Populists May Rip Up Sweden’s Nuclear Code of Conduct

(Bloomberg) -- Sweden’s biggest ever cross-party energy deal was designed to provide stability for utilities for almost three decades, but the 2016 accord is now at risk of being ripped up after next month’s general election.

The Sweden Democrats, which some polls show could emerge as the biggest party, would revoke nuclear-plant closures central to the agreement if they came to power. The Christian Democrats, one of the accord’s co-signers, on Tuesday echoed that view and pressed for key parts of the deal to be renegotiated.

The agreement ended more than 30 years of bickering over nuclear power, extended support for renewable energy and stated that there should be zero emissions impacting the climate by 2045. It effectively boosted the lives of the nation’s six newest reactors until at least 2040, but didn’t address how the capacity of four older Vattenfall AB and EON SE units will be replaced.

“It is an empty agreement that lacks concrete details,” said Runar Brannlund, head of economics research at Umea University in northern Sweden. “It doesn’t deal with how to have enough capacity when the wind does not blow and the sun does not shine. But sooner or later this will become a real issue that the parties will handle, and then we will see how they act.”

Whoever emerges as the winner next month will have to act fast. Grid manager Svenska Kraftnat warned that the nation from this winter will depend on imports to meet peak demand. It could get even worse if Vattenfall’s Ringhals reactors on the west coast are shut in two years time as planned.

There are several options to replace the lost capacity, including adding more plants to a national reserve, batteries or increased demand flexibility. But unless something is done, Sweden will be dependent on imports and could face soaring power prices, according to the network manager.

Record Power

Nordic power prices already rose to records this summer, something Skandinaviska Enskilda Banken AB and Nordea Bank AB say will stoke inflation.

The Christian Democrats, which could be on its way out of the parliament after struggling in the polls, on Tuesday mooted the possibility of new nuclear plants to meet growing power demand.

A first evaluation of the deal by the five parties involved is scheduled for this autumn. Current ruler Social Democrats and coalition partner the Green Party remain confident in the deal’s longevity and ability to handle the capacity deficit within the existing agreement.

“The strength lies in that it is a bi-partisan agreement,” Energy Minister Ibrahim Baylan said by email. “It is the first time five parties from both sides has managed to agree on the long-term energy policy.”

The Sweden Democrats, who was not invited to join talks ahead of the agreement, does not see the point of closing reactors and instead import power from nuclear reactors and plants burning fossil fuels abroad. They would start talks with Vattenfall to extend operations at the Ringhals units, energy spokesman Mattias Backstrom Johansson said by phone.

“Security of supply is more important for Sweden than Vattenfall’s economical targets,” he said. “In the past the system has been stable enough for politicians to play around with energy policy without causing any harm, but now we are approaching the first winter where Sweden will not be able to supply domestic demand.”

Other parties have signaled they will do what they can to devoid the anti-immigration Sweden Democrats of any real influence on how the country is run, even if they end up with the most votes in the election.

Despite the broad deal, a lot of topics were not covered and those need to be addressed after the election, said Lars Hjalmered, a lawmaker for the Moderate Party and one of the co-signers. One option for maintaining enough winter capacity would be more favorable conditions for bio-fueled combined power-and-heat plants currently under threat from rising taxes, he said.

The Liberal Party, the only party in the alliance that didn’t support the deal, says the best option would be to renegotiate the accord after the election.

“The energy agreement has already failed and the cracks are staring to show,” said energy spokeswoman Maria Weimer in an interview.

To contact the reporter on this story: Jesper Starn in Stockholm at jstarn@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Lars Paulsson

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