The looming Nordic energy crisis

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Forsmark nuclear power plant (photo Natalia Svedlund)

Forsmark nuclear power plant (photo Natalia Svedlund)

Sweden is faced with the possible shutdown of its entire nuclear generating capacity. This could result in grid instability, price hikes and much higher greenhouse gas emissions, writes Rauli Partanen, an independent analyst and author on energy and the environment. Partanen calls on policymakers to take action to avoid a Swedish nuclear phaseout.

Nuclear power in Sweden has become uneconomical. Wholesale prices of electricity in Sweden have been much lower than the breakeven price for nuclear generation. Electricity has been sold at a record low price of €20 per megawatt hour (MWh), while the cost of generating nuclear power has been in the same ballpark, or even slightly higher. In addition, the Swedish government has set a tax on nuclear power, which has been steadily rising. After the latest hike, it amounts to about a third of the wholesale price, roughly €7 per MWh.

the world after cheap oil

Rauli Partanen is author, most recently, of The World After Cheap Oil (with co-authors Harri Paloheimo and Heikki Waris), published by Routledge in 2015.

The publicly owned utility Vattenfall, which owns and operates seven reactors in Sweden, announced recently that if the government does not remove the nuclear tax, it would close down all of its reactors by 2020. This, in addition to the earlier announcements by the German utility Uniper (the company was created when E.On split its business; Uniper got the nuclear and fossil fuels part) to close down two of its three reactors prematurely, would mean a massive loss of generating capacity in Sweden and in the common Nordic electricity market. The ramifications would be huge.

How did this situation arise? To put it frankly, Swedish energy policy has been messy when it comes to nuclear power. After the oil crises in the 1970s Sweden moved away from fossil-based electricity production with record speed. In addition to its existing hydropower fleet, the country built twelve nuclear reactors, commissioned between 1972 and 1985. Their total capacity was over ten gigawatts, but three plants have since been closed: Barsebäck 1 (600 MW) in 1999, Barsebäck 2 (600 MW) in 2005 and Oskarshamn 2 (638 MW) in 2015. The current operational capacity is around 9000 MW. Nuclear power has produced between 40 and 50 percent of Sweden’s electricity.

This combination gave Sweden one of the cleanest, most affordable and secure electricity grids in any industrialized country. The average carbon emissions per kWh of electricity produced have been roughly 20 grams. The nuclear power plants produce at around 5 gCO2/kWh. If the world’s energy would be produced as cleanly as Swedish electricity, the climate change problem would be well on its way to be solved. Consider for example that the carbon balance of electricity in Germany, which arguably has the most ambitious and radical energy and climate policy today, is many times higher at roughly 500 gCO2/kWh.

Possibly the Swedes have been taking their clean and affordable electricity system for granted. Even before the last reactors were started up and connected to the grid, Swedish nuclear energy policy made a U-turn. After the Three Mile Island nuclear accident happened in the United States in 1979, the Swedes decided they needed to close down their nuclear fleet by 2010. This killed the future prospects of nuclear power in Sweden, although little was actually done to replace the nuclear fleet with anything.

With all four older reactors announced for closing by 2020, more than 2,500 MW of capacity will be lost. That is roughly equal to the total capacity of the Finnish nuclear fleet

Then, when it came to the crunch in 2010, Sweden made another U-turn, allowing nuclear power to be maintained after 2010 and even making it legal to build new nuclear reactors, as long as they replaced the existing aging reactors. But a lot of damage had been done by this time. The fact that the political order had declared nuclear power “obsolete in a few decades”, darkened the prospects of the sector considerably.

Insidious problem

In the 1990s, the Swedish government passed a tax on nuclear power, in anticipation of the shutdown. It was roughly €3 per MWh in the beginning, but after numerous hikes it is now over €7, accounting for roughly a quarter of the production costs of nuclear energy. The government collects around half a billion euros from the tax annually. The combination of this tax and record-low prices of electricity have seen to it that no new reactors have been seriously proposed in recent years. Even the planned upgrades to existing reactors have been largely forgotten, since the reactors are likely to be shut down way before their licences expire.

The tax is only a part of the problem. The deeper and more insidious problem are crashing electricity prices throughout Sweden, the Nordic market and even much of the Western Europe. There are several reasons for this, of which the most prominent ones include:

  • The economic slowdown since 2008 and the accompanying European-wide reduction in demand for electricity.
  • The increase of especially wind power in the Nordic market, made possible by price-premiums and tariffs.
  • The continuing trend of industry moving out of Europe’s shrinking markets to other countries with cheaper labour, growing markets and laxer environmental regulation.
  • The low carbon prices in the European emission trading scheme (ETS), partly a result of the three other factors.

As a result, electricity spot prices in Sweden have been around €20 per MWh for some time. Even without the nuclear tax, this is lower than the total production costs of nuclear.

