Sweden abolishes nuclear tax
The Swedish parliament has today agreed to abolish a tax on nuclear power as it recognizes nuclear’s role in helping it to eventually achieve a goal of 100% renewable generation.
The framework agreement announced by the Social Democrats, the Moderate Party, the Green Party, the Centre Party and the Christian Democrats, will see the tax phased out over two years. It also allows for the construction of up to ten new nuclear reactors at existing sites, to replace plants as they retire. Setting 2040 as the date at which Sweden should have a 100% renewable electricity system, the document stresses that 2040 is a ‘goal’ and not a cut-off date for nuclear generation.
A variable production tax on nuclear power introduced in 1984 was replaced by a tax on installed capacity in 2000. Since its introduction this tax has gradually increased and today corresponds to about 7 öre (0.8 US cents) per kilowatt-hour. In February this year, utility Vattenfall said that the capacity tax had brought its nuclear operating costs to around 32 öre (3.8 US cents) per kWh. However, its revenue from nuclear power generation is only about 22 öre (2.6 US cents) per kWh.
Swedish utilities had sought redress against the tax through the courts, but the European Court of Justice ruled last October that Sweden could continue to tax nuclear power, deciding the tax is a national, rather than European Commission, matter.
Vattenfall CEO Magnus Hall welcomed the agreement, which he said gave the utility the predictability it needed. “The abolishment of the nuclear capacity tax is an important precondition for us to be able to consider the investments needed to secure the long-term operation of our nuclear reactors from the 1980s,” he said. Vattenfall’s reactors at Forsmark and Ringhals have undergone a comprehensive modernisation programme to allow them to operate until the mid-2040s. However, to continue operating beyond 2020 they must meet stricter safety requirements through the installation of independent core cooling. Investing in those upgrades was economically impossible with the tax in place.
“Even with the abolishment of the capacity tax, profitability will be a challenge,” Hall concluded. “Low electricity prices put all energy producers under pressure and we will continue to focus on reducing production costs. Naturally, investment decisions must be taken on commercial grounds, taking all cost factors and expected long-term market developments that the agreement implies into account,” Hall said.
The director general of the World Nuclear Association, Agneta Rising, said: “Today’s announcement is a positive development. It is vital that there is now consistent policy to give operators the confidence to make the investments needed in their plant to allow for their long term continued operation. Other countries should follow Sweden’s example and ensure that their energy policies provide a level playing field that treats all forms of generation equally on their merits.”
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