Nuclear certainty: Sweden seeks ways to shield investments from politicians’ whims

New nuclear power projects are typically associated with investment horizons spanning decades. Over such a long period, however, major changes can take place on the political scene, as has been evident, for example, in Germany. Sweden’s current government will therefore look for ways to give investors greater certainty and protection against possible policy changes in the future.

Ensuring an adequate supply of electricity remains a key priority for most, if not all, countries and governments, not only in the European Union. While some countries are increasingly relying on the development of renewable energy sources, a considerable number of others are returning to the idea of building nuclear power plants. These can provide dispatchable supplies of low-emissions electricity, particularly as other conventional sources, especially coal-fired power plants, are being phased out.

Investment horizons spanning decades can, however, be a major obstacle for most investors, particularly in view of political risks. With new governments taking office and energy strategies changing, the economics of operating nuclear power plants can be put at risk, especially if they are shut down prematurely.

“Investments in nuclear power are long-term. It takes a very long time to bring nuclear reactors online, and they are then operated for decades, during which further investment may be needed. At the same time, the role of nuclear power is an issue on which politicians’ views have changed over time in some cases. This means investments will not be made because of the risk that future political decisions could lead to power plants being shut down,” the Swedish government said, according to World Nuclear News.

The Swedish government has appointed Anne Vadasz Nilsson as a special investigator and tasked her with submitting proposals on companies’ right to compensation if political decisions lead to their nuclear power plants being taken out of operation.

Among other things, Nilsson is to propose who should be eligible for compensation, under what kinds of political decisions the right to compensation should arise, how much compensation should be paid, how it should be funded, and what legislative or other regulatory changes are needed.

Investors should not fear politicians “pulling the rug out from under them”

“As the owner of a nuclear power plant, you should not have to worry about politicians pulling the rug out from under new nuclear power projects. A new right to compensation could give owners greater certainty and lead to more investment in Swedish nuclear power,” Sweden’s Minister for Energy and Enterprise, Ebba Busch, said, according to the outlet.

When it took office, Sweden’s current government adopted a positive stance towards nuclear power and intends to develop the sector in the future. These plans are expected to include building at least two new nuclear units by the middle of the next decade and up to ten units by 2045.