Shutdown

The Swedish utilities face another challenges in addition to low prices and taxes. The Swedish law on nuclear safety requires reactors to be fitted with what is called an independent core cooler to improve their safety in the event of a Fukushima-style accident. These improvements need to be in place by 2020. This means investment decisions have to be made soon, during 2016 in most cases. Since the planned operating life of some of the older reactors ends in the early 2020s, it is not worth investing in new safety measures unless they obtain extensions to their planned lifetime.

The closures already decided upon – 2,500 MW in total – would mean Sweden would not be a net exporter anymore. Sweden could become a net importer

Both Vattenfall and OKG, which is majority owned by German Uniper and minority owned by Finnish Fortum, announced in 2015 that they will close down the older reactors before 2020. These include Ringhals 1 and 2 (Vattenfall) and Oskarshamn 1 and 2 (OKG). The planned 50 year operating lives of these reactors will end by mid-2020. Until recently the owners were planning extensive maintenance projects and upgrades to extend the lives to 60 years.

Now the situation has turned completely on its head. Oskarshamn-2 was already undergoing significant repairs and maintenance aimed at extending its operation to 60 years and having spent roughly €1 billion on them, when the operations were stopped in mid-2015, with a later decision to never start up the reactor again. Fortum, the minority-owner, was firmly against this, but Uniper did not budge. With all four older reactors announced for closing by 2020, more than 2,500 MW of capacity will be lost. That is roughly equal to the total capacity of the Finnish nuclear fleet currently.

And it did not end there. In early 2016, Vattenfall announced that if the Swedish government does not remove the nuclear tax, it will prematurely close down its remaining five reactors as well. These include Ringhals 3 and 4 and Forsmark 1, 2 and 3. All of these reactors currently have 60 year planned operating lives extending to the early 2040s. They would, however, also need the independent core coolers to be installed by 2020.  Closing these reactors down would remove roughly 5,000 MW of capacity.

Subsequently, Uniper recently announced that it is considering closing down the last remaining, biggest and most modern (along with its twin-unit Forsmark 3) nuclear reactor in Sweden, Oskarshamn-3, if the situation does not change. This would bring the closures to around 9,000 MW. This is almost equal to Finland’s average electricity consumption, and equal to twice the electricity Denmark uses, 34 TWh, in a year.

Capacity void

So what would be the result of a Swedish nuclear shutdown in terms of grid balance? Sweden is a net exporter of electricity. Depending on available hydropower, Sweden exports between 10-20 TWh of electricity annually. This corresponds to roughly 1,200-2,500 MW of constant power being exported. Most of this ends up in Finland. The closures already decided upon – 2,500 MW in total – would mean Sweden would not be a net exporter anymore, and Finland would have to find its imports from somewhere else. It could even mean Sweden would become a net-importer, depending on the spare, largely unused capacity Sweden currently has.

Imports could be increased from Poland, the Baltic countries, Germany, Russia through Finland and a few other places. Most of these countries have dirty or very dirty electricity mixes

If the other reactors – 5,000MW – are also shut down, there would be a huge capacity void in the Nordic power market, and Sweden would become a big electricity importer in a very short time. Especially during low wind productivity and during cold spells in winter, Sweden would need to import large amounts of electricity. During these times, however, Sweden’s neighbours would also need a lot of electricity. The likely sources for these additional imports would be mainland Europe.

Finland would have to rely on its eastern neighbours for maximum imports (interconnection capacity to the east is 1,400 MW). During higher demand, even these imports might not be enough.

Rauli Partaanen table

What could be done to replace the nuclear capacity at risk? There will be one nuclear reactor – Olkiluoto 3 in Finland – coming online before 2020 at a capacity of 1,600 MW. In addition, Finland will likely build another 1,300 MW of wind power, with perhaps similar additions from Sweden. Sweden and Norway have had a common electricity certificate program, which has a goal of building 20 TWh worth of wind power. This equals to about a third of what the nuclear fleet now produces.

Sweden’s lobbying organization for wind power has written that it thinks Swedish nuclear can be replaced by building many times more wind power than Sweden has now, and by dealing with peak hours and low winds by building gas turbines. This amount of wind would be hugely uneconomical to build. The gas turbines could also cost billions of euros, and they would be running only a few hours during the year, making them monumentally bad investments. At current market conditions, nobody would build either of these without very generous subsidies from the government.

The current supposedly market based system mixed with government subsidies and arbitrary taxes is proving to be a failure

Since the grid needs dispatchable power, the role of wind power will be limited unless similar increases in energy storage can be realised. The most realistic replacements for nuclear in addition to wind power are hydropower (mainly upgrading current plants) and burning wood, peat, natural gas and coal. It should be remarked, however, that none of these energy sources will be economical to build on their own in the current situation. Finland has already made a decision to give up coal in the 2020s. At the same time, Sweden is talking of dismantling some of its hydro power to restore river biodiversity.

