Svezia : December 16, 2010
The nerves and patience of the Nordic electricity buyers are being sorely tested for the second straight winter in a row. The previous winter had electricity prices reaching record levels on the deregulated market mainly due to the poor performance of the Swedish nuclear reactors. These nuclear facilities generally account for half of the country’s electricity generation but have, for long periods, stood at less than two-thirds of their total capacity due to technical problems.
Prior to the start of this winter season the nuclear power producers – who by the way are also the three largest energy companies in the Nordic Market and control nearly 90 percent of the total production capacity in Sweden – all solemnly swore that this winter all the reactors would run smoothly without any major incidents. However now that winter has barely started, consumers have been hit by below normal cold conditions and technical problems have arisen with the two largest nuclear reactors causing price spikes in the electricity spot market.
“We are now seeing serious signs that Swedish companies are being damaged by high energy costs and a lack of a long term Swedish energy policy”, said Peter Egardt, CEO of the Swedish Chamber of Commerce. Some of the larger energy intensive industries have already taken action given the higher cost of electricity. Steelmaker Outokumpu announced a month ago that they are prepared to halt production and sell their contracted power to the Spot market in the “likely event” of price spikes on the Nordpool thus making these power sales more profitable to them than their core business activities. Another electricity intensive company, SCA, also announced that it will shut down its production for some time due to the higher electricity prices.
Critics of the Nordic Electricity Market have pointed out a number of measures to improve the situation. Perhaps the most significant step suggested would be widening the ownership of Swedish nuclear reactors to include the very industries that depend upon them for their own production needs. This type of action was taken up in Finland where industry owns close to half of the country’s nuclear capacity. The critics also suggest that the Government should encourage the development of additional nuclear reactors with its owners being from the non-energy industry sector. Other suggestions include breaking up the country’s largest energy company Vattenfall. However, as this energy company is owned by the Swedish government, they are not likely to kill this goose that lays the golden eggs.