Sweden government shifts nuclear power funding approach amidst energy crisis

The government has shifted its stance from insisting that new nuclear power should be built under market conditions to recognizing the need for state involvement in risk-sharing with energy companies. Finance Minister Niklas Wykman emphasized the urgency of ensuring an increased electricity supply, which is vital for transition, jobs, and growth.

Investigator Mats Dillén proposed a guaranteed electricity price of 0.8 SEK per kWh and low-interest state loans to improve the economic feasibility of new nuclear projects. He noted that these loans would not burden taxpayers over time and that potential state profits could arise if the projects are successful. Dillén stated, “We aim for the best estimates, avoiding overly optimistic forecasts.”

However, Thomas Tangerås, an electricity market researcher, cautioned that the costs for taxpayers might be double the anticipated amount, even if companies benefit from rates two percent lower than bank loans throughout the lifespan of the power plants.

The government aims to nearly double electricity production to 300 TWh, with nuclear power playing a crucial role. Plans include building two large reactors within ten years and a total of ten by 2045. However, energy companies have hesitated due to high costs and uncertainties. Consequently, the government has prompted an investigation into how financial risks should be distributed between the companies and the state.

The proposal for support involves three components: government loans covering 75% of construction costs (300 billion SEK) while companies cover 25% (100 billion SEK); a price guarantee for electricity, with the government paying the difference if prices fall below 0.8 SEK per kWh; and a safety net for companies if costs rise significantly, adjusting financial terms accordingly but allowing the state to share in profits if projects become rapidly profitable.