Imports could be increased from Poland, the Baltic countries, Germany, Russia through Finland and a few other places. Most of these countries have dirty or very dirty electricity mixes, and increasing imports from them will mean that this extra power will be produced at marginal cost, most likely by burning coal. So while the imported electricity would in theory have the “average” grid carbon content of the exporting country, in reality the addition would come from burning coal with a carbon balance of 800-1,000 gCO2/kWh. As this will happen outside Sweden, these emissions might be ignored in the Swedish discussion. Out of sight, out of mind.

Rising emissions

Let’s look in more detail at what the implications might be of a Swedish nuclear phase-out for greenhouse gas emissions The Swedish nuclear fleet would produce more than 900 TWh of clean electricity during its current, licensed lifetime with a carbon burden of roughly 20 gCO2/kWh. Here are three simplified scenarios of what could happen if the nuclear energy is replaced with various energy mixes.

Scenario 1 – Mostly clean at 200 gCO2/kWh

In the most optimistic scenario, most of the alternative energy would be low-carbon, with very little imports from Poland or the Baltic countries. The electricity in Finland has a carbon balance of around 100 gCO2/kWh on average. Replacing Swedish nuclear with a mix that has 200 gCO2/kWh (only slightly lower than the median carbon balance of biomass, 230 gCO2/kWh, according to the IPCC) would increase the carbon burden manifold. Over 180 million tons of extra carbon dioxide would be released into the atmosphere during the remaining lifetime of the nuclear reactors that were shut down. This equals to three years of Finland’s total emissions, from all sectors.

Scenario 2 – Clean power and something else

If roughly one half of the production would be replaced with other clean production, like wind and hydro, and the other half with natural gas, biomass and some coal-fired imports, we get an average carbon balance of roughly 350 gCO2/kWh. This is over ten times higher than Sweden’s current electricity has, and it would increase the average carbon balance for the grid many times over. It would result in 330 million tons of added emissions, which equals to almost six years of Finland’s total emissions.

Scenario 3 – Natural gas equivalent

If the alternative energy would have a similar carbon balance as the German grid, 500 gCO2/kWh, equal to the emissions of gas-fired power, it would increase the carbon balance of the grid by more than ten times. This would be a likely result if much of the power would need to be imported (although imports would not show in Sweden’s carbon balance). It would result in over 450 million tons of added emissions, equalling 7.5 years of total Finnish emissions.

Rauli replacing nuclear graph

Rising prices

Losing a large amount of low-cost baseload capacity will also lead to higher prices and more frequent price spikes. Imports would increase, and some old thermal power plants would be restarted, with possible investments needed to increase the maximum power of current generation capacity. The timeframe of five years is rather short for any big investments. If production can’t meet normal demand, plants that provide reserve power will be started up. These have a very limited total capacity however, and the costs are high.

Affordable electricity has been one of the important factors in the competitiveness of Nordic industry. In this new situation, those affordable prices could disappear too fast for industry to be able to accommodate

In the longer run, new capacity will get built. The options for clean energy production are limited, so most capacity would tend to be thermal power or imports. This could bring average electricity prices much closer to the prices of near €100/MWh during the recent cold spell in January, when Finland had to import a lot of electricity from Estonia’s dirty power plants.

If the shutdowns are realized fully, grid operators may need to require some industry to shut down during peak demand hours. This would carry a high price in two ways. First, the high price of electricity that would precede this situation would in itself strike a blow to both industry and domestic electricity users.  When factories need to be paid to shut down production and send workers home, the situation has become serious indeed. This would be done mainly in order to keep the grid stable. Secondly, the productivity of national industry would be impacted.

Affordable electricity has been one of the important factors in the competitiveness of Nordic industry. In this new situation, those affordable prices could disappear too fast for industry to be able to accommodate. At the same time, household energy bills would go up, reducing their spending elsewhere.

Is there something we could do?

What could be done to avoid this outcome? The utilities in Sweden want to get rid of the nuclear tax. Political decisions would need to be made quickly, preferably during first half of 2016. There may be other possible solutions, but the schedule is quite tight for any major market reforms. Those reforms are, however, also direly needed. The current supposedly market based system mixed with government subsidies and arbitrary taxes is proving to be a failure.

Sweden has just announced that it aims to be world leader in decarbonization, and wants its energy sector to be carbon-neutral by 2050 or even earlier. Shutting down thousands of megawatts of low-carbon power will cost Sweden decades of hard work in this decarbonization project. Both the energy companies as well as the politicians involved need to weigh the situation carefully and negotiate with care and cool heads.

Editor’s Note

Rauli Partanen (@kaikenhuippu, @Climate_Gamble, raulipartanen@gmail.com) is an independent author and communicator on energy and its role in the environment and modern society. He is the main author of Climate Gamble – Is Anti-Nuclear Activism Endangering Our Future? (with co-author Janne M. Korhonen, published in 2015) and The World After Cheap Oil (with co-authors Harri Paloheimo and Heikki Waris, published by Routledge in 2015). He is also co-founder and vice chair of Ecomodernist Society of Finland, a new environmental NGO.

