Kärnkraftssamordningen

The Swedish Nuclear Programme

The Swedish Government has, since it came into office in 2022, taken several steps to establish a new nuclear programme in Sweden. The Government has, inter alia, proposed a model for risk sharing that is expected to be adopted by the parliament by summer 2025. The Government has presented a bill on research and innovation in the field of energy, where research on nuclear power is a particular priority. Investments are made in pilot and demonstration projects in the area of nuclear power and the licensing and environmental permitting processes are being reformed to make them more efficient. An overview of all measures can be found in the second interim report of the National Nuclear New-build Coordinator.

A Model for Financing and Risk Sharing

It is around 40 years since the last nuclear power plant was built in Sweden. Building new reactors is expected to be relatively expensive because recent experience is lacking and new supply chains will need to be built up. A model for financing and risk sharing has therefore been deemed required to facilitate investments in new nuclear power. The model is intended to finance a programme equivalent to 4 000–6 000 MWe (megawatts electric) of installed generator capacity, corresponding to about four large-scale reactors. Subsequently, it can be expected that both the costs and risks associated with building new nuclear power will have fallen, and thus also the need for state aid.

The financing and risk sharing model consists of three main components that address key risks in a nuclear power project. Together, they lead to a lower cost of capital that facilitates new investments in nuclear power at a low cost.
1. State loans – State loans are issued by the National Debt Office to finance investments in new nuclear power, which lowers the cost of capital. State loans enable a higher debt-to-equity ratio during the construction phase than can be obtained on market terms, and at a lower interest rate than the market would have provided.
2. A price hedging agreement
A two-way contract for difference is signed between the state and the nuclear power producer. The contract for difference is designed to preserve market incentives. For periods when the market price of electricity is lower than the agreed strike price, a cost arises for the state, which is financed with a tax proportional to electricity
consumption, paid by all electricity customers. In cases where the market price is higher than the strike price, the state will receive income from the contract for difference which can be passed on to the electricity consumer.
3. Risk and gain-share mechanism
The third component is a risk and gain-share mechanism that gives investors a minimum return on equity. Conversely, in the best outcomes, profits are shared with the state and electricity consumers. The mechanism is activated based on the result of a market valuation of the project after the nuclear power plant has entered the operational phase. The risk and gain-share mechanism is active until the value of equity in the project is restored to a level between a floor and ceiling value. After that, the project is left on its own with the expectation of earning a market return.