Sweden wants to build both small and large nuclear plants. The state had to step in

Sweden has taken another important step towards building new nuclear capacity. At the end of June, the state announced that it would acquire a 60% stake in Videberg Kraft, which is preparing new reactors at the Ringhals site. The stake is being sold by Sweden's Vattenfall, which is 100% owned by the Swedish state. The parties have also agreed on the main parameters of public support. As with Czech support for the new Dukovany units, the model rests on the same three pillars: state loans, a contract for difference and the sharing of selected risks. At the end of last month, the Swedish government announced that the state would become the majority owner of Videberg Kraft AB. The company is preparing the construction of new nuclear reactors in Sweden near the existing Ringhals nuclear power plant. The state is to acquire 60% of the company's shares from Vattenfall

Visualisation of a Rolls-Royce small modular reactor. Source: Rolls-Royce The project envisages total capacity from the new units of approximately 1500 MW. Videberg Kraft is to build three to five small modular reactors, and Vattenfall previously announced that Rolls-Royce SMR would supply three of the units. If implemented, it will be one of Europe's most significant commercial large-scale SMR construction projects. The Swedish government is also retaining some flexibility in the future ownership structure. It has asked parliament for the ability to adjust the state's stake between 51 and 65% until the reactors are completed and enter regular operation, but no later than 2045.

Without public support, investors are not rushing into nuclear power

The Swedish case once again shows that new nuclear projects in Europe can hardly do without a substantial role for the state. In February, Vattenfall said that the project was too large to be carried solely on its balance sheet

Ringhals nuclear power plant. Source: Vattenfall Vattenfall said the agreement represents a unique combination of an energy company, industry and the state in a joint ownership structure. According to the company, the negotiations were challenging, but resulted in risk allocation based on the principle that responsibility should be borne by the party best able to influence a given risk.

“These were challenging negotiations. However, we reached a solution in which risks are divided between commercial entities and the state, based on the principle that responsibility for a given risk lies with the party best able to manage it. It was a thorough process accompanied by a strong shared determination to enable the construction of new nuclear capacity in Sweden,” Anna Borg concluded.

The government is now preparing a notification of the public support to the European Commission. Sweden expects the Commission's decision in the second half of 2027. Only then will it be possible to assess whether the proposed model will pass state-aid rules in the form Stockholm negotiated with investors. The support structure itself is well known from a European perspective. The Swedish model is to rest on three main instruments: a preferential government loan, bilateral contracts for difference and a risk-sharing mechanism (or protection against risks). At its core, it is therefore very similar to the model the Czech Republic notified for two new units at Dukovany.

EU nuclear support is converging on a model originating in the Czech Republic

For the Czech Republic, Sweden's move is important for several reasons. First, it confirms that the model of public support for new nuclear power in Europe is beginning to converge around a combination of cheap state financing, a contract for difference and risk sharing. This may strengthen the Czech position before the European Commission that, without similar instruments, new units at Dukovany cannot be built on acceptable terms. Second, however, the Swedish model shows that the Commission will have an increasing number of comparisons. Alongside the Czech case, it is also assessing France's plan to support six EPR2 reactors, and will now deal with the Swedish programme. If any state offers investors a less generous allocation of risks or greater direct state control over a project, this may affect the negotiating room of other countries. The third important point is technology. While the Czech Republic is pursuing large APR1000 units at Dukovany, Sweden intends to launch Rolls-Royce SMR modular reactors as its first major project. ČEZ, meanwhile, sees the same technology more as a future complement and holds an approximately one-fifth stake in Rolls-Royce SMR.