This article was originally written in Finnish and will be published by Energiauutiset 3/2016 www.energiauutiset.fi Published in English with permission.

Comments

    • Hans Hyde says

      Agree, and this problem is also prevalent in the US, where natural gas turbines are all too happy to fill the voids, where the intermittent sources increase market price volatility, and availability of bulk storage options do not match locational needs; i.e. pumped storage in sunny or windy onshore regions. NIMBY for offshore wind or 140m hub heights also dominates eastern load centers, no different than nuclear will be phased out for more political & environmental activism.

      Excellent article Rauli, as well as follow up comments by all.

  1. one.second says

    “The options for clean energy production are limited, so most capacity would tend to be thermal power or imports.”

    “This amount of wind would be hugely uneconomical to build.”

    “Since the grid needs dispatchable power, the role of wind power will be limited unless similar increases in energy storage can be realised.”

    Wrong, wrong and wrong. It is funny to see these claims dropping out of nowhere without anything supporting them, so I will answer them in style. Anyone who reads this should turn to google to see for themselves who is right:
    -The potential to produce electricity from renewables in Sweden is many times greater than its need. Wind alone could provide all the energy needed.
    -Wind power already is the cheapest source of electricity to be newly build in Europe.
    -Sweden already has huge hydropower plants, their output could be balanced with the wind output, plus it is next to Finland with huge hydro storage capacities as well.

    Wind power can be build very quickly, too. If Sweden manages it well, there will be no reason to not shut down its nuclear fleet.

    • says

      The article was quite long already, so I chose not to explain those points further. Here are a couple of comments:

      This article assumes a framing of relatively market-based solutions. I am not getting into a discussion where nuclear, because of extra taxes, is uneconomical, while at the same time some other source with subsidies is viewed as economical. The “goal posts” need to stay in one place.

      1) Regarding the timeframe, five years is a short time to build a few tens of TWh of clean power production capacity. The reason why I chose to say what I did was due to
      a) I have not seen any real-world plans on this, and the Swedes have been “shutting down” their nuclear fleet since 1980 already.
      b) All the experts (pro-renewable as well) working in the field that I interviewed and asked for comments agreed on this. Further, they thought that my text was being rather optimistic.

      2) About the economics of wind power. First: Currently, there is practically no wind power being built without subsidies or feed-in tariffs. So while it might be cheap to build wind capacity, nobody is doing it in a market-based environment. I have nothing against wind power, but like other energy sources, it needs to account for its own costs.

      Also, I have not seen anyone saying that it is cheaper to build new wind than to keep these nuclear power plants operating. They produce at roughly 20 €/MWh. That is the point.

      Further, to my main point on the uneconomics of building so much wind: building sufficient capacity of wind would start to cannibalize its own value, but still be unable to meet the POWER required by the grid at low wind times. So yes, its relatively cheap to produce ENERGY with wind, but it does not offer reliable POWER, which is as important. When it would be windy, the price of electricity would go to zero. Why would someone build more wind if they know that most of their production will happen when all the other wind farms are also producing, making price of electricity to fall near zero? This will happen way before enough wind has been built to replace the nuclear.

      3) Yes, Sweden has plenty of hydro (but it is considering dismantling some due to ecological reasons). It is already being used to balance the grid for supply and demand. The point is that they have limited POWER. Also, that capacity is and could be used to replace heavy-carbon production in mainland Europe, instead of using it to replace low-carbon and low-cost nuclear in Sweden. Finland cannot build much more hydro currently.

      And please note on the last point that there is a condition: Wind power will be limited, UNLESS similar energy storage emerges.

      About Sweden “managing” something energy related. The main point of my article was that currently Sweden is NOT managing it. They have built a lot of wind in the last couple of years, but as the subsidies died down, so did the building of new capacity. And no, they are nowhere near in replacing their nuclear capacity yet.

      Also, Sweden just announced it wants to be carbon-neutral by 2045. Closing down almost half of its current low-carbon capacity will take that goal a decade or two farther, at least. (No, the guys talking about climate goals have not yet realized this, nor is there any discussion in Sweden about this as far as I know, and I have asked around).

    • says

      Sweden is lucky , having huge hydro and wind potential . End of the day , investments in green looks less that in fossil and/or nuclear power generation units . Balancing can be a problem . But is a technical problem , means soluble ! The couple wind- hydro is typical for good balance .
      Good luck Sweden !

  2. Jan Veselý says

    What is the biggest difference between Sweden and Denmark in energetics? Danish consume 6 MWh of electricity per person per year, Swedish consume 14 MWh per person per year. Maybe they have more use for it? Maybe, but Swedish use 225 GJ of total energy per person per year and Danish use 145 GJ per person per year.
    It seems to me, that Swedish should stop wasting energy at first and make some wind, this can be done quickly and they have enough hydro to fill gaps.

