Sweden’s Power Bills Set to Rise With Closure of Nuclear Plant

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Millions of homes and factories in Sweden could get hit by rising power costs after the nation’s oldest nuclear reactor generates its last megawatt on Thursday.

Utility Vattenfall AB took the decision to shut the reactor five years ago. Since then, the energy debate has turned from discussing what to do with a massive glut of power to how to deal with a capacity shortages in many of the major cities. The closure of Ringhals-1, the fourth reactor to shut in seven years, will strain supply to the populous south.

“The shutdown has a double effect on the south of Sweden,” said Christian Holtz, an analyst at industry consultant Sweco Energy AB. “It cuts power generation in the region and it forces the system manager to further limit the transfer capacity from the north to keep the grid stable.”

The Ringhals-1 reactor on the west coast will leave the grid after 44 years, despite several motions from opposition lawmakers to the parliament to extend its life. There was even a proposal by an entrepreneur to buy the reactor, but it was never considered by Vattenfall.

“It was an utopia and far too late,” said Bjorn Linde, the plant’s chief executive officer. “We work in a long-term industry where you cannot just reverse the plans with a couple of weeks’ notice.”

Sweden’s Power Bills Set to Rise With Closure of Nuclear Plant

The lack of transfer capacity means power prices are diverging within the country. While the north of Sweden has this year had the lowest power prices for more than two decades, rates in the south have been about 60% higher. That resulted in consumers paying more than 1.5 billion kronor ($177 million) extra in the first 10 months of the year, according to a calculation by Sweco. Hedging prices for next year are also still trading at almost twice the rate in the south.

The Ringhals-1 reactor started generating power in 1976, one year after the Ringhals-2 reactor, which was closed down last year. The decision to shut the reactors was based on financial considerations, since both units could have technically continued to operate for several more years, Linde said. The plan is to operate the two remaining and much younger units at the plant until at least the start of the 2040s.

Sweden’s Power Bills Set to Rise With Closure of Nuclear Plant

By the middle of 2022, Ringhals will have removed all the radioactive fuel from the two reactors. It will then be able to start the dismantling process. The sites of the two defunct units should have normal radiation levels by the start of 2030, but it has not yet been decided if the buildings will be torn down.

The Swedish grid manager Svenska Kraftnat AB has pledged to spend as much as 75 billion kronor during the next two decades to strengthen capacity to the south from the north, where much of the nation’s giant wind parks are located.

©2020 Bloomberg L.P.

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