Decommissioning of nuclear power in German will lead to higher electricity prices in Sweden


Monday, 30 May 2011
The Germans decided on Monday to phase out the use of nuclear power by the year 2022. The immediate effect immediately accounted by analysts of this is that it will lead to higher electricity prices in Sweden. This has to do with normal economic principles which show that shortages in the market lead to high prices.

Therefore, concern over shortage of electricity means that expected price increases are coming earlier than anticipated and in the long run, these are big changes. "In Sweden, there is already a doubling of electricity prices," said Bj�rn Karlsson, professor of energy systems at Link�ping University, to Swedish daily Dagens Nyhteter.

German Chancellor Angela Merkel's coalition government has backed away from last year's decision to allow the country's 17 nuclear power plants to live on. On Monday, the coalition agreed that the country will be totally free of nuclear power in eleven years.

The decision has direct implications for the Swedish electricity consumers. Price increases as Professor Bj�rn Karlsson already mentioned has been expected with the liberalization of the European electricity market. But this will come in than expected. Does the average person have to fear that the decommissioning of nuclear power in Germany leads to a lack of affordable electricity; this is typically directed to the market.

“It's quite a nervous stock market, power exchange. If it is felt that there is a risk of electricity shortages the price will rise. There is a lot of psychology in it, "said Bj�rn Karlsson, professor of energy systems at Link�ping University, to Dagens Nyhteter.


Not only do futures trade in the purchase of electricity four years from now is confusing, the future price of electricity is also governed by what it costs to build and operate new plants, according to Bjorn Karlsson. An extension is needed if Germany's 17 nuclear power plants are to be closed.

“The risk of failure increases with the removal of these reactors and bringing forward the construction of new power plants. Then the price rise is expected to come in earlier, "said Bj�rn Karlsson, and continues:

“We have traditionally low electricity prices in Sweden and we are doing so by having twice as much power as the Germans per produced product. Now that we have common electricity market the prices are smoothed out. In time, these are the major changes for electricity consumers, "said Karl.

In Sweden, there is a doubling of electricity prices. It is enough that we get to a new economic boom? We will see,” ponders the professor.

Anders Wallinder, analyst at Energy Agency, believes that the Swedish electricity prices will be affected significantly in the short term. In more recent times he thinks, given how the market works to the settlement decision will mean higher prices.

“The Nordic and continental prices will increasingly be linked together in the future. We are very dependent on the mix that exists in Germany,” said Wallinder to Dagens Nyhteter.
Other analysts already report that electricity prices have already increased somewhat after the nuclear disaster in Fukushima. The upcoming German decision, Sweden is affected by the fact that Germany is an alternate source of electricity if there is a deficit in the Swedish reservoirs.
The point is that over night there would not be twice as high a price with the closing down of nuclear power.

But our question here still stands that if nearly a quarter of German's electricity comes from nuclear power so the question becomes: How do they make up the short-fall?
By Team

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