    • says

      Danes do not have much energy-intensive industry. Swedes (and the Finns) do. To put it bluntly: We make the steel for them Danish windmills.

      And given the clean electricity in Sweden and nowadays also in Finland, its a good thing we do. If that steel was made in Denmark, Germany or let alone in China, the emissions would be huge.

      • Csaba says

        On yearly basis 1/3 or all electricity in Sweden is used by papermills – not steel plants. Further, in Sweden direct heating of houses with electricity is common. During chilly periods more than 10 GW out of about 25 GW is used for heating. Not so clever.

      • GMan says

        Exactly! We in Sweden (and Finland) produce what ex. the Danish use in their, in comparison, small industries. We in Swedan have Iron ore; Steel making capacity and this and many more industries are power consumption demanding. To compare the danish per capita usage of energy is not relevant in any way.
        Futhermore the polical will is obviusly to close the power capacity in Sweden. This in a industrial inviroment that uses lot of energy is not so bright to do. The power using industry doesen’t stop use energy so what is the outcom of that? We, the people are most likely to front huge rice to our private power use. We don’t live in the south of europe.. The winters are cold and long.. It’s pure madness that’s happening regarding down sizing/stopping the Swedish nuklear capacity..
        I have serious doubts of this countrys future.

  3. says

    A few thoughts:

    1) I think Germany is an object lesson in how abandoning nuclear will hurt a country’s climate change credentials no matter what great work they do elsewhere, a lesson Sweden should learn from.

    2) Seems to me it’s appropriate that nuclear pay additional taxes to cover future decommissioning costs and that nuclear plants be upgraded to meet new safety standards. These are the real costs of nuclear.

    3) While I agree that the existing fleet should be maintained in the absence of an immediate alternative and even extended in the absence of a viable zero-carbon alternative in the medium term, I find it curious that nuclear is unable to compete in the electricity markets. It seems appropriate that we should be looking for a post-nuclear zero-carbon alternative.

    • says

      To elaborate on your second point: Nuclear in Sweden is already paying to cover future decommissioning and handling the waste. This tax now in question, as far as I know, has nothing to do with that, but is simply an extra tax to make nuclear less competitive (a fiscal tax to collect money to the government). They have a similar one in Germany if I’m not mistaken.

      And on your second point, I agree partly. Nuclear is, even with the high costs of newbuild plants in western countries, reasonably competitive, given its good capacity factor and long plant lifetime. Installing wind power is lower cost per capacity, but when you take into account the total amount of energy produced during plant lifetime, nuclear is cheaper (this is for example according to IEA recent report). The baseload produced by nuclear is also of higher value to society than intermittent wind (especially when share of wind increases).

      Still, we need to find ways to make cheaper clean energy, otherwise fossil fuels will continue their supremacy. But that includes ways on how to make nuclear energy cheaper as well. There are ways to do that as well (which could have an article of their own I guess), but one example can perhaps best showcase the situation on safety and the “level playing field”:

      If other energy production was faced with the same safety standards regarding radiation as nuclear, all burning (except for natural gas perhaps) would have to stop immediately. Burning biomass or coal releases too much radiation to the surroundings. Even my wood-fired sauna by the lakeside would have to be dismantled or switch to electricity. And this does not even touch on other health hazards (particle-pollution, greenhouse gases). As has been widely studied, even with all the accidents and the waste, nuclear is one of the safest way to produce energy.

      • says

        For wind it depends on whether it’s onshore or offshore. On an LCOE basis even the IEA report shows onshore wind to be competitive with nuclear (BNEF and Lazard are much more definitive about this). To be fair, many of the wind projects in Northern Europe are offshore and those are for sure more expensive than nuclear.
        But, the biggest problem with nuclear, in my view, is the industry itself. They just can’t get a project without extensions and cost overruns. Here in the UK, what’s going on with Hinckley C is an absolute debacle. The government may ram it through in the end, but at huge political cost and further hardening of attitudes against nuclear.
        I agree with the thrust of your article that we should hang on to our existing nuclear capacity because it seems very unlikely to me that we will see a nuclear renaissance until SMRs and MSRs mature which is still some years down the road.

        • En Pelle says

          Wind power requires more transmission capacity and some sort of backup from a powersource that can power up on demand, so for the whole society windpower is more expensive than nuclear power. This is seen in Sweden as fixed fees are raising steadily. Despite same low electricity energy prices as in late 90’s households now pay a lot more on their bills.

          And in the debate is external costs not ever included, in EU almost half a million people dies every year as a consequence from burning fuels – both fossile and biofuels. More people dies per produced kWh in all the alternative power solutions than who dies due to nuclear despite nuclear figures are calculated with estimates of Chernobyl and Fukushima deaths that now have been proven to overestimate by 2-5 times.

