Swedish government proposes loans, contracts for difference for new nuclear

The Swedish government has proposed government loans and two-way contracts for difference (CfDs) to support the construction of up to 5 GW of new nuclear power capacity.

Loans could be provided for the design and construction phase for new reactors, ministers laid out in a March 27 plan.

Once operational, new nuclear power plants could enter CfDs. Neither the loan amounts nor the CfD levels were detailed.

5 GW is equivalent to four large-scale reactors. To build a project, energy companies can create joint ventures with industrial partners or the state to reduce the burden of capital requirements, ministers said.

While a formal decision on state aid approval would have to be made by the EU, the commission earlier this week issued a comfort letter about the Swedish plans, which indicates that they will likely be in compliance with EU state aid rules, said Finance Minister Niklas Wykman in a press conference.

Companies can begin applying for funds from August 2025. The budget for the program will not be clear until the government's autumn budget plan, however.

By co-financing and assuming risk in a project, the Swedish state would lower the financing costs for new nuclear projects, which it said was a prerequisite for enabling investments.

Indeed, Swedish utility Vattenfall and Finland's Fortum have pointed to the need for risk-sharing models to be implemented before new investments can proceed.

Vattenfall welcomed the proposal on March 27. "The state taking a clear role in financing is a basic prerequisite for it to be possible to invest in new nuclear power. The bill is therefore a crucial step on the path towards us being able to realize new nuclear power on the Varo peninsula near Ringhals," said Desiree Comstedt, head of new nuclear at Vattenfall.

The Varo site in southwestern Sweden could host the first new nuclear reactor.

Vattenfall said it would now study the proposals and submit an application as soon as possible.

The actual levels of support available will only be known after the application is made, Comstedt noted.

A new reactor at the Varo site can be in operation in the mid-2030s at the earliest, Vattenfall added.

Price volatility

Energy minister Ebba Busch pointed to increasing price volatility in the southern Swedish price zones SE 4 and SE 3 as an example of why new baseload power in the form of nuclear is needed.

Deploying stable generation will improve system reliability and facilitate the integration of wind and solar, Busch argued during the press briefing.

"The question about pushing out other technologies is fair," she said. "But when it comes to the alternative - that is what we live with now," Busch said, adding that battery storage and grid enhancements do not address the problem of seasonal variation in generation.

"We don't see nuclear as the only solution," Wykman said, noting that wind and solar can complement the technology.

Nuclear has become an ideological debate in Sweden, Busch argued.

However, "the times where the one who wants to do the least ... wins are over," she declared, referring to potential political objection to the plans.

Sweden will hold its next general election in September 2026.