June 23, 2016 / 5:05 PM / 3 years ago

Sweden's deal leaves door to nuclear power open, but only just

STOCKHOLM, June 23 (Reuters) - Sweden has agreed to cut taxes on nuclear power generators and allow for the construction of new reactors but policymakers have yet to work out how that fits with a commitment to using 100 percent renewable energy.

Nuclear reactors provide about 40 percent of electricity in Sweden, ensuring stable supplies in one of the world’s highest per capita power consumers.

But major ruling and opposition parties say Sweden should aim for all renewable energy by 2040, starting by adding 18 terawatt-hours (TWh) in annual renewable production during the next decade.

French utility EDF, the world’s biggest operator of nuclear reactors, has said the June 10 agreement was a major boost for the industry, while Toshiba Corp’s Westinghouse Electric, reactors’ producer, urged other governments to follow Sweden’s example.

But the major political parties also said that Sweden should aim to have “100 percent renewable electricity production” by 2040, while adding 18 terawatt-hours (TWh) in annual renewable production during the next decade.

State-owned Vattenfall, which operates seven out of nine active reactors, denied that the agreement meant the reactors would have to shut by 2040, and said the 100 percent target covered only domestic consumption.

“It means that there can still be nuclear reactors exporting power,” said Torbjorn Wahlborg, head of Vattenfall’s Generation, said.

Spokeswomen for the Energy Minister Ibrahim Baylan and for the Green Party, a junior member of the ruling coalition, challenged that view.

“That is not correct, because the target is formulated as electricity production... that means all production in Sweden is renewable,” Lise Nordin, Green Party energy policy spokeswoman and member of the parliament, told Reuters.

While the agreement allows power generators “in theory” to build new reactors, in reality they would be too costly, she added.

“The probability that new nuclear power will be built is zero,” Nordin said.

Wahlborg said it was unlikely that any entity would build nuclear reactors in Sweden during the next five to 10 years, given low power prices and plans to add more renewables, but he didn’t exclude this in the longer term.

Sweden’s biggest business lobby, the Confederation of Swedish Enterprise, said the political deal was contradictory.

“To say that you will have 100 percent renewable electricity and that this doesn’t mean closure of nuclear power is difficult to understand,” Maria Suner Fleming, in charge of energy and climate policies at the Confederation, told Reuters.

“But it’s good that we have a broad political agreement that we are not forbidding nuclear reactors,” she said.

Vattenfall and E.ON had said they would be forced to shut their loss-making nuclear reactors in Sweden unless the tax on nuclear capacity was abolished, risking a spike in electricity prices and energy shortages for industry.

Vattenfall says the nuclear tax accounts for about 25 percent of its costs.

“The deal saves the existing reactors,” said Wahlborg. (Reporting by Nerijus Adomaitis; Editing by Ruth Pitchford)

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