New nuclear power is not worth it without billions of subsidies

New nuclear power would bring much-needed supply-reliable electricity production to Finland, help to fill the power deficit and more stable electricity prices. However, building traditional nuclear power is not profitable under market conditions, and supporting it can be expensive and risky for states. This can be summed up as a new survey of the alternatives for the promotion of nuclear power the outcome of the investigation.

According to a study commissioned by the Ministry of Labor and the Economy and carried out by the consulting company Afry, the construction of traditional nuclear power is not profitable at the expected electricity price levels. The same result was reached by the energy company Fortum in its own report a year ago, but Afry’s work provides an estimate of what subsidizing the construction of nuclear power could cost the state.

The construction of new nuclear power is already being planned with state support in the neighboring country of Sweden, as well as in the Czech Republic, Poland and Great Britain. Direct electricity price subsidies and various financial instruments, such as state guarantees, interest subsidies or state capitalization, are pending to support the construction of nuclear power.

According to a recent report, similar subsidies in Finland could require an annual price subsidy of 330–820 million euros and a state guarantee of 11 billion euros for one conventional nuclear power plant. The assumption in the calculation is that a 17 billion euro nuclear power plant with an electrical output of 2,400 megawatts will be built in Finland. The size class is between Loviisa and Olkiluoto nuclear power plants.

Additional nuclear power can lower the price of electricity, but it depends on the demand and price of electricity whether the benefit is greater than the support costs. The risk is that other forms of production will also need support in the future.

According to the report, an 11 billion euro guarantee for an individual institution would also increase the state’s current 70 billion euro guarantee and loan portfolio to such an extent that this could even weaken the state’s credit rating.

Of course, the calculations are based on assumptions. The amount of the necessary price support is affected by the electricity price level and the guarantee amount by the size of the nuclear power plant and the investment costs.

The Minister of Environment and Climate, Sari Multala (kok), who received the report, did not promise support models for the construction of new nuclear power in the near future, but raised the possibility of using EU financial instruments as help.

The report sees better conditions than traditional nuclear power in the profitability of heat-producing small nuclear power, but the technology is still in the development phase. The risk-free option is to extend the service life of the current nuclear power plants.

The essential question is whether this will be enough for the needs of the electricity market in the coming decades – and whether there will be industrial investments that increase the demand for electricity, if there is not enough stable electricity production like nuclear power alongside wind power. In the investment competition, pressure is brought by the better readiness of other countries to allocate money to support nuclear power.