Low prices may force Vattenfall reactor closures – analysts

 (Montel) Swedish utility Vattenfall’s warnings that poor profitability may force it to close more nuclear reactors should be taken seriously, analysts told Montel on Wednesday.

“No matter how you add up the numbers it is impossible to make money from nuclear generation with a power price of EUR 20/MWh,” said Christian Holtz, analyst at consultants Sweco.

He expects the state-run company will make an announcement this year given that there are no major changes in factors affecting profitability.

Since Vattenfall and Uniper-controlled OKG announced last year they were to close down four reactors (2,857 MW) by 2020, power prices at the long end of the forward curve have fallen by EUR 8/MWh or more.

More closures?
“It’s more likely that more reactors will be decommissioned than not,” said John Brottemsmo, analyst at Bergen Energi.

“Removing the [two] remaining [Ringhals] units would lift the power price to EUR 30.26/MWh in 2022,” he said.

In comparison the 2022 forward contract was last seen at EUR 22.84/MWh on Nasdaq Commodities.

Nena analyst Sigbjørn Seland agrees.

“If Vattenfall made the right decision last year [to close two reactors], then it is clearly possible they may choose to shut down further units,” he said.

Last month Vattenfall senior executive vice president Torbjörn Wahlborg told Montel that the company’s five remaining reactors (5,451 MW) faced closure by the mid-2020s due to the low electricity prices and Sweden’s capacity tax of SEK 14,770/MW (EUR 1,597) on nuclear generation.

The company will have to decide this year whether to make costly investments in safety upgrades.

(EUR 1 = SEK 9.25)