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Reason Returns as Sweden Abolishes Its Nuclear Tax

The anti-nuclear tax measure, pushed by green groups as a means to shut down the nation’s 9 Gwe of nuclear power, will be phased out. The new policy, approved by the Swedish parliament, also allows utilities to replace current reactors with new ones as they reach the end of their service life.

The Swedish government said this week that it will phase out a tax on the install capacity of the country’s nuclear reactors over the next two years. The legislation enacted by Parliament also calls for a shift to renewable energy by 2040, but this date is not cited in the new legislation as a cutoff for nuclear energy.

Because the act allows Swedish utilities to replace aging reactors, in effect, it sets in motion plans to build up to 10 new nuclear reactors in Sweden by the mid 2040s. Four reactors will have to be replaced by the mid-to-late 2020s.
Nuclear Reactors in Sweden

Nuclear Reactors in Sweden
Table courtesy World Nuclear Association

Nuclear utilities has told the government that unless the tax was overturned, that four of the country’s ten reactors, representing 2.3 GWe (26%) of the country’s 8.8 GW of nuclear power, would be closed earlier than planned. Germany’s E.ON had already shut down one of them in response to the tax. In April of this year Vattenfall, which is owned by the Swedish government, said it would close all six of its reactors by 2020 if the tax was not abolished.

The nuclear capacity tax was passed on the consumers which raised their electric bills making it broadly unpopular. With the early shut down of one of the reactors, electricity shortages began to affect Sweden’s heavy industries. The country’s nuclear reactors provide about 40% of the nation’s electricity.

Swedish Energy Minister Ibrahim Baylan told wire services that the government’s objective is to “guarantee the supply of electricity at competitive prices.”

Later, a government spokesman added that as the nuclear reactor capacity tax was being phased out, a new tax on energy users, excluding heavy industry, would be imposed to make up for the shortfall estimated to be about $488 million in 2015. The original tax on nuclear power, imposed in the mid-1980s, was tied to electricity production rather than capacity. The newest tax will shift the burden altogether from electricity producers to consumers.

The heavy industry firms involved include steel firm SSAB, Volvo, and engineering construction giant Sandvik among others.

Green groups had pushed an increase in the tax last year in an effort to force the phase out of the reactors, and were well on their way to achieving that goal when Swedish industry raised objections to the loss of electrical generation capacity tied to the announced plan to close the first four units.

The tax was making the operation of the reactors unprofitable. Vattenfall said the tax was raising its cost to the point that it was losing money on every kilowatt of electricity it generated and that there was no way to recover from it. World Nuclear News reported June 10 that the costs were $0.038/kWh compared to revenue of $0.026/kWh.

The reversal of the tax by parliamentary actions is a setback for the green groups despite the commitment to renewable energy since the legislation also emphasizes that Swedish utilities can replace each of the ten current reactors with new ones.

Swedish utilities still face a problem of low prices for electricity. The continued operation of the current fleet, and construction of any replacements, will depend on long-term economics.

NJ Rejects Efforts by Green Groups to Impose Cooling Towers on Salem 1 & 2

The State of New Jersey Department of Environmental Protection this week granted a five-year water quality permit to PSEG which will allow it to continue to draw water from the Delaware River for cooling loops in its Salem 1 & 2 nuclear reactors. The permit does not require the two reactors to build and use cooling towers which is a plan pushed by green groups.

While the green groups claimed that the intake pipes for the reactors killed fish, in fact, their plan was to impose ruinous costs on PSEG to force it to close the reactors. Had the permit included the cooling towers, that outcome would have been assured. While the permit does not require the towers, green groups said they are considering legal action to press their case.

The two NJ reactors draw 3 billion gallons of water a day from the river in a “once through” non-consumptive use. Through this open system, the cooling water is returned to the river. The other reactor at the same location, the Hope Creek unit, does have cooling towers. It’s closed secondary loop recirculates inside the plant.

PSEG Reactors
PSEG’s reactors on the banks of the Delaware River. Salem 1 & 2 right, Hope Creek left.

Joe Delmar, a spokesman for PSEG, told wire services that over the years the utility has made improvements to the intake systems to reduce environmental harm.

The new permit includes a requirement for PSEG to conduct biological monitoring and to restore wetlands around the artificial islands that are home to all three reactors. Approximately 20,000 acres of land along the NJ shoreline of the Delaware River are included in the program.

The three reactors at the southwestern NJ site combine to form one of the largest nuclear power plants in the country. Delmar told wire services the permit keeps the plants operating and that brings environmental and economic benefits to the region.

“Nuclear plays a key role today and also in the future in meeting New Jersey and America’s clean air goals. These goals cannot be achieved without carbon free nuclear power. Just as important is the economic impact of the 1,800 jobs we supply and the millions of dollars we spend each year on goods and services right here in New Jersey.”

Separately, PSEG now has an Early Site Permit from the NRC which is a milestone towards a decision to build a new nuclear reactor. However, the permit is good for 20 years and PSEG has not made any formal plans to build a fourth reactor at the site.

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