Sweden’s Riksdag (parliament) has approved government’s proposals for providing state aid to companies that want to invest in new nuclear reactors. The 98-page bill, proposing a law on state support for investment in new nuclear power, was submitted in March. It was approved with a narrow majority of 154 votes in favour and 151 against. It will enter into force in August.
Aid may be in the form of government loans and two-way contracts-for-difference (CfDs) between an operator, a power generation facility and the state that provides both minimum compensation protection and a limit on over-compensation. Aid may only be granted if new nuclear reactors are located on the same site and have a total installed electrical power of at least 300 MWe. However, the government may decide to grant aid even if the reactors have a total installed electrical power of less than 300 MWe if there are “special reasons”.
This came after Sweden’s new centre-right coalition government in 2022 adopted a positive approach to nuclear energy, outlining a roadmap in November 2023 for the construction of new nuclear generating capacity. This envisages the construction of new nuclear generating capacity equivalent to at least two large-scale reactors by 2035, with up to 10 new large-scale reactors coming online by 2045.
In December 2023, the government appointed Mats Dillén to submit proposals for models for financing and risk sharing for new nuclear reactors. The model was designed so that nuclear power with a total power of at least 2,500 MWe, corresponding to the power of two large-scale reactors, would in place by 2035. His report, presented in August 2024, said the investigation “identified conditions which give rise to a discrepancy between a private investor’s business case for new nuclear power and the socioeconomic equivalent. It is concluded that efficiency reasons give a rationale for the state to support investments in nuclear power”.
In January 2024, Energy & Industry Minister Ebba Busch had appointed Carl Berglöf as national nuclear power coordinator to support the government in following up and analysing how the work with the expansion of nuclear power was progressing and identifying the need for supplementary measures. His assignment was to be completed by the end of 2026.
The law that the Riksdag has voted for lays down a framework for how the financing of the first reactors can be used, the Ministry of Finance said in a press release. “State aid is limited and is planned to include investments totalling up to approximately 5,000 MW of electrical power, which corresponds to four large-scale reactors.” Companies interested in receiving state aid for investments in new nuclear power can apply to the government. Support is provided in the form of government loans and two-way CfDs.
“These two parts contribute financial support at different stages of a project: Government loans are given for the construction and test operation of new nuclear reactors, and for planning and other preparatory measures. It is not possible to borrow at the entire investment cost, and additional equity is required. The state loans must be paid back gradually to the state after the nuclear reactor has been commissioned.”
The two-way CfDs are “a form of price hedging agreement and applies when the new reactor has been commissioned and is authorised to produce electricity at full power”, the Ministry said. “The price hedging agreement may entail a cost or revenue for the state depending on the electricity price. If the average price of electricity in the electricity area where the new reactor produces, on an annual basis falls below the set exercise price, the company receives compensation for the difference from the state. In the reverse, when the average electricity price exceeds the exercise price, the company must pay the difference to the state.” The terms of the support also include a mechanism that regulates risk and profit sharing between the company and the state.
Finance Minister Niklas Wykman said: “This is a historical message that takes responsibility for public finances and taxpayers’ money when we enable players to build new nuclear power. An expansion of nuclear power is expected to lead to more stable prices and lower system costs, which benefits both households and companies. With new nuclear reactors, we pave the way for higher growth, more jobs and better conditions for coping with the climate change.”
