Ringhals 2 - until the middle of the next decade, when they reach the age of 50.

“But, of course, higher nuclear capacity tax affects an already strained profitability further,” Jan Greisz, Vattenfall’s head of nuclear fleet management, told Reuters.

Earlier decommissioning would also translate into lower payments to the Nuclear Waste Fund, which has to cover decommissioning costs and disposal of spent nuclear fuel, as operators pay fees from every kilowatt-hour produced.

SSM has already proposed almost doubling the fee to 0.04 crowns per kilowatt-hour in 2015 from the current 0.022 crowns, after discovering that estimates by Swedish Nuclear Fuel and Waste Management Company (SKB) were at least 11 billion crowns short of needs.

Owned by nuclear operators, SKB is in charge of building Sweden’s permanent storage side for spent nuclear fuel.

So far, the Nuclear Waste Fund has accumulated 52 billion Swedish crowns in 2013 money, less than half of estimated total need of 110 billion crowns ($15.2 billion), Astrom said. (Additional reporting by Niklas Pollard in Stockholm and Christoph Steitz in Frankfurt, editing by William Hardy.)

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