Low Nordic power prices cast doubt on Swedish nuclear return

Tasmin Chowdhary


• Ringhals 1 reactor to reduce margins

• Uncertainty around nuclear units returning

• Production could remain low on strong hydro

LONDON (ICIS)–Swedish nuclear production has fallen to new lows as market prices have plummeted, while the opportunity that supply will be limited this winter has increased with Nordic futures staying at unattractive levels for plant operators.

The country could experience supply restraints from early next year as the 880MW Ringhals 1 nuclear reactor is permanently shut down, adding to the baseload capacity deficit.


Nuclear plants have been operating at reduced load this year as producers switched off because of weak market prices and limitations caused by the coronavirus. The capacity factor dropped to 60% in the first half of the year, down from 86% the same period a year ago, data from grid operator Svenska Kraftnat shows.

The system operator’s deal with utility Vattenfall to keep its 880MW Ringhals 1 online this month underlines the possibility for capacity constraints over the coming months, as electric heating demand over the winter sets in.

Latest transmission system operator schedules show availability of Sweden’s 8.8GW nuclear fleet is set to increase from 50% currently to 63% by the end of September, although bearish market prices leave uncertainty around when units will fully return.

Nordic power September ’20 tumbled to a low of €7.65/MWh last month and although it has recovered value it was still hovering below €11.00/MWh in week 32, Nasdaq exchange data shows. Market prices of €10-12.00/MWh would be necessary for nuclear facilities to operate at a reasonable margin, traders previously told ICIS.


A crucial problem is that lack of interconnection between the northern wind-based SE1 and SE2 price zones to southern consumption points in SE3 and SE4 means that renewable generation is often trapped.

This has led to unusually wide price spreads between the four bidding zones this year, with southern areas delivering at a strong premium.

In the southern SE3 zone, Sweden may face challenges in meeting peak demand when Ringhals 1 is switched off at the end of the year.

A new interconnector, the 1.2GW SouthWest HVDC link will strengthen transmission between central and southern Sweden and reduce bottlenecks during the winter when demand escalates. The link could narrow delivered price differences and is due online in October, according to Svenska Kraftnat.


Dominance of low carbon electricity in the supply mix means Sweden is a dominant net exporter in the Nordic and Baltic region. Switching to inbound flows in exceptionally restrained periods would help ease any grid problems.

Typically, hydro reservoirs provide flexibility and production would increase during the higher-priced peak hours, so generators can maximise revenues and robust stocks this year means production will be above levels seen historically.

This would potentially counter the supply margin limitations caused by lower nuclear plant availability this winter and into early next year.


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