Sweden could borrow 300 billion Swedish crowns (26 billion euros) to help finance a new fleet of nuclear reactors over the coming decades.
A government study published Monday in Stockholm highlights several characteristics of the model it favors in order to offer a certain security to investors. Financing instruments include public loans to support construction and 40 years of guaranteed income through a Contract for Difference (CfD).
The Nordic nation urgently needs new energy capacity, as demand is expected to double as the economy continues to electrify. Currently, the country has six reactors that provide about a third of its electricity, while hydroelectric and wind turbines cover most of the rest.
Financing is one of the main obstacles to nuclear power, because reactors cost billions of dollars and take years to build, often adding to the bill. The model unveiled Monday focuses on financing a program of up to 6,000 megawatts, or four large reactors, and is inspired by the Czech Republic’s plans to finance new units at the Dukovany complex.
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“We took a lot of inspiration from the Czech model,” Mats Dillen, who led a government-appointed investigation, told a news conference in Stockholm. “It was recently approved by the European Commission, which makes it interesting for us, because it allows us to adopt a support model that we know has been approved by the Commission,” he added .
The proposals will be subject to consultation with various institutions, companies and public bodies before being approved by the government.
One feature is the CfD model, used both for Électriqué de France SA’s Hinkley Point C in the UK and for Dukovany. Under this mechanism, developers and the government agree on a fixed price for electricity for a certain period, which guarantees future revenues. If market prices fall too low, the producer receives a supplement from the state. On the other hand, the plant operator must reimburse the difference if the market rate is higher.
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Unlike the Hinkley Point financing system, whose total cost is estimated at around €47.9 billion in today’s prices, the model proposed for Sweden also provides for public borrowing to finance construction. Under the proposal, the government would borrow up to 75% of investment costs, which could increase public debt by around 300 billion Swedish crowns ($28.5 billion).
Swedish state-owned Vattenfall AB and Finnish firm Fortum are among the power companies exploring the possibility of building new reactors.
The government’s roadmap predicts that at least 2,500 megawatts will be operational by 2035, enough capacity to power around 2.5 million European homes. According to Vattenfall, a new reactor could be commissioned in the first half of the 2030s.