Germany has been planning for many years to phase out its nuclear power, and on Saturday the country’s remaining reactors will be decommissioned.
Magnus Thorstensson, electricity market analyst at Energiföretagen Sweden, believes that the shutdown will affect the Swedish electricity price, but mainly in the longer term.
— There are many factors that affect electricity prices, and it is very difficult to isolate the influence of a specific factor. Right now we are moving towards brighter and warmer times with lower demand, and then the shutdown matters less. But towards winter it can definitely become important, he says.
Small direct trade
The European electricity market is interconnected between several countries, and the electricity price is determined by supply and demand. According to Magnus Thorstensson, the reactor closure needs to be compensated – in the form of production – which risks raising electricity prices in Germany and on the continent.
This, in turn, can spill over to prices in Sweden.
— Sweden’s direct electricity trade with Germany is comparatively small and limited by the capacity of the export cables. But if the price increases in Germany, depending on the circumstances, it can also affect the Swedish electricity price, he says.
Finnish compensation
For Sweden, however, several factors can dampen a potential price rise. Among other things, Finland’s newly built nuclear power reactor – Olkiluoto 3 – is to have started its electricity production, the output of which corresponds to about a third of the German nuclear power plants decommissioned on Saturday.
— Finland has for a long period had a deficit in electricity production, and imported power from Sweden. With the new Finnish reactor in operation, their balance is better and the power can flow to Sweden instead, which means a higher supply which thus contributes to dampening the Swedish electricity prices.
“The new Finnish reactor is thus more important for Sweden than the recently closed German reactors,” says Magnus Thorstensson.
The German nuclear power phase-out coincides with a planned shutdown for Sweden’s largest reactor, Oskarshamn 3. According to Magnus Thorstensson, this could cause electricity prices to rise in the short term.
— Since O3 is the largest production facility in southern Sweden, it affects the price picture. But at the same time this is counteracted by higher temperatures and thus lower demand. Within a week or so, the spring flood usually starts, which can also balance the prices, he says.