          Sweden subsidies of reneweables to push out nuclear hasn’t even lessen release of co2 but rather the opposite due to all the concrete, steel,… that was produced (wind power uses up to 40 times more of such resources per produced kWh).

          And all but 1 rivers are used for hydro power with the result that species has dissapeared and other species are kept in small population by breeding up outside their habitat.

          Forests in sweden has also lost species due to forest industry and open land is about to loose species due to farming.

          It is easy to understand that everything man does has consequences, and reneweables can only be used to a certain amount.

          Nuclear power and solar energy are the types that has least consequences per produced kWh.
          Unfortunately solar energy is expensive and even more for a full solution as it requires expensive energy storage. In sweden one third of a solar cell production would be needed to be seasonally stored to the four coldest and darkest months – per household that would cost 10-20 times more than the solar cell power system.

      • Ike Bottema says

        Pauli you say “And on your second point, I agree partly.”
        Which part then? The part I noticed was the claim that those taxes are needed to cover decommissioning costs. Is that true? In Ontario at least, decommissioning costs have been factored in to electrical rates and monies go into a trust fund that can’t be touched other than for decommissioning purposes.

  4. says

    Congratulations!

    “The current supposedly market based system mixed with government subsidies and arbitrary taxes is proving to be a failure”

    Yes, I completely agree!

    It is not just the Nordic system that is in for a nasty shock.

    Essentially, the same, politically constructed, so-called “market-based” system is bankrupting all or most European suppliers of dispatchable power generating capacity. The gigantic losses incurred by these “serious” power suppliers is discounted by the “green” enthusiasts, gullible politicians and over-excitable journalists who mendaciously claim that “renewable energy” is driving down wholesale electricity prices! “Happy happy” talk of unlimited GW of “cheap”, mass, distributed storage (Powerwalls and such) filling the gap, fails to take into account that only about 1 GW of mostly subsidized, nearly all of limited duration, but in any case far from cheap storage was installed worldwide during 2015.

    We do not yet know how the consequences of the inevitable shortages of dispatchable capacity will reveal themselves. But when this happens, wholesale prices must respond, very negatively for consumers and to the huge financial advantage of anyone lucky enough to still own dispatchable capacity, as Norway discovered during the winter 2010 – 2011 when its reservoirs fell below 20% of their capacity. Every fossil plant in the region was base-loading power into Norway to reduce its dependence on hydro.

    • Amur_Tiger says

      I think the solution is simple, the dispatchable power producers need to start demanding higher prices for their objectively more valuable electricity, since it’s there when other intermittent sources are less able to produce.

  5. says

    Progress has some common characteristics, the most important being: “less dependency on land and nature” .
    Renewables are the opposite of progress. They require enormous space and makes us dependent on the weather. They have no future and are a sad waste of resources and a denial of human ingenuity.
    There is no technology yet to leave the fossil fuel era.
    Eventually, nuclear technology with likely thorium MSR and compact fusion reactors will take over. Placed close to the consumer, they eliminate large grids, saving billions.
    We should not be too concerned for CO2, the basic compound of life on earth. We should do vigorous nuclear research.

    • says

      If and when. Nuclear has been in decline for quite some time in most parts of the world. I have very little faith in the nuclear industry making a significant contribution on this front in terms of new generation capacity.

    • Csaba says

      “Eventually, nuclear technology with likely thorium MSR and compact fusion reactors will take over.” So the 60 years old dreams are still around? They are always far off and have nothing to do with reality.

  6. says

    It appears inevitable from this analysis that average CO2 emissions per kWh will be rising in Northern Europe. In result, Sweden might withdraw from its objective of full decarbonization by mid-century. Vattenfall’s new coal power plant in Hamburg, Germany, will likely be in operation for another 40 years anyway. It has also become apparent that none of the four bidders (thee Czech and one German) for the company’s eastern German lignite power operations has offered a sufficient price to justify a takeover. Under that circumstance, Vattenfall might decide to retain ownership of these four power plants. Alternatively, a German foundation could be formed to sustain the lignite industry in Lusatia and possibly also the Rhineland. In any case, a good deal of high-carbon low-cost electricity will continue to be available on the European grid.

    • Csaba says

      The coal power plants commisioned recent years are all from decisions from 2008 and before the financial crises that year, and the coal power plants are very delayed, with disastrous financial result. The low elctricity prices are due to over production. If there is an over production with the low prices, who will commision a coal power plant? If no more fossil plants are commisiond, why do you think that that average CO2 emissions per kWh will be rising in Northern Europe? Is it really worth calling this an “analysis”?

