Two factors have conspired to make Vattenfall's nuclear power generation in Sweden unprofitable, explains Torbjörn Wahlborg.
"The fact that electricity prices have been low for a while and are continuing to fall, combined, of course, with the tax on nuclear power of 7 öre/kWh, means that we're currently not making any money. Our generation costs are around 30 öre/kWh, including output tax. The electricity price, on the other hand, is around 20 öre/kWh."
”Clearly, we're very concerned”
At the end of April 2015, Vattenfall decided to change its decision regarding the period of operation of the two oldest reactors at Ringhals nuclear power plant. The background to the decision was poor profitability and increased costs.
The reactors will now remain in operation until 2019 and 2020 respectively.
Torbjörn Wahlborg says, however, that the situation is difficult for the other two reactors at Ringhals too, and for the three reactors at Forsmark, all of which were commissioned in the 1980s.
"Things are really difficult at the moment, even for the newer reactors. At the same time, we're faced with a situation where everyone agrees that the 1980s reactors will be needed over the next few years. That includes the energy minister, the industry minister, Sweden's national grid Svenska Kraftnät, and everyone else who knows about these things."
According to Torbjörn Wahlborg, it is the output tax - the tax on electricity generated from nuclear power which is based on the reactors' thermal capacity - which currently stands at 7 öre/kWh, that must be dispensed with if nuclear power in Sweden is to become profitable once again.
"In my view, more and more decision makers realise that this is what we have to do if we want our reactors to continue in operation. But the leap from this to actually removing the tax is a big one."
The five reactors at Ringhals and Forsmark that were commissioned in the 1980s are now nearly half way through their planned life cycles. As a result, significant and expensive investments are required.
"Many large components, such as turbines, generators and transformers, need replacing. What's particularly worrying is that we need to make major investments in independent core cooling, for example, which is a requirement that's been imposed on us by the Swedish Radiation Safety Authority."
How do you make decisions about investments of this kind when nuclear power is unprofitable?
"So far, a good many of our investments have been made in the hope that electricity prices will start to rise. But clearly there are fewer and fewer signs that this will actually happen. We don't expect to see higher market prices for electricity over the next five or ten years."
Decision on four reactors
Nuclear power currently accounts for approximately 40 per cent of the electricity generated in Sweden. In 2015, in addition to Vattenfall's decision to close two reactors early, a decision was also taken to close another two reactors at Oskarshamn nuclear power plant where the majority shareholder is E.ON.
What impact do you think it could have on security of supply if more reactors are closed early?
"The odd thing is that we know that these reactors are needed. Equally, the fewer reactors you have in a system, the more vulnerable the system becomes if one or more production units are out of operation."
"We saw this very clearly one Tuesday in the second half of November when it was really cold. It was probably the coldest day of the year so far, seven to eight degrees below zero in the Stockholm area and well below zero in the countryside. At the same time, there was virtually no wind anywhere in Sweden. Hydro power was generating at full capacity but the electricity price shot up on the Nordpool spot market. We saw a mean daily price of almost 60 Euros in price areas three and four in southern Sweden. That's three times as high as today. And for a few hours the price was as much as 150 Euros, almost eight times higher than it is today. And, don't forget, on that day Ringhals 1 and Oskarshamn 1 were generating at full capacity."
"If we're faced with the same situation in five years' time, there'll be an additional 1,500 MW less capacity in the system. That would be really bad. I don't know if it would lead to a blackout or to people having to be disconnected, but I suspect it would."
”More smartly and more efficiently”
In spite of the very challenging situation in which the nuclear power industry currently finds itself, Torbjörn Wahlborg certainly has no plans to throw in the towel.
"We must make nuclear power more competitive. We can do this in a number of different ways. One way of course is to get rid of the output tax, and we're working on that. Another way is to work more efficiently, to collaborate more both within and between the nuclear power units, which will make us more efficient and may reduce our costs. There's a huge amount to think about at the moment. We must work more smartly and more efficiently and only do what is actually necessary. In the future, we must continue to operate our nuclear power plants with a high level of safety but with lower costs."