Power prices shot to extremely high levels last winter when winter temperatures sank to their lowest. Such volatility affected both individual and industrial customers negatively. The Confederation therefore asked one of the most respected consultancies in the field, Pöyry Group, to review Swedish energy and climate policies for the next twenty years.
Their report shows that policies proposed by the Red/Green opposition parties in Sweden will lead to both higher volatility in electricity prices and greater greenhouse gas emissions in Scandinavia.
Sweden experienced extremely high power prices last winter—seeing rates shoot up to over SEK 10/kWh as compared to normal prices of SEK .30 to .50/kWh for the immediately preceding period. The explanation lies in the extremely long, cold winter and low production partly due to the temporary shutdown of several nuclear power stations.
Still, this was in the midst of a deep recession. At higher industrial production rates the country would have experienced longer periods of significantly higher prices, as opposed to the few extreme peaks. The sky-high electricity prices could have occurred daily.
Volatile electricity prices impact negatively on consumers and businesses alike. They cannot easily switch to alternatives and are therefore forced to accept the added costs, and the variations involved, or at worst, companies might be forced to shut down.
The study conducted by Pöyry, considers two scenarios for energy policy that roughly match the choices offered by the two current political alignments in Sweden—the centre-right and the left. Both scenarios consider the consequences these policies can bring in a severe winter in year 2030 and their effects on price levels, volatility, and carbon dioxide emissions.
The scenario for the centre-right Alliance parties is based on the currently enacted expansion of the electricity certificate system to 25 TWh by 2020. A total of 15 TWh of electrical power will be generated by wind power by 2030. This also includes replacing current nuclear power plants with similar production, but modern plants. Practically, only the oldest reactor, Oskarshamn 1, will be able to be replaced by 2030.
The scenario of the Red/Green opposition coalition is expected to lead to larger subsidies for electrical power production. This anticipates the electricity certificate system is expanded to 30 TWh by 2020. By 2030, wind power should also produce up to 20 TWh. But this scenario includes phasing out significant portions of nuclear power generation so only the three most modern current reactors remain in use in 2030, producing some 45% of current nuclear capacity.
A comparison of these two clear alternatives shows average electricity prices of SEK .47/kWh for the Alliance scenario while the Red/Green alternative averages .55/kWh—prices nearly 20% lower during an extended severe winter in 2030.
The electricity certificate program would also result in increased supplemental charges to consumers. These would be as much SEK .13/kWh for the Red/Green alternative compared to SEK 8.8/kWh in the Alliance scenario—bringing the total difference in average prices to household consumer up to SEK .13/kWh.
The Red/Green scenario also brings greater volatility and so vulnerability. This is primary due to having lower levels of base production in combination with greater reliance on wind power, which is much less predictable. The study shows that central Swedish electricity prices would pass the SEK 1/kWh price level 13 times for the Alliance scenario compared to 110 times for the Red/Green scenario for the projected winter in 2030. The centre-right Alliance scenario anticipates Sweden being able to export as much as 15 TWh electrical power more per year than the Red/Green scenario, and so earn from exporting emissions-free electricity.
Carbon dioxide emissions are also considered since the Scandinavian energy sector is part of the larger European Union Emission Trading Scheme. In the Red/Green scenario, annual emissions from Scandinavia would be 3.9 million tons of carbon more than the Alliance scenario. This finding raises serious questions about the climate policies advocated by the Greens.
There is the argument that the Emission Trading Scheme would enable adjustment for this increase, but then other European countries would be required to compensate for the greater emissions advocated by the Red/Green coalition.
Another negative affect found in the Red/Green alternative is the greater difficulty in managing the addition of new wind power generators. With the advocated phasing out of nuclear power generation, Sweden would be forced to rely on its more easily regulated hydropower as part of its base production.
For Sweden to remain a leader in energy and climate issues, it must provide more competitively priced energy. This speaks for the governing Alliance’s current policies to implement a full modernisation of nuclear energy supplies at current levels, increase competition in electrical power production markets, improve consumers’ flexibility in choosing energy source, and eliminate bottlenecks in transmission capacity.
As well, Sweden should become a driving force in developing new technologies, like ‘Smart Grids’, solar energy production, and so-called fourth generation nuclear power plants. This would enable reducing greenhouse gas emissions while keeping power prices at levels both private and business consumers can live with—and keep Sweden at the forefront of energy and climate issues!