      • says

        If Sweden goes ahead and closes ~8000 MW worth of nuclear production by 2020, at least part of that production will be replaced with something else, and due to the short time frame, a big chunk of that will be imports. With the new transmission connection to mainland Europe, those imports will largely come from there. Baltics, Poland, Germany…

        Right now, coal and other fossil fuels have the largest marginal cost of production, and among those, the oldest and most inefficient plants have the highest costs. With a capacity void of that size, those old plants will see a new lease of life in producing and transmitting electricity to Sweden and Finland (or at least they get to operate more to supply domestic markets because there will not be any extra capacity coming to the mainland from the Nordic countries).

        So the extra production replacing nuclear will be made on the “margin”. That margin is often (and this is not an opinion) thermal power plants, which right now operate on a low capacity factor and are on the brink of being economically not profitable. No new plants will be needed, since the ones used now can often run more of the time. But that is maybe even worse, since Poland and the Baltic countries have old marginal production capacity that produces at 1000 gCO2/kWh.

        To put it bluntly, Sweden might well be “saving” the coal and oilshale (Estonia) industry that has been struggling for the last years, at least for the time being.

        • says

          Marginal costs are of little concern in Germany, where the continuation of lignite mining is regarded as a social necessity in regions that have made no provisions for prematurely retiring fossil fuel generation. The prospect that Vattenfall’s eastern German lignite assets could soon be sold at far below their book value has not evoked any proposals for simply turning off some of these plants. The required funds might be drawn from current EEG annual revenues of €28 billion if the German energy transition was not so inflexible and commensurately self-defeating. The Vattenfall sale has also underlined the lack of cost coverage for mining land reclamation and the threat of enduring water contamination in the Spree River, which flows right past the Bundestag where these developments may ultimately have to be debated. Across the border, Poland is planning an immense lignite mining project beginning around 2030 with three new power plants that would be in operation for another half-century.

          • says

            Jeffrey,

            Sounds interesting, and terrifying. I was not aware of that project in Poland. If Sweden does close its nuclear (which I hope it won’t) then there is likely a bigger market for that coal power. Do you have a link to that project, some news etc for further reference? Thanks.

        • Csaba says

          If the prices go up, nuclear plants in Sweden will not be decommisioned. if there is an incitament and as already done, it is easy to to build 10 GW wind + 10 GW solar per annum in just Germany. And > 2GW wind per annum in Sweden alone. As stated above, the major system fault with the swedish electricy system is that >10 GW of the about 25 GW peak electricity demand in winter is used for heating.

          • says

            The thing is, the regulator will shut down the plants by end of 2020 no matter what the price of electricity is, unless they make the investment decision to install those external core coolers now. And right now, it does not look economical to have those plants invested on and operational. Hence, environmentally speaking, it would probably be a great idea to remove that tax.

            And, those winds and solars you mentioned can still be built, and they can replace carbon intensive production together with nuclear in mainland europe, and we can cut even more emissions.

            I suspect that no matter which way the nuclear thing goes, those wind and solar capacity are going to be built only if they get some subsidies (if they appear solely market based, then great! So far that has not happened nearly anywhere). With the current situation with nuclear, the question is whether the extra, nuclear-specific tax should be removed or not. Imagine wind and solar having a similar tax! What I’m looking for here is a step towards a more level playing field.

  7. says

    In January, I had written an article about the enduring role of coal in Europe that included a treatment of the new 100 square kilometer opencast mining site planned by Polska Grupa Energetyczna (PGE) at Gubin-Brody. The lignite mine would be adjacent to the border and within sight of the Vattenfall Jänschwalde lignite power station. Following a decade of preparation, 17 Mt of lignite annually are to be extracted at that location. Three mine-mouth plants are intended for power generation, each with approximately 830 MW net capacity and a design efficiency of 40 percent. Regrettably, the article was not published at Energy Post due to insufficient coherency. However, it is difficult to imagine what analysis written over the last two months on the coal industry could have qualified as coherent. The fact that Vattenfall may now not be able to sell its eastern German assets would seem to indicate that either those operations will remain in Swedish hands, or the German government will set up a foundation to take them over from Vattenfall. The silence of German and perhaps also Swedish politicians on this issue is deafening.

  8. VS says

    and you scratch that thing importing from Baltics, Lithuania have ~70% imports, 15% wind, rest imported natural gas and some hydro, Latvia imports less, but mainly in spring when they have hydro, only Estonia have excess capacity, but its dirty oil shale, they have some wind too, but hey its usually windy in whole region.
    And for building more wind just look for example feb 22 nordpoolspot prices in Denmark with increasing wind it only will be worse

    • says

      VS, right. I wanted to touch this more in the article, but there was simply no space.

      Lithuania actually just got a new 700 MW transmission cable to Sweden, which they wanted to use to import electricity from Sweden. When they joined EU, they had to close down their Ingalina power plant (RBMK-type, the same that was in Chernobyl, so its understandable), At the same time, EU promised to offer secure energy supply to Lithuania in exchange for closing down Ingalina (this whole thing is perhaps something that would need an article of its own to clarify).

