MAGNUS HALL ON THE ENERGY AGREEMENT

Magnus Hall

Sweden There are two parts of the Swedish energy policy settlement that are welcomed in particular by Vattenfall's CEO Magnus Hall, who says: "The most important components for us are that the politicians have decided to phase out, and respectively reduce, the taxes on nuclear power and hydro power".

On Friday 10 June the parties in government, the Social Democrats and the Green Party, together with three opposition parties, presented an agreement that sets out a framework and objectives for Sweden's energy policy over the next 25 years.

Investments in the energy field always involve large sums of money and there is a major requirement for the planning to take a long-term approach.

"The energy agreement provides predictability surrounding our framework conditions in Sweden, which is important in order to take a position on investments in existing and new production capacity," says Magnus Hall.

Will be phased out
Two points in the agreement have a direct effect on Vattenfall's existing operations. The first is that the nuclear power tax, also called the output tax, will be phased out over a two-year period, starting in 2017.

"One prerequisite for us being able to take any sort of position at all on whether to continue investing in nuclear power, including the measures to improve safety in independent core cooling, which can't actually be recouped in any other way than through being able to run the reactors, was that the nuclear power tax would be removed," says Magnus Hall.

”Completely unreasonable”
The second point in the settlement entails the property tax that hydro power pays being gradually cut from its current 2.8 per cent to 0.5 per cent over a four-year period, starting next year.

"This tax came about when the price of electricity was extremely high and today it is completely unreasonable. The tax has been unreasonable in that sense, but also in relation to the investment that hydro power requires in order to be the necessary complement to other weather-dependent, renewable sources of energy."

Better transmission
In Sweden an electricity certificate system is used to stimulate the development of renewable electricity generation. For each MWh of renewable electricity generated, the producers can obtain an electricity certificate from the government.

The electricity producers can then sell the electricity certificates in an open market where the price is determined between seller and buyer.

What do you feel about the fact that the electricity certificate system in the energy agreement is being extended to 2030 and expanded by 18TWh of new certificates?
"I view it above all as a part of the political compromise that has been required in order to come to an agreement. The substantial increase in renewable energy generation must be combined with significantly increased transmission capacity within the Nordic region, but also from the Nordic region and out towards other markets so that the power is not only available here. It is an important issue, which we have put forward separately and which is quite clearly described in this agreement."

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