      Now it seems that some Swedes think they could use that cable to import energy from the Baltics/Russia. For me it seems that is unlikely to happen. And if it did, that energy would be very dirty.

      • VS says

        well Belorus is building 2x1200MW NPP nearby Lithuania, which mainly would reuse existing power lines from closed Ignalina NPP, but it’s not nordpoolspot so real availability is question plus Baltics have plans to synchronize with west…

  9. says

    Quite right VS!

    Dispatchable capacity cannot “wash its face” under these politically inspired, so-called “market” conditions!

    The whole region is moving towards a surrealistic dependence on inter-connectors for electricity security! Or a bizarre, semi-religious belief that “smart grids” and “cheap” storage will suddenly solve the problem!

    Sweden’s 8 GW nuclear shut-down in only four years time might be the trigger for Europe’s technically ignorant, political classes to wake up!

    Who knows?

    The s**t will hit the fan when

    • Tilleul says

      You can’t blame for the wholesale price. Nuclear power plants are owned by consortiums who have activities in both sides of the grid. As a power producer they sell to the grid, as an energy supplier they buy from the grid, owning both activities means they are not exposed to the risk of a fluctuating price. Power plants are not built to make a profit on the spot market, they are here to serve as an insurance for the energy suppliers. The spot market is mostly a gentlemen agreement.

      Same goes for policies : we are talking about the so called “nuclear renaissance” since 2000 ! Even when nuclear activists are drafting the energy policy of countries you can’t rely on nuclear for future use. See : UK, France, Finland, Czech Republic… Since 15 years they kept supporting nuclear and still nothing new excepts more debts.

      As they say : it’s the economy, stupid !

      Nuclear is expensive and you can’t even know how expensive it is until the thing is finally built ! Then these nuclear power plants are not made to be retrofitted. When people are saying they need some billions euros to extend the life of nuke these are only the minimum requirements you know you need to pay… there are no guarantess you won’t need to pay some more billions euros two years later (assuming the plant won’t self destruct in the meantime like TMY, Chernobyl, Mayak or Fukushima.).

      So on the production side you don’t know what nuclear is costing you and when it’s available.

      On the consumption side, nuclear was owned by monopolies so they basically knew what would be their needs during the lifetime of the plant and could decide on the price (if you think a fixed price is a subsidy how should we call a guaranteed margin!). Today you can see hundred of thousands of consumers leaving you in a matter of days so you need to be able to build, buy or sell powerplants on a very short term and if it’s easy to change ownership of a wind turbine, this is simply not possible to change the ownership of nuclear powerplant every two years.

      Nuclear is simply not fitted for the modern consumer-centric electricity market…

      I think nuclear activists should stop to talk only to each others and be a bit more open to the reality of the market. Governments can’t do anything for you, what you need is to convince banks to join in and there is a long way to gobecause there is currently no way they will keep their money in such a hasardous investment as repairing a NPP.

      Anyway as you states in your alternative the only risk you can find is a short term rising of emissions if renewable alternatives are not fast enough to grow (assuming for various reasons you would not able to connect as much renewables in Sweden as german developpers can certainly install in 6 months), so it won’t change the face of the earth… That’s only a few years of CO2 certificates which will finance CO2 reductions in other places of Europe.

      Your article is actually a good reminder that we can’t really take for granted the emissions reduction from nuclear in the near future and probably that renewables would need to be growing even faster than we imagined as they will need to replace both fossil fuels and the nuclear capacity that will disappear.

      • Ike Bottema says

        What’s really really dumb is letting those already-built-and=working-fine nukes close because of unfair pitting of over-taxed nukes against subsidized renewables. Crazy! It’s not just happening in Nordic areas, It’s the same in North America.

        There really needs to be an adjustment of market mechanisms too. Spot prices are fine for short-term needs but for base load there needs to be some sort of longer-term contracted pricing scheme put in place for guaranteed delivery to establish financial justification for capital-intensive assets like nuclear.

        • Tilleul says

          Come on we all know ageing nuclear reactors are a nightmare to maintain. As I said nuclear owners are not exposed to the spot price as they buy their own electricity. What you need is a nuclear technology which is cheaper, smaller and more reliable.

  10. Hans Hyde says

    Hello Rauli,

    You may appreciate this article, as increasingly we in the US hear about Hinckley C, but not much further into Europe on the impacts of closing nuclear plants.

    In NY, where I am currently, there are 6 reactors. Two at Indian Point, close to NYC that the ‘centers of power’ want to close without alternate generation sources. While far from the city on Lake Ontario, there are 2 stand alone small reactors (one is adjacent to the other pair, but different ownership) that their owners want to close as they’re at the end of their life & no longer economical, but the ‘centers of power’ want them to remain open… as again, there is no alternative power generation.

    https://www.linkedin.com/pulse/explosion-technology-cheerleading-draws-flourish-pragmatic-hans